CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE PORTIONS OF THIS AGREEMENT
MARKED [*]. THE OMITTED PORTIONS OF THIS AGREEMENT HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
Effective as at 17th February 1998
----------------------------------
[*]
(2) MACROVISION CORPORATION
(3) C-DILLA LIMITED
------------------------------------------
SUBSCRIPTION AGREEMENT
relating to C-DILLA LIMITED
------------------------------------------
INDEX
1. Definitions and Interpretations
2. Conditions Precedent
3. Subscription
4. Completion
5. Shareholders Agreement
6. [*]
7. Warranties, Representations and Undertakings
8. Warranty Limitations
9. [Not used]
10. Authorisation
11. Restrictive Covenant
12. Notices
13. Performance of this Agreement
14. Announcements
15. Costs
16. Whole Agreement
17. Successors
18. Proper Law
19. Severability
20. No Partnership
21. Waiver and Forbearance
22. Further Assurance
23. Joint and Several Obligations
24. Exchange Rate
25. Relationship of Parties
26. Confidentiality
SCHEDULE 1 - Short Details of Company
SCHEDULE 2 - The Warranties
SCHEDULE 3 - Properties
SCHEDULE 4- Charges
AGREED FORM DOCUMENTS
A - [Not used]
B - Articles of Association
C - Licence to Occupy
D - Financial Projections
E - Management Accounts
F - Directors' Questionnaires
G - Resolutions
H - Letter of amendment to the Service Agreement
I - Software Marketing Licence and Development Agreement
2
SUBSCRIPTION AGREEMENT
Effective as at 17th February 1998
PARTIES:
(1) [*]
(2) MACROVISION CORPORATION whose registered office is at 1341 Orleans Drive
Sunnyvale CA 94089 ('Macrovision'); and
(3) C-DILLA LIMITED (Company number 2683202) whose registered office is at
Woodley House Crockhamwell Road Woodley Reading Berkshire RG5 3JP ('the
Company').
RECITALS:
(A) The Company (particulars whereof are set out in Schedule 1) is a private
company incorporated in England on 31st January 1992 under the Companies
Act 1985.
(B) The Investors hold the number of Shares in the capital of the Company set
out opposite their names in Schedule 1 being all of the Shares in the
capital of the Company in issue at the date of this Agreement.
(C) At the request of the Founder, Macrovision has agreed to subscribe for new
Shares in the Company upon the terms and conditions and in reliance of the
Warranties hereinafter appearing.
(D) In consideration of the above subscription the Investors and the Company
have agreed to amend the Shareholders Agreement (as defined below) on the
terms and conditions in this Agreement.
OPERATIVE PART:
1. DEFINITIONS AND INTERPRETATIONS
In this Agreement, unless the context otherwise requires:
1.1 the following expressions shall have the following meanings:
''A' Ordinary Shares ''A' Ordinary Shares of 10 pence each in the
capital of the Company having the rights set
out in the Articles
'Accounts' the audited profit and loss account of the
Company for the period ended on the Balance
Sheet Date and the audited balance sheet of
the Company as at the Balance Sheet Date
together with the notes and the report of the
Directors and Auditors, being in the Agreed
Form
3
'Agreed Form' in the form (or in the form of the draft)
which has for the purpose of identification
been initialled by or on behalf of the
Founder, Macrovision and the Company
'Articles' the new Articles of Association in the Agreed
Form marked 'B' to be adopted by the Company
'Auditors' [*]
''B' Ordinary Shares' 'B' Ordinary Shares of 10 pence each in the
capital of the Company having the rights set
out in the Articles
'Balance Sheet Date' 31st December 1996
'Board' the Board of Directors of the Company (or
when the context requires any other Group
Company from time to time)
'Business' [*]
'Business Plan' the business plan to be prepared by the
Founder and approved by the Board in
accordance with Clauses 7.10 and 7.11 of this
Agreement
'Claim' a claim for breach of any of the Warranties
''C' Ordinary Shares' 'C' Ordinary Shares of 10 pence each in the
capital of the Company having the rights set
out in the Articles
'Companies Act' the Companies Acts 1985 and 1989
'Company's Solicitors' Nabarro Nathanson of The Anchorage 34 Bridge
Street Reading RG1 2LU
'Completion' completion of the matters referred to in
Clause 4
'Completion Date' 19 February 1998
''D' Ordinary Shares' 'D' Ordinary Shares of 10 pence each in the
capital of the Company having the rights set
out in the Articles
'Directors' all those individuals identified as directors
of the Company in Schedule 1 being all the
directors of the Company at the date of this
Agreement and each other member of the Board
from time to time
'Directors' Questionnaires' the questionnaires in relation to the
Directors in the agreed form marked 'F'
4
'Disclosure Letter' the letter of the same date as this Agreement
addressed to Macrovision by the Founder and
the Company
''E' Ordinary Shares' 'E' Ordinary Shares of 10 pence each in the
capital of the Company having the rights set
out in the Articles
'Emoluments' in relation to a person:-
(a) sums paid by way of fees, salary, bonus,
commission, pension contributions and
benefits in kind; and
(b) all items of value received by any
person (or by his spouse or by another
on his behalf or for his benefit) from
any Group Company
'Employees' all the present employees of the Company
''F' Ordinary Shares' 'F' Ordinary Shares of 10 pence each in the
capital of the Company having the rights set
out in the Articles
'Financial Projections' the financial projections for the Company
prepared by the Founder in the Agreed Form
marked 'D'
'Founder' Peter Alfred Newman
'Group' the Company and any Holding Company of the
Company and each Subsidiary of the Company
and such Holding Company from time to time
'Group Company' each company in the Group
'Holding Company' a holding company as that expression is
defined in Section 736 Companies Act 1985
'Intellectual Property Rights' any or all of the following (whether written
or unwritten) and all rights in, arising out
of, or associated therewith anywhere in the
world: (i) all United Kingdom, international
and foreign patents and applications therefor
and all reissues, renewals and extensions
thereof; (ii) all inventions (whether
patentable or not), invention disclosures,
discoveries, secret process, improvements,
trade secrets, proprietary information, know
how, technology, technical data and customer
lists, and all documentation relating to any
of the foregoing; (iii) all copyrights,
copyright registrations and applications
therefor; (iv) all industrial designs and
5
registrations and applications therefor
throughout the world; (v) all trade names,
logos, trademarks and service marks;
trademark and service mark registrations and
applications therefor and all goodwill
associated therewith throughout the world;
(vi) all databases and data collections and
all rights therein throughout the world; and
(vii) all computer software including all
source code, object code, firmware,
development tools, files, records and data,
specifications, all media on which any of the
foregoing is recorded, (viii) any similar,
corresponding or equivalent rights to any of
the foregoing and (ix) all manuals,
instructions, catalogues and other
documentation related to any of the foregoing
'Licence to Occupy' [*]
'Listing' the admission to listing on the Official List
of the London Stock Exchange, or the grant of
permission to trade the whole or any class of
the issued shares capital of the Company on
the Alternative Investment Market or other
recognised investment exchange (as defined by
section 207 of the Financial Services Act
1986)
'Macrovision Director' any Director appointed to the Board by
Macrovision from time to time pursuant to
Clause 5.5
'Macrovision's Solicitors' Pitmans of 47 Castle Street, Reading RG1 7SR
'Management Accounts' (a) the draft unaudited profit and loss
account of the Company for the period
ended on 31 December 1997 and
(b) the draft unaudited Balance Sheet of the
Company as at 31 December 1997 in the
Agreed Form marked 'E'
'Management Accounts Date' 31 December 1997
'Ordinary Shares' Ordinary Shares of 10 pence each of whatever
class in the capital of the Company having
the rights set out in the Articles
'Preference Shares' redeemable preference shares of L1 each in
the capital of the Company having the rights
set out in the Articles
'Properties' the properties short particulars of which are
set out in Schedule 3
6
'Proprietary Information' shall include but not be limited to the
parties' ideas, concepts, development plans
for new or improved products or processes,
data, formulae, techniques, designs,
sketches, know-how, photographs, plans,
drawings, specifications, samples, test
specimens, reports, customer lists, price
lists, findings, studies or inventions
relating to tools, equipment and products.
'Resolutions' the Ordinary and/or Special Resolutions of
the Company in the Agreed Form marked 'G'
'Service Agreement' the service agreement between (1) the Founder
and (2) the Company dated 2 October 1996
'Shares' all the shares of the Company of whatever
class from time to time in issue
'Shareholders' the holders of the Shares from time to time
'Shareholders Agreement' the agreement dated 2 October 1996 between
the Investors, [*] and the Company;
'Software Marketing Licence
and Development Agreement' the licence to be granted by the Company to
Macrovision in the Agreed Form marked 'I'
'Subsidiary' a subsidiary company as defined in Section
736 of the Companies Act
'Sunnyvale' Macrovision's headquarters at 1341 Orleans
Drive Sunnyvale CA
'TA' Income and Corporation Taxes Act 1988
'Taxation' all forms of taxation, duties, imposts,
levies and rates whatsoever and whenever
imposed and whether of the United Kingdom or
elsewhere and any interest, surcharge,
penalty or fine in connection with the same
'TCGA' Taxation of Chargeable Gains Act 1988
'Warranties' the warranties, representations and
undertakings set out in Schedule 2
(references to a Warranty being to any of
them);
1.2 references to a statute or statutory provision shall include any statute or
statutory provision which (whether before or after the date of this
Agreement) consolidates or replaces the same or which has been amended,
consolidated or replaced by the same
7
and shall include any order, regulation, instrument or other subordinate
legislation made under the relevant statute or statutory instrument;
1.3 the term 'equity share capital' shall have the meaning attributed to it in
the Companies Act;
1.4 sections 839 (connected persons) and 417 (associate) TA are to apply to
determine whether a person is connected or associated with another for the
purposes of this Agreement;
1.5 references to those of the parties that are individuals include their
respective legal personal representatives;
1.6 references to a 'Business Day' are to any day from Monday to Friday
(inclusive) other than United Kingdom public bank holidays during normal
working hours;
1.7 references in this Agreement and the Schedules to the parties, Clauses and
Schedules are respectively to the parties and the Clauses of and the
Schedules to this Agreement;
1.8 the headings are included for convenience only and shall not affect the
interpretation or construction of this Agreement;
1.9 the Schedules shall for all purposes form part of this Agreement and the
expression 'this Agreement' shall include the Schedules
1.10 references to the masculine gender shall include the feminine and neuter
and vice versa and references to the singular number shall include the
plural and vice versa;
1.11 references to persons shall include trustees, firms, unincorporated
associations, corporations, partnerships, states and governmental and
administrative entities;
1.12 references to 'writing' or 'written' include any form of visible
reproduction;
1.13 any agreement, covenant, representation, warranty or undertaking in this
Agreement on the part of two or more persons is made or given by such
persons jointly and severally;
1.14 where any warranty is qualified by the expression 'so far as the Founder is
aware' or 'so far as the Company is aware' or any similar expression, such
warranty shall be deemed to include an additional warranty that the Company
or Founder has made enquiry of the Directors and employees of the Company
and patent registries throughout the world and has consulted the books and
records of the Company and no further level of enquiry shall be imputed to
the Founder or the Company under such additional warranty or otherwise;
2. CONDITIONS PRECEDENT
8
2.1 Completion and all obligations of Macrovision under this Agreement are
conditional upon:
(a) the passing of the Resolutions by the Company in general meeting, without
amendment, and the implementation of the Resolutions;
(b) Macrovision being satisfied with the replies to the Directors'
Questionnaires;
(c) Macrovision being satisfied as to the adequacy of the Company's insurance
arrangements;
(d) no breach of any undertaking referred to in Clause 5 and no condition,
event or act which might constitute such a breach having occurred;
(e) the delivery to Macrovision of such waivers, consents or authorities by
members of the Company or other persons as Macrovision may require
(including such waivers and class consents as may be required under the
Company's existing articles of association) in order to enable Macrovision
to be registered as the holder of the Shares for which it subscribes under
this Agreement;
(f) the due execution of a letter of amendment to the Service Agreement by the
Founder and the Company; and
(g) the delivery of the following to Macrovision's Solicitors for inspection:
(i) the Common Seal, Certificate of Incorporation, Statutory Books,
Share Certificate Books and Memorandum and Articles of
Association of the Company; and
(ii) all licences (if any) obtained by or issued to the Company or any
other person in connection with the Business or businesses
carried on by it or them; and
(iii) any contracts, deeds or other documents which Macrovision has
required prior to the date of this Agreement; and
(iv) such minutes, resolutions and other documents as Macrovision may
reasonably require in relation to the constitution of the Company
and in relation to the creation and allotment of the Shares and
the registration in the Register of Members of the Company of
Macrovision as a Member of the Company.
2.2 The Founder hereby undertakes to Macrovision that he shall procure so far
as he is able and otherwise use all reasonable endeavours to procure, the
satisfaction of each of the conditions set out in Clause 2.1.
2.3 If any of the said conditions is not satisfied in full on or before
Completion or waived by Macrovision then this Agreement shall cease to be
of effect and no party shall have any liability under it except insofar as
there is a breach by the Founder of Clause 2.2 or a breach by any party of
Clause 21.
3. SUBSCRIPTION
9
Macrovision hereby applies for the allotment and issue to it or its
trustee, nominee or custodian at Completion of 247,500 'F' Ordinary Shares
(currently representing 19.8% of the equity of the Company) for an
aggregate price of TWO MILLION ONE HUNDRED AND TWENTY ONE THOUSAND TWO
HUNDRED AND TWELVE POUNDS (L2,121,212) and the Company shall allot to
Macrovision or its trustee, nominee or custodian the said Shares and the
Investors shall procure that Macrovision is registered as the holder of the
said Shares in the Register of Members of the Company
4. COMPLETION
4.1 Completion of the subscription by Macrovision shall take place on the
Completion Date at the offices of Macrovision's Solicitors (or at such
other place and time as the Investors and Macrovision may agree) when:
(a) a Board Meeting shall be duly convened for the purpose of producing Written
Resolutions of the Company in the form of the Resolutions;
(b) subject to the passing of the Resolutions, Macrovision shall deliver to the
Company, or as it may direct, the sum of L2,121,212.
(c) a Board Meeting of the Company shall be duly convened at which the
Directors shall:
(i) validly allot the Shares for which Macrovision has subscribed;
(ii) issue to Macrovision properly executed share certificates in
respect of those Shares for which Macrovision has subscribed in
the name of Macrovision or its nominee and enter the name of
Macrovision or its nominee in the Register of Members as the
registered holder of those Shares for which it has subscribed;
(iii) appoint [*] as the first Macrovision Director in accordance with
the provisions of clause 5.5 below; and
(iv) approve the execution of the letter of amendment to the Service
Agreement
(v) approve the execution of the Software Marketing Licence and
Development Agreement
(vi) approve the execution of the [*]
4.2 The Shares belonging to Macrovision and the Investors shall have attached
thereto and be subject to the rights and restrictions set out in the
Articles.
5. SHAREHOLDERS AGREEMENT
5.1 The Investors and the Company undertake to and covenant with Macrovision
with effect from the Completion Date to comply with the provisions of and
to perform their respective obligations as provided in the Shareholders
Agreement, so far as they remain to be observed and performed and from the
Completion Date, Macrovision shall become a party to the Shareholders
Agreement as if Macrovision were named in the Shareholders Agreement as an
Investor holding 247,500 F Shares.
5.2 The parties to this Agreement agree that all provisions of the Shareholders
Agreement shall remain in full force and effect subject to the amendments
set out in this clause.
10
5.3 The parties to this Agreement agree that from the Completion Date the
Shareholders Agreement shall be read and construed as if the definitions
'F' Ordinary Shares' and 'Macrovision Director' as set out in clause 1 were
included in clause 1.1 of the Shareholders Agreement.
5.4 The Investors confirm to Macrovision that the conditions set out in clause
3 of the Shareholders Agreement have been satisfied in full.
5.5 Macrovision shall be entitled to appoint a non-executive director to the
Board and to the board of each Group Company in accordance with the terms
of Clause 5.1.1 of the Shareholders Agreement (the non-executive director
appointed by Macrovision to be known as the 'Macrovision Director') which
shall apply to Macrovision mutatis mutandis as if set out herein.
5.6 The appointment of the Macrovision Director pursuant to Clause 5.5 shall
cease with immediate effect if the aggregate number of 'F' Ordinary Shares
held by Macrovision shall be less than 123,750
5.7 Macrovision agrees to comply with the terms of Clause 5.1.7 of the
Shareholders Agreement regarding the appointment of a non-executive
director.
5.8 The Macrovision Director shall be entitled to appoint an alternate director
in accordance with the terms of Clause 5.2 of the Shareholders Agreement
which shall apply to Macrovision mutatis mutandis as if set out herein.
5.9 Macrovision undertake to the Investors and the Company with effect from the
Completion Date to comply with the provisions of clauses 8.1, 8.2, 8.3,
8.4, 8.5, 9.1, 9.4, 9.5, 10.5, 14.2, 14.3 and 16.4 of the Shareholders
Agreement.
5.10 Subject to the provisions of Clause 5.22 of this Agreement, the Macrovision
Director and his alternate director shall be entitled to disclose to
Macrovision such information concerning the Company and/or any Group
Company as he thinks fit.
5.11 The Company (or relevant Group Company as the case may be) shall pay in
respect of the services of the Macrovision Director but only for such time
as he is appointed (apportioned pro rata for the term of appointment in any
one year) a fee at the rate of L12,000 (plus VAT) per annum, quarterly in
arrears, such amount being increased on each anniversary of the Completion
Date by the percentage thereof (or of any increased amount) equal to the
percentage increase (if any) in the Retail Price Index published by the
Department of Employment (or any index substituted for the same) in the
preceding 12 months.
5.12 The Company agrees with and undertakes to Macrovision to observe the
provisions set out in clause 6.1 of the Shareholders Agreement which clause
shall apply to Macrovision as if Macrovision were named as one of 'the
Investors' therein.
11
5.13 The Company will prepare and send to Macrovision as it may direct (all in
such form and detail as is approved by the Macrovision Director) the items
set out in clause 6.2 of the Shareholders Agreement within the times
specified therein. Where any provision of clause 6.2 refers to
consultation with, the request of, or the agreement of (or similar) any
Investor or [*] or the Nominated Director (as those parties are defined in
the Shareholders Agreement) such provision shall be read and construed as
if consultation with, or the request of, or the agreement of (or similar)
Macrovision was incorporated into such sub-clauses.
5.14 If the Company shall be in breach of its obligations under clauses 15.12 or
15.13 then (without prejudice to any other rights which it may have in
respect of such breach) Macrovision shall be entitled to appoint a firm of
accountants pursuant to the provisions contained in Clause 6.3 of the
Shareholders Agreement which shall apply as if Macrovision were named
therein.
5.15 The Company undertakes to and covenants with Macrovision in the terms of
Clause 6.4 of the Shareholders Agreement as if such undertakings were
repeated herein.
5.16 The Company undertakes to and covenants with Macrovision that the Company
shall not carry out any of the matters referred to in clause 6.5 of the
Shareholders Agreement without the prior consent of the holders of not less
than 75 per cent of the voting rights conferred by the issued ordinary
share capital of the Company.
5.17 The Company undertakes to and covenants with Macrovision that the Company
shall not while there is a Macrovision Director without the prior written
consent of the Macrovision Director (such consent not to be unreasonably
withheld) do any of the acts set out in Clauses 6.6.1 - 6.6.22 of the
Shareholders Agreement
5.18 Where in accordance with the provisions of the Shareholders Agreement (as
amended by this Agreement) a consent or approval is expressed to be
required of the Macrovision Director it may only be given:
5.18.1 by the Macrovision Director signing a written resolution of the Board
approving the relevant transaction or matter;
5.18.2 by the Macrovision Director in writing addressed to the Board; or
5.18.3 if there is no Macrovision Director in office at the relevant time, by
Macrovision giving its written consent or approval to the relevant
matter.
5.19 The Investors (other than [*]) jointly and severally warrant to Macrovision
in the terms of clause 6.7.8 of the Shareholders Agreement as if such
warranty was repeated herein.
5.20 Subject to clause 5.22 the Company shall supply to the Macrovision Director
the information and documents referred to in clause 7.5 of the Shareholders
Agreement.
5.21 The Founder undertakes to Macrovision in the terms set out in clause 10.1
of the Shareholders Agreement as if such undertakings were repeated herein.
12
5.22 Macrovision shall and procure that the Macrovision Director and any
alternate director appointed by him shall comply with the terms of the
confidentiality undertakings set out in Clause 10.4 of the Shareholders
Agreement provided that such confidentiality undertakings shall not prevent
Macrovision divulging or disclosing or making known or using such
confidential information or information relating to Inventions or Know How
where the same is permitted by the terms of the Software Marketing Licence
and Development Agreement. Provided further that the undertakings in
clause 10.4 shall cease to apply to information which has come into the
public domain (other than by a breach by Macrovision of this clause) or
where disclosure is ordered by law or by any governmental or other
authority or regulatory body.
5.23 The Investors confirm (for the purposes of clause 6.5.1 of the Shareholders
Agreement) that they consent to the issue by the Company to Macrovision of
the 'F' Ordinary Shares subscribed for by Macrovision in this Agreement.
5.24 [Not used]
5.25 The Company and the Founder undertake and covenant to Macrovision that:
(a) they will apply the subscription monies hereunder of Macrovision in the
furtherance of the Products (as defined in the Software Marketing Licence
and Development Licence Agreement)
(b) comply fully with all laws, bye-laws, rules, regulations and codes of
conduct relating to or being effective in respect of the Business and
conduct its affairs so as to ensure that there is no breach or failure by
the Company to comply with its duties and obligations under or restrictions
imposed on it and its officers by the provisions of the Articles of
Association of the Company
(c) at all times promptly and fully inform Macrovision of all matters coming to
the attention of the Company that affect or may affect the validity or
enforceability of the Intellectual Property Rights including the actual or
anticipated commencement of any proceedings by or against the Company in
respect of them and to take such action as may from time to time be
requested by Macrovision to protect, safeguard and enforce such
Intellectual Property Rights
(d) in so far as it is appropriate:
(i) procure that each Group Company shall give effect to each of the
undertakings contained in this Clause 5 (other than this Clause
5.25(d)) as if such undertakings had also been given individually by
each such Group Company as if it had appeared in each undertaking in
substitution for 'the Company' wherever it occurs; and
(ii) if so requested by Macrovision ensure that each Group Company shall
enter into a direct covenant with Macrovision in terms which are
identical (mutatis mutandis) to the undertakings on the part of the
Company contained in this Clause.
13
5.26 In the event of a Listing of the Company Macrovision agrees that it will
prior to the Listing give such class and other consents as may be required
to vary the class rights relating to the 'F' shares in order to amend the
Articles of Association to establish one class of ordinary share capital
and make other changes as may reasonably be necessary.
5.27 The parties agree that to the extent that any further equity share capital
is required by the Company, an offer shall be made to Macrovision to
participate in the provision of such funding (by subscription for further
'F' Shares) in proportion (as nearly as practicable) to the percentage of
the overall voting rights (exercisable by the equity shares in the capital
of the Company) then exercisable by Macrovision. No new 'F' Shares will be
issued other than to the holders of 'F' Shares. Macrovision agrees that if
it does not participate to the full amount of its entitlement as above the
voting rights exercisable in respect of its holding of 'F' Shares shall be
reduced to the following percentage of the said overall voting rights:-
A x C
---
B
where A is the number of 'F' Shares held by Macrovision after the said
funding is completed.
B is the number of 'F' Shares that would have been held by Macrovision
after the said funding is completed if it had taken up its full
entitlement to participate in the provision of the funding
C is the percentage (immediately before the said funding) of the total
voting rights exercisable by the 'F' Shares held by Macrovision.
and Macrovision undertakes to give all necessary class and other consents
to give effect to this reduction and the corresponding increases in the
voting rights of other classes of Ordinary Shares.
6. [*]
6.1 [*]
6.2 [*]
7. WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS
7.1 Each of the Founder and the Company jointly and severally hereby:-
(a) acknowledges that Macrovision has been induced to enter into this
Agreement and to subscribe for Shares on the basis of the Warranties;
and
(b) warrants, represents and undertakes to Macrovision in the terms of
Schedule 2 subject only to any matters fully and fairly disclosed in
the Disclosure Letter
14
7.2 Each of the Founder and the Company hereby confirms and agrees that each of
the Warranties is a separate and independent warranty, representation and
undertaking and that no one of the Warranties shall be limited by reference
to any other of them or by this Agreement.
7.3 No proceedings shall be commenced in respect of any claim for breach of the
Warranties unless notice giving details of the claim shall have been
delivered to the Founder and/or the Company by Macrovision within two years
of the Completion Date or, in the case of Warranties relating to Taxation,
within seven years of the Completion Date (except in the case of fraud or
wilful non-disclosure when this limitation shall not apply)
7.4 Macrovision may assign the whole or any part of the benefit of any of the
Warranties on a transfer of all or any Shares held by Macrovision.
7.5 The rights and remedies of Macrovision in respect of any breach of any of
the Warranties shall not be affected by:
(a) Completion;
(b) any investigation made by or on behalf of Macrovision into the affairs
of any Group Company or the Business; or
(c) any other event or matter whatsoever which otherwise might have
affected such rights and remedies except a specific and duly
authorised written waiver or release.
7.6 Any information supplied by any Group Company or its agents,
representatives or advisers to the Founder or his agents, representatives
or advisers in connection with, or which forms the basis of, any of the
Warranties, the Disclosure Letter, the Financial Projections or otherwise
in relation to the business and affairs of any Group Company (whether
before or after the date of this Agreement) shall not be treated as a
representation, warranty or guarantee of the accuracy thereof by that or
any other Group Company to the Founder and shall not constitute a defence
to any claim by Macrovision under the Warranties and the Founder hereby
irrevocably waives any and all claims against the relevant Group Company in
respect thereof.
7.7 In the event of any breach of Warranties 5.5 and/or 13 (without restricting
the rights or ability of Macrovision to claim damages or indemnity from the
Founder and on any basis available to it in respect of such breach) the
Founder shall on demand at the sole option of Macrovision
7.7.1 pay to the Company the amount by which the value of any asset or
assets of the Company is or are less than or (as the case may be) the
amount by which any loss and/or liability or liabilities of the
Company is or are greater than would have been the case if there had
been no breach of the Warranties; or
15
7.7.2 pay to Macrovision the amount by which the aggregate value of
Macrovision's shares then in issue is less than would have been the
case if there had been no breach of the Warranties
and shall further on demand fully indemnify Macrovision and the Company
against all costs charges expenses and other losses or liabilities which
they would not have incurred or which would not have existed if there had
been no such breach or claim or which are reasonably incurred by
Macrovision or the Company or any of them in connection with any claim or
enforcement of its or their rights arising in relation thereto and also
against any additional liability to tax which may arise by reason of any
payment under clause 7.7.1 and 7.7.2
7.8 In the event of any breach of the Warranties (other than Warranties 5.5
and/or 13) the Company and/or the Founder shall on demand pay to
Macrovision the amount by which the aggregate value of Macrovision's shares
then in issue is less than would have been the case if there had been no
breach of the Warranties and shall further on demand fully indemnify
Macrovision and the Company against all costs charges expenses and other
losses or liabilities which they would not have incurred or which would not
have existed if there had been no such breach or claim or which are
reasonably incurred by Macrovision or the Company or any of them in
connection with any claim or enforcement of its or their rights arising in
relation thereto and also against any additional liability to tax which may
arise by reason of any payment under clause 7.8.
7.9 Each of the Investors hereby jointly and severally warrant to Macrovision
that at Completion no claim or dispute has arisen under the Subscription
and Shareholders Agreement dated 2 October 1996 entered into between (1)
The Founder and others [*] ('the Subscription and Shareholders Agreement')
and others which remains outstanding or unresolved including, without
limitation, any claim under the representations and warranties set out in
Schedules 5, 6 and 7 thereto and so far as the Investors are aware no such
claim or dispute is pending or threatened.
7.10 The Founder undertakes within 3 weeks of Completion to prepare and submit
to the Board a Business Plan setting out the Company's commercial and
financial objectives and commitments during the following year in relation
to all projects proposed to be undertaken by the Company and including the
facilities required, the members of staff involved and the estimated time
and cost of completing each stage of the proposed Projects.
7.11 The Board shall have 21 days from the date of receipt of the draft Business
Plan to review the same and shall give written notice to the Company
stating whether or not it accepts the draft Business Plan. If the Board
notifies the Founder of any amendments or modifications to the draft
Business Plan in order for it to be accepted by the Board the Founder shall
re-submit the draft Business Plan to the Board containing such amendments
or modifications for further review and acceptance by it.
7.12 Macrovision shall not upon a sale of Shares be required to give any
warranties or indemnities except as to title to its Shares.
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8. WARRANTY LIMITATIONS
8.1 Neither the Founder nor the Company shall have any liability in respect of
any Claim to the extent arising from any matter, act, omission or
circumstance:
8.1.1 fully and fairly disclosed in the Disclosure Letter;
8.1.2 which would not have occurred but for any act, omission or transaction
on or after Completion by or with the consent of Macrovision.
8.2 In the event of a Claim Macrovision shall not be entitled to rescind this
agreement
8.3 Nothing in this agreement shall operate to reduce Macrovision's common law
duty to mitigate any loss giving rise to any Claim and Macrovision shall
take reasonable steps so to mitigate.
8.4 A Claim in respect of which notice is given in accordance with clause 7.3
shall, if it has not previously been satisfied, settled or withdrawn, be
deemed to have been withdrawn and be barred and unenforceable unless legal
proceedings have been issued and served on the Founder in respect of such
Claim within 9 months after the date of such notice or, where the Claim is
based on a contingent liability, within 6 months after such liability
ceases to be contingent.
8.5 Neither the Founder nor the Company shall have any liability in respect of
a Claim unless:
8.5.1 the liability agreed or determined in respect of the Claim (excluding
related interest and costs) exceeds [*] (save that where one or more
individual Claims relate to the same cause or an associated event
Macrovision may treat all such Claims as one Claim and not as
individual Claims); and
8.5.2 the aggregate liability agreed or determined (excluding related
interest and costs) in respect of all Claims referred to in clause
8.5.1 exceeds [*] and if such aggregate liability exceeds that amount
then the Founder and/or the Company shall be liable for the whole of
the liability and not just the excess.
8.6 The aggregate liability of the Founder for any breach of this Agreement
shall not exceed [*]
8.7 The aggregate liability of the Company for any breach of this Agreement
shall not exceed [*] (excluding related interest and costs)
8.8 Neither the Founder nor the Company shall have any liability in respect of
any Claim which is based upon a liability which is contingent only unless
and until such contingent liability becomes an actual liability and is due
and payable.
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8.9 Neither the Founder nor the Company shall have any liability in respect of
any Claim to the extent that the Accounts make provision or reserve for
the matter giving rise to the Claim;
8.10 Neither the Founder nor the Company shall have any liability in respect of
any Claim to the extent arising from:-
8.10.1 the passing of, or change in, after the date of this agreement, any
law, regulation or rule of any government, governmental department,
agency or regulatory body (including any stock exchange) or any
judgment delivered after the date of this agreement with retrospective
effect, or any increase in the rates of Taxation or any imposition of
Taxation not in effect at the date of this agreement;
8.10.2 a change after Completion in the methods which have been used by the
Company in valuing stock in trade and work in progress or any other
change in accounting policy or practice all not in accordance with
relevant SSAPs or FRSs or any change to the length of any accounting
period or to the accounting reference date of the Company;
8.10.3 the failure or omission by the Company or Macrovision to make any
claim, election, surrender or disclaimer or give any notice or consent
or do any other thing under the provisions of any enactment or
regulation relating to Taxation after Completion, and the making,
giving or doing of which was taken into account in computing the
Taxation in the Accounts;
8.10.4 any claim, election, surrender or disclaimer properly made or notice
or consent properly given or any other thing properly done after
Completion by the Company or Macrovision or their agents under the
provisions of any enactment or regulation relating to Taxation.
8.11 Neither the Founder nor the Company shall have any liability in respect of
any Claim to the extent that the loss in respect of which the Claim is made
is recovered under a policy of insurance in favour of the Company
8.12 If the Founder has paid to Macrovision any amount in respect of a Claim and
Macrovision subsequently receives or recovers from a third party (including
an insurer) a sum which is referable to such Claim, Macrovision shall
forthwith repay to the Founder the amount so received or recovered up to
the amount which has been paid by the Founder in respect of such Claim
(after deducting all reasonable costs charges and expenses incurred by
Macrovision in making such recovery)
8.13 If Macrovision becomes aware of a matter which could reasonably be
expected to give rise to a Warranty Claim, Macrovision shall give notice in
writing of that fact as soon as reasonably practicable to the Founder.
8.14 If the Company or Macrovision receives notice of a claim by a third party
('Third Party Claim') against the Company or Macrovision which might
constitute or give rise
18
to a liability pursuant to this agreement, the Founder and Macrovision
shall consult with each other regarding the conduct of the Third Party
Claim.
8.15 A party having conduct of a Third Party Claim shall keep the other fully
informed of the progress and the defence of any Third Party Claim and shall
consult with and have due regard for the other's reasonable
representations.
9. [NOT USED]
10. AUTHORISATION
Each of the parties represents, warrants and undertakes to the others that
he or it has taken all necessary corporate and other action to enable he or
it validly to accept and perform the obligations imposed on him or it under
the terms of this Agreement and that performance of the provisions of this
Agreement will not result in a breach of or constitute a default under any
agreement, statute, law, regulation or other contractual restriction
binding upon him or it.
11. RESTRICTIVE COVENANT
The Company and Macrovision each hereby covenants with each other that for
so long as Macrovision is a Shareholder and for 12 months after Macrovision
ceases to be a Shareholder it will not directly or indirectly and whether
on its own behalf or for another do or attempt to do any of the following:
11.1 communicate with an employee of the other in a manner calculated or likely
to cause that employee to leave or end or seek to leave or end his or her
position or relationship with any company in the same group as the other,
regardless of whether or not such communication would be in breach of any
contract;
11.2 employ, engage the services of or work directly or indirectly with an
employee of the other, except in accordance with the terms of the Software
Marketing Licence and Development Agreement.
12. NOTICES
Any notice to be given pursuant to this Agreement shall be in writing and
addressed to the person concerned at the last address which such person
shall have notified in writing to the parties to this Agreement for the
purpose at least 15 Business Days prior to such notice being given or,
failing such notification, at it registered office for the time being (if a
company) or at the address set out in this Agreement (if an individual).
Any notice in writing correctly addressed shall be treated as validly
served, if by delivery, at the time of delivery; if remote copier, at the
time of despatch; and if by post, 48 hours after it is posted in the United
Kingdom by first class prepaid registered post. In proving service, it
shall be sufficient for the sender to prove that the notice was delivered,
despatched or posted in the manner described above.
13. PERFORMANCE OF THIS AGREEMENT
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13.1 The Founder and Macrovision agree that, so far as permitted by law, they
will jointly and severally take all necessary steps (including if necessary
but without limitation the exercise of any voting rights held by them,
whether as shareholder in the Company or as Director, or otherwise) in
order that the provisions of this Agreement and of any agreements entered
into by the Company pursuant to this Agreement are given full force and
effect.
13.2 In the event of any conflict between the provisions of this Agreement and
the provisions of the Articles, the provisions of this Agreement shall
prevail.
13.3 This Agreement shall, as to any of its provisions remaining to be performed
or capable of taking effect following the Completion Date, remain in full
force and effect following the Completion Date.
14. ANNOUNCEMENTS
No party hereto shall make any announcement statement or communication in
relation to any of the transactions provided for in this Agreement or any
matter ancillary thereto (other than to professional advisers whose
province it is to know the same) without the prior consent of the other
parties hereto, (which consent shall not be unreasonably withheld or
delayed) save to the extent required by law or any Stock Exchange or by any
governmental or other authority or regulatory body
15. COSTS
The Company, Macrovision and the Investors shall each pay their own costs
and expenses incurred in relation to the negotiation, preparation and
completion of this Agreement.
16. WHOLE AGREEMENT
16.1 It is acknowledged and agreed that this Agreement (which shall include the
documents and instruments referred to herein) shall supersede all prior
representations arrangements understandings and agreement between the
parties relating to the subject matter hereof and shall constitute the
entire complete and exclusive agreement and understanding between the
parties hereto.
16.2 The parties irrevocably and unconditionally waive any right they may have
to claim damages for any misrepresentation arrangement understanding or
agreement not contained in this Agreement or for any breach of any
representation or warranty not contained in this Agreement (unless such
misrepresentation or representation or warranty was made fraudulently).
16.3 It is further acknowledged and agreed that no misrepresentations
arrangements understandings or agreements (whether written or oral) made
by or on behalf of any the other parties have been relied upon other than
those expressly set out or referred to in this Agreement.
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16.4 No alteration amendment or variation of this Agreement shall be of any
force or effect unless it is writing and signed by (or by some person duly
authorised by) each of the parties
17. SUCCESSORS
17.1 This Agreement shall be binding upon the personal representatives or
successors in title and permitted assigns of the parties hereto and
references to 'the Company', and 'the Founder' and the 'Investors' shall be
read and construed accordingly provided that this Agreement shall not be
binding on the Personal Representatives of the Founder.
17.2 Save as specifically provided in Clause 7.4 and without prejudice to the
right to transfer shares under the Articles no party shall be entitled to
assign his or its rights or obligations under this Agreement without the
written consent of all the other parties (such consent not to be
unreasonably withheld or delayed).
17.3 Macrovision shall be entitled to assign all (but not some only) of its
rights or obligations under this Agreement to any person to whom it shall
have transferred all or any of its holding of Shares pursuant to the
provisions of this Agreement and/or the Articles.
18. PROPER LAW
This Agreement and the documents to be entered into as provided herein
shall be governed by and construed in accordance with English law and the
parties hereto agree to submit to the non-exclusive jurisdiction of the
English Courts.
19. SEVERABILITY
Each of the obligations contained in the clauses and sub-clauses of this
Agreement shall be construed as separate and severable obligations but if
at any time any one or more of the obligations is or becomes invalid
illegal or unenforceable in any respect under law but would be valid if
some part thereof were deleted or the period or area of application reduced
such obligation shall apply with such modification as may be necessary to
make it valid and effective and in any event the validity legality and
enforceability of the remaining obligations clauses and sub-clauses hereof
shall not in any way be affected or impaired thereby. Notwithstanding the
foregoing the parties hereto shall thereupon negotiate in good faith in
order to agree the terms of a mutually satisfactory provision to be
substituted for the provision so found to be invalid illegal or
unenforceable.
20. NO PARTNERSHIP
21
None of the provisions of this Agreement shall be deemed to constitute a
partnership between the Investors and Macrovision and the Investors shall
have no authority to bind Macrovision in any way.
21. WAIVER AND FORBEARANCE
No failure or delay on the part of any party hereto to exercise any right
or remedy under this Agreement will operate as a waiver thereof and no
waiver by any party in respect of any breach shall operate as a waiver in
respect of any subsequent breach.
22. FURTHER ASSURANCE
The Company and the Investors jointly and severally agree to do and execute
all such lawful and necessary acts, deeds, documents and things within its
or their power as Macrovision may reasonably require for giving full effect
to this Agreement and for securing to Macrovision the full benefit of the
rights powers and remedies conferred upon it in this Agreement.
23. JOINT AND SEVERAL OBLIGATIONS
Where this Agreement is executed by or on behalf of two or more parties
together:-
23.1 Those parties' obligations shall take effect as joint and several
obligations and all references to those parties shall take effect as
references to any of them;
23.2 This Agreement shall not be revoked or impaired as to any of such parties
by the death incapacity or insolvency of any other; and
23.3 Macrovision may release or discharge any one of such party from their
obligations under this Agreement or accept any composition from or make any
other arrangements with any of such parties without releasing or
discharging the other(s) or otherwise prejudicing or affecting the rights
and remedies of Macrovision against the other(s)
24. EXCHANGE RATE
The parties agree that other than any payments due on Completion or where
the express terms of this Agreement otherwise require any payments from one
party to any other party or parties under this Agreement shall be paid in
US Dollars in accordance with the exchange rate applicable at the date of
payment.
25. RELATIONSHIP OF PARTIES
Each of the parties to this Agreement confirms that it is executing this
Agreement as principal and not as agent or broker for any other person.
26. CONFIDENTIALITY
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26.1 All Proprietary Information disclosed by any party to any other party in
connection with the performance of this Agreement or otherwise relating to
the Company's Business or the business and affairs of any other party to
this Agreement (except such information as may be generally available to
the public) shall be agreed to have been disclosed in confidence and each
party is obliged to keep any such information as it may acquire
confidential and, save to the extent required by law or by any governmental
or other authority or regulatory body or as set out on clause 26.2 below,
not to disclose it, nor the contents and existence of this Agreement to any
other person or otherwise improperly use it at any time hereafter, except
insofar as such information has entered the public domain otherwise than in
breach of this clause.
26.2 Each party shall ensure that disclosure of any Proprietary Information is
restricted to those employees or directors having the need to know the
same. Copies or reproductions shall not be made except to the extent
reasonably necessary for the performance of this Agreement and shall be the
property of the disclosing party.
EXECUTION:
The parties have shown their acceptance of the terms of this Agreement by
executing it at the end of the Schedules.
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SIGNED by the said )
[*] )
in the presence of: )
Witness:
Address:
Occupation:
SIGNED by the said )
[*] )
in the presence of: )
Witness:
Address:
Occupation:
SIGNED by )
[*] )
Director for and on behalf of )
[*] )
in the presence of: )
Witness:
Address:
Occupation:
24
SIGNED by )
[*] )
Director for and on behalf of )
[*] )
in the presence of: )
Witness:
Address:
Occupation:
SIGNED by )
[*] )
Director for and on behalf of )
[*] )
in the presence of: )
Witness:
Address:
Occupation:
SIGNED by )
)
Director for and on behalf of )
[*] in the presence of: )
Witness:
Address:
Occupation:
SIGNED by )
25
)
Director for and on behalf of )
[*] in the presence of: )
Witness:
Address:
Occupation:
SIGNED by )
)
Director for and on behalf of )
[*] )
in the presence of: )
Witness:
Address:
Occupation:
SIGNED by )
)
Director for and on behalf of )
[*] )
in the presence of: )
Witness:
Address:
Occupation:
SIGNED by )
[*] )
26
Director for and on behalf of )
C-DILLA LIMITED )
in the presence of: )
Witness:
Address:
Occupation:
27
Subscription Agreement - Macrovision Corp. and C-Dilla Ltd.
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