STRATEGIC INVESTMENT AGREEMENT

 

TABLE OF CONTENTS

 

			PAGE
ARTICLE I. PURCHASE AND SALE OF ADDITIONAL SHARES			2
1.1	PURCHASE AND SALE OF THE ADDITIONAL SHARES		2
1.2	THE CLOSING		2
1.3	JDA AMENDMENT		2
ARTICLE II. REPRESENTATIONS AND WARRANTIES			2
2.1	REPRESENTATIONS AND WARRANTIES OF THE COMPANY		2
2.2	REPRESENTATIONS AND WARRANTIES OF THE INVESTOR		9
ARTICLE III. COVENANTS			12
3.1	[RESERVED]		12
3.2	INVESTOR’S STANDSTILL AGREEMENT		12
3.3	TRANSFER		13
3.4	COMPLIANCE WITH SECTION 13		14
3.5	DIRECTOR APPOINTMENTS AND ELECTION		14
ARTICLE IV. REGISTRATION RIGHTS			12
4.1	LEGEND		14
4.2	REGISTRATION ON FORM S-3		15
4.3	PIGGYBACK REGISTRATION		16
4.4	REGISTRATION PROCEDURES		17
4.5	DELAY OF REGISTRATION; FURNISHING INFORMATION		20
4.6	TERMINATION OF REGISTRATION RIGHTS		20
4.7	INDEMNIFICATION		20
4.8	ASSIGNMENT OF REGISTRATION RIGHTS		23
4.9	LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS		23
4.10	MARKET STAND-OFF AGREEMENT		23
4.11	RULE 144 REPORTING		24
ARTICLE V. ADDITIONAL AGREEMENTS			24
5.1	CONSENTS; APPROVALS		24
5.2	PROCEDURAL SAFEGUARDS		25
ARTICLE VI. CONDITIONS PRECEDENT			25
6.1	INVESTOR CONDITIONS TO CLOSING		25
6.2	COMPANY CONDITIONS TO CLOSING		27
ARTICLE VII. MISCELLANEOUS			29
7.1	FEES AND EXPENSES		29
7.2	SEVERABILITY		29
7.3	CONSENT TO JURISDICTION		29
7.4	DISPUTE RESOLUTION PROCEDURES		30
7.5	BROKERS		32
7.6	ENTIRE AGREEMENT; AMENDMENTS		32

 

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7.7	NOTICES		33
7.8	NO WAIVER		34
7.9	HEADING		34
7.10	SUCCESSORS AND ASSIGNS		34
7.11	NO THIRD PARTY BENEFICIARIES		34
7.12	GOVERNING LAW		34
7.13	FURTHER ASSURANCES		34
7.14	RELATIONSHIP OF THE PARTIES		35
7.15	PUBLICITY		35
7.16	NUMBER AND GENDER OF WORDS		35
7.17	INTERPRETATION		36
7.18	COUNTERPARTS		36

 

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TABLE OF EXHIBITS

 

Exhibit A - Definitions
Exhibit B - JDA Amendment
Exhibit C - Schedule of Exceptions
Exhibit D - Director Agreement

 

 

EXHIBIT 10.12

 

DIGIMARC CORPORATION

 

STRATEGIC INVESTMENT AGREEMENT

 

THIS STRATEGIC INVESTMENT AGREEMENT (this “AGREEMENT”) is made as of September 17, 2000 by and between MACROVISION CORPORATION, a Delaware corporation (the “INVESTOR”), and DIGIMARC CORPORATION, a Delaware corporation (the “COMPANY”), (each a “PARTY”, collectively, the “PARTIES”). Capitalized terms used in this Agreement and not otherwise defined are defined in EXHIBIT A, attached hereto and incorporated by reference herein.

 

A.             The Investor and the Company believe that a more extensive business relationship between them would be mutually advantageous.

 

B.             As part of such current and potential business relationship, the Parties desire that the Investor further increase its equity stake in the Company by purchasing additional shares of the Company’s Common Stock (the “COMMON STOCK”, and such shares, the “ADDITIONAL SHARES”) at a purchase price of the lower of (i) $20.00 per share and (ii) the price to be paid for the Common Stock by Koninklijke Philips Electronics N.V. or an Affiliate thereof (“PHILIPS”) for the purchase of approximately twelve percent (12%) of the issued and outstanding Common Stock pursuant to the Strategic Investment Agreement between the Company and Philips of even date herewith (the “PHILIPS STRATEGIC INVESTMENT AGREEMENT”), such that after its purchase of the Additional Shares the Investor will hold an aggregate amount of Common Stock equal to the Macrovision Percentage (defined below). The “MACROVISION PERCENTAGE” of the Common Stock shall be an amount equal to twelve and five tenths of a percent (12.5%) of the issued and outstanding Common Stock at the Closing, including the 924,475 shares of Common Stock currently owned by the Investor (the “ORIGINAL SHARES”) and the Additional Shares to be issued to the Investor hereunder and the shares issued or to be issued pursuant to the Philips Strategic Investment Agreement, but excluding shares subject to warrants, options or other contracts for the sale of the Common Stock existing on the date of this Agreement. If the Company issues any warrants, options or other contracts for the purchase of Common Stock after the date of this Agreement but prior to the Closing (other than pursuant to the Company’s existing employee stock purchase plans), then the Investor may purchase (at its option) a number of shares of Common Stock such that the Macrovision Percentage may be calculated including the Common Stock available for issuance under such warrants, options and other contracts.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and made pursuant hereto, and good and valuable consideration, receipt of which is hereby acknowledged, the Parties hereto do hereby agree as follows:

 

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ARTICLE I.

 

Purchase and Sale of Additional Shares

 

1.1            PURCHASE AND SALE OF THE ADDITIONAL SHARES.

 

Subject to the terms and conditions hereof, the Company will issue and sell to the Investor, and the Investor will purchase from the Company, at the Closing (defined in Section 1.2), that number of Additional Shares at a purchase price per share (the “SHARE PRICE”) equal to the lower of (a) $20.00 per share and (b) the price for the Common Stock to be paid by Philips pursuant to the Philips Strategic Investment Agreement, such that the Investor will hold an aggregate amount of Common Stock equal to the Macrovision Percentage. The “TOTAL PURCHASE PRICE” shall be the Share Price multiplied by the number of Additional Shares purchased by the Investor, such number of shares when taken together with the Original Shares not to exceed the Macrovision Percentage.

 

1.2            THE CLOSING.

 

The purchase and sale of the Additional Shares shall take place at the offices of Morrison & Foerster LLP, 425 Market Street, San Francisco, California, on October 19, 2000, or at such other time and place as the Company and the Investor mutually agree upon orally or in writing (the “CLOSING”). At the Closing, the Company shall deliver to the Investor a stock certificate representing the Additional Shares purchased by the Investor, and the Investor shall pay the Total Purchase Price by wire transfer of immediately available funds in the manner requested by the Company, all in accordance with Section 1.1.

 

1.3            JDA AMENDMENT.

 

On the date hereof the Parties will execute an amendment to the Joint Development Agreement between them, dated as of August 22, 1997 and as previously amended, which is attached hereto as EXHIBIT B (the “JDA AMENDMENT”). [***] The remaining terms and conditions are more fully set forth in the JDA Amendment.

 

ARTICLE II.

 

Representations and Warranties

 

2.1            REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Except as set forth on the Schedule of Exceptions, attached hereto as EXHIBIT C (“SCHEDULE OF EXCEPTIONS”), or as disclosed in the SEC Documents (as defined in Section 2.1(f)), the Company represents and warrants to the Investor as follows:

 

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(a)            ORGANIZATION AND QUALIFICATION.

 

The Company is a corporation duly organized and existing in good standing under the laws of the jurisdiction in which it is incorporated, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary and where the failure to qualify would have a Material Adverse Effect with respect to the Company.

 

(b)            AUTHORIZATION; ENFORCEMENT.

 

The Company has the requisite corporate power and authority to enter into and perform this Agreement and to issue the Additional Shares in accordance with the terms hereof. The execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Company’s Board of Directors, and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Company. Subject to the Company’s receipt of the Total Purchase Price, this Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by applicable insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by equitable principles of general application.

 

(c)            CAPITALIZATION.

 

The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, of which as of September 13, 2000, 13,085,930 shares were issued and outstanding and 5,000,000 shares of Preferred Stock, none of which is outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. As of September 15, 2000, the Company has: (1) granted options to purchase a total of 4,028,438 shares of Common Stock; (2) issued warrants covering 150,000 shares of Common Stock; (3) not entered into other contracts covering the future issuance of any shares of Common Stock; (4) reserved for issuance 1,167,470 shares of Common Stock under its employee stock option plans; and (5) reserved for issuance 575,603 shares of Common Stock under its employee stock purchase plans. The Company has furnished to the Investor true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (the “CERTIFICATE OF INCORPORATION”) and the Company’s By-laws, as in effect on the date hereof (the “BY-LAWS”).

 

(d)            VALIDITY OF ADDITIONAL SHARES.

 

The Additional Shares, when issued in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable.

 

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(e)            NO CONFLICTS.

 

The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not (i) result in a violation of the Company’s Certificate of Incorporation or By-laws, or (ii) conflict with, or constitute a default (or an event which with material notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, material indenture or material instrument to which the Company is a Party, or result in a violation of any law, rule, regulation, order, judgment or decree applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect on the Company). No action, suit, dispute or proceeding is pending or, to the best knowledge of the Company, threatened against the Company which, if adversely determined, would prevent the Company from carrying out its obligations under this Agreement or which would have a Material Adverse Effect on the Company or on any of the Company’s Intellectual Property (as defined in Section 2(m)(i) hereof). The business of the Company is not being conducted in violation of any law, ordinance or regulation of any Governmental Authority, except for possible violations which either singly or in the aggregate do not and will not have a Material Adverse Effect with respect to the Company. Except as contemplated by this Agreement, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or Governmental Authority in order for it to execute, deliver or perform any of its obligations under this Agreement.

 

(f)             SEC DOCUMENTS, FINANCIAL STATEMENTS.

 

Since December 7, 1999, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all filings with the SEC since such date through the date of this Agreement are hereinafter the “SEC DOCUMENTS”). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and none of the SEC Documents (when read together with all exhibits included therein and financial statement schedules thereto and documents (other than exhibits) incorporated by reference) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial

 

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statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or year-end adjustments or may be condensed or summary statements) and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

(g)            LIABILITIES.

 

The Company has no debt, obligation, duty or liability of any nature including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability, regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with GAAP, consistently applied, and regardless of whether such debts, obligations, duties or liabilities are immediately due and payable (hereinafter, “LIABILITIES”), and the executive officers of the Company have no knowledge that could result in any such debts, obligations, duties or liabilities of the Company except:

 

(i)             Those Liabilities disclosed in the SEC Documents; or

 

(ii)            Those Liabilities reflected or reserved against on the Company’s June 30, 2000 balance sheet (the “INTERIM BALANCE SHEET”) or incurred by the Company in the ordinary course of business since June 30, 2000, none of which individually or in the aggregate had or will have a Material Adverse Effect on the business of the Company or its property, assets, financial condition, earnings, profits or prospects or which would have a material adverse effect on any of the Intellectual Property.

 

(h)            OFFERING.

 

Assuming (i) the accuracy of the representations and warranties of the Investor contained in Section 2.2 hereof and (ii) that the principal office of the Investor is at 1341 Orleans Drive, Sunnyvale, California, the offer, issuance, and sale of the Additional Shares are and will be exempt from the registration and prospectus delivery requirements of the Securities Act and are exempt from the registration, permit, or qualification requirements of all applicable state securities laws.

 

(i)             SUBSIDIARIES.

 

The Company does not presently own or control, directly, or indirectly, any interest in any other corporation, association, partnership, or other business entity.

 

(j)             LITIGATION.

 

There are no civil, criminal or administrative actions, suits, claims, hearings or proceedings pending, initiated or, to the best knowledge of the executive officers of the

 

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Company, threatened, against the Company which, if decided adversely, are reasonably expected to have a Material Adverse Effect with respect to the Company. There are no actions, suits, claims, hearings or proceedings pending, initiated or, to the best knowledge of the Company, threatened, by the Company against any other Person for claims in excess of $500,000.

 

(k)            WATERMARKING TECHNOLOGY.

 

There is no present intention by the Company to depart from its business plan of aggressively developing and marketing its watermarking technology.

 

(l)             ABSENCE OF CERTAIN CHANGES.

 

Since the date of the Company’s most recent quarterly report filed with the SEC (the “AUDIT DATE”), the Company has conducted its businesses only in, and has not engaged in any material transaction other than according to, the ordinary and usual course of its business. Without limiting the generality of the foregoing, since the Audit Date there has not been any damage, destruction or other casualty or loss with respect to any asset or property owned, leased or otherwise used by the Company or any of its subsidiaries, whether or not covered by insurance, which will have a Material Adverse Effect on the Company.

 

(m)           INTELLECTUAL PROPERTY.

 

(i)             The Company is the sole legal and beneficial owner of all intellectual property, proprietary technology and proprietary information held or used in the business of the Company (the “INTELLECTUAL PROPERTY”), except for Intellectual Property that is the subject of any license for Third Party Intellectual Property Rights (a “THIRD PARTY INTELLECTUAL PROPERTY LICENSE”) or commercially available or user licenses. Notwithstanding the foregoing, the Company makes no warranty about third party patents that have not, to the knowledge of the Company’s executive officers, been asserted in writing against the Company as of the date hereof, other than: (A) third party patents that the Company has asked outside legal counsel to analyze to determine whether such patents apply to the Company’s products; (B) any third-party patent for which the Company’s in-house attorneys have prepared a written analysis relating to the relevance of such patent to the Company’s products; (C) third-party patents that have been identified by or brought to the attention to any of the executive officers of the Company (which includes its Chief Technology Officer and the general managers of each of its three lines of business) or the Vice President of Engineering or the Vice President of Corporate Development of the Company as being potentially infringed by the Company’s products or methods, or (D) third party patents that the Company is willfully infringing.

 

(ii)            With the exception of immaterial licenses and agreements entered into in the normal course of business and except for as set forth in the Schedule of Exceptions, [***].

 

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(iii)           The Company is in compliance in all material respects with all Third Party Intellectual Property Licenses.

 

(iv)           The Company is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of obligations hereunder in violation or breach of any contracts as to which the Company licenses or sublicenses the Intellectual Property or any Third Party Intellectual Property Licenses.

 

(v)            The Company has the right to license to third parties the use of the Intellectual Property other than commercially available and user software licenses and other than the Intellectual Property that, in the aggregate, would be immaterial to the Company’s business.

 

(vi)           All registrations and filings relating to the Company’s Intellectual Property are in good standing. All maintenance and renewal fees necessary to preserve the rights of the Company in respect of its Intellectual Property have been made. The registrations and filings relating to the Company’s Intellectual Property are proceeding, and there are no facts of which the executive officers of the Company have knowledge which could significantly undermine those registrations or filings or reduce to a significant extent the scope of protection of any patents arising from such applications beyond that which ordinarily might occur in a patent prosecution proceeding. Notwithstanding the foregoing, the Company only makes the foregoing warranties under this subsection (vi) to the knowledge of the Company’s executive officers as of the Closing as applied to the Third Party Intellectual Property Rights.

 

(vii)          The manufacturing, marketing, distribution or sale of any product currently manufactured, marketed, distributed or sold by, or identified for development by, the Company, any of its subsidiaries, licensees or sublicensees in the countries where the Company has conducted or proposes to conduct such activities does not and would not infringe, induce infringement or contributorily infringe the intellectual property rights throughout the world of any third party (collectively, “THIRD PARTY INTELLECTUAL PROPERTY RIGHTS”), except the Company makes no warranty about third party patents that have not, to the knowledge of the Company’s executive officers, been asserted in writing against the Company as of the date hereof, other than: (A) third party patents that the Company has asked outside legal counsel to analyze to determine whether such patents apply to the Company’s products; (B) any third-party patent for which the Company’s in-house attorneys have prepared a written analysis relating to the relevance of such patent to the Company’s products; (C) third-party patents that have been identified by or brought to the attention to any of the executive officers of the Company or the Vice President of Engineering or the Vice President of Corporate Development of the Company as being potentially infringed by the Company’s products or methods, or (D) third party patents that the Company is willfully infringing.

 

(viii)         Except as set forth in the Schedule of Exceptions, there are no allegations, claims or proceedings instituted or pending which challenge the rights

 

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possessed by the Company to use the Intellectual Property or the validity or effectiveness of the Intellectual Property, including without limitation any interferences, oppositions, cancellations or other contested proceedings.

 

(ix)            There are no outstanding claims or proceedings instituted or pending by any third party challenging the ownership, priority, scope or validity or effectiveness of any Intellectual Property.

 

(x)             There are no Third Party Intellectual Property Rights that would be infringed by the continued practice of any technologies previously used or presently used by the Company, except the Company makes no warranty about third party patents that have not, to the knowledge of the Company’s executive officers, been asserted in writing against the Company as of the date hereof, other than: (A) third party patents that the Company has asked outside legal counsel to analyze to determine whether such patents apply to the Company’s products; (B) any third-party patent for which the Company’s in-house attorneys have prepared a written analysis relating to the relevance of such patent to the Company’s products; (C) third-party patents that have been identified by or brought to the attention to any of the executive officers of the Company or the Vice President of Engineering or the Vice President of Corporate Development of the Company as being potentially infringed by the Company’s products or methods, or (D) third party patents that the Company is willfully infringing.

 

(xi)            Except as set forth in the Schedule of Exceptions, to the knowledge of the executive officers of the Company, there is no unauthorized use, infringement or misappropriation of the Intellectual Property by any third party, including any employee or former employee of the Company or any of its subsidiaries, except for use, infringement or misappropriation that would not have a Material Adverse Effect.

 

(xii)           The Company has taken commercially reasonable measures to maintain the confidentiality of the inventions, trade secrets, formulae, know-how, technical information, research data, research raw data, laboratory notebooks, procedures, designs, proprietary technology and information of the Company, and all other information the value of which to the Company is contingent upon maintenance of the confidentiality thereof.

 

(n)            PAYMENTS.

 

To the knowledge of the executive officers of the Company, none of the current stockholders, directors, officers, representatives, agents or employees of the Company (i) has used or is using any corporate funds for any illegal or improper contributions, gifts, entertainment or other unlawful expenses, (ii) has used or is using any corporate funds for any direct or indirect unlawful or improper payments to any domestic government officials or employees, (iii) has established or maintained, or is maintaining, any unlawful, improper or unrecorded fund of corporate monies or other properties, (iv) has made any false or fictitious entries on the books and records of the Company, (v) has made any bribe, rebate, payoff, influence payment, kickback or other unlawful or

 

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improper payment of any nature using corporate funds or otherwise on behalf of the Company, or (vi) has made any material favor or gift that is not deductible for federal income tax purposes using corporate funds or otherwise on behalf of the Company.

 

(o)            REGISTRATION RIGHTS.

 

The Company has not granted registration rights with respect to the Company’s securities, except as set forth in the Company’s Second Amended and Restated Investor Rights Agreement, dated as of November 2, 1999.

 

(p)            FULL DISCLOSURE.

 

No representation or warranty made by the Company in this Agreement nor any of the exceptions, qualifications or other information set forth in the Schedule of Exceptions (i) contains any statement that is false or misleading with respect to any material fact, or (ii) omits to state any material fact that is necessary to make the statements made in the context in which made, not false or misleading. Notwithstanding anything in the foregoing to the contrary, nothing in this Agreement shall require the Company to provide to the Investor information which (A) the Company must, under confidentiality obligations to third parties, not disclose to the Investor; (B) is protected by the attorney-client privilege of the Company; or (C) is the Company’s attorney work product.

 

(q)            DISCLAIMER.

 

The Company shall not be deemed to have made to the Investor any representation or warranty other than as expressly made by the Company in this Section 2.1. Without limiting the generality of the foregoing, and without prejudice to any express representations and warranties made by the Company in this Section 2.1, the Company makes no representation or warranty to the Investor with regard to any projections, estimates or budgets or as to any matters addressed in other materials previously delivered to or made available to the Investor with respect to future revenues, expenses, expenditures or future results of operations. Within the limits of the foregoing disclaimer, nothing in this Section 2.1(q) shall limit any remedy that may be available to the Investor pursuant to Applicable Law.

 

2.2            REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

 

The Investor hereby makes the following representations and warranties to the Company:

 

(a)            AUTHORIZATION; ENFORCEMENT.

 

The Investor is a corporation duly organized and existing in good standing under the laws of the jurisdiction in which it is incorporated, and has the requisite corporate power and authority to enter into and perform this Agreement. The execution and

 

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delivery of this Agreement by the Investor and the consummation by the Investor of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and no further consent or authorization of the Investor or its Board of Directors or stockholders is required. This Agreement has been duly authorized, executed and delivered by the Investor. Upon receipt of the Additional Shares, this Agreement constitutes a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

(b)            PRESENT OWNERSHIP.

 

Other than the Original Shares and the Additional Shares to be acquired pursuant to this Agreement, the Investor does not Beneficially Own any other securities issued by the Company.

 

(c)            INVESTMENT INTENT.

 

The Investor is acquiring the Additional Shares solely for the purpose of investment within the meaning of 16 C.F.R. Section 802.9. Based upon the Company’s representation in Section 2.1(c) regarding its issued and outstanding stock, as a result of this investment, the Investor and all other entities controlled by the Investor will not own more than 12.5% of the outstanding voting securities of the Company. As used in the preceding sentence, the term “controlled” shall have the meaning set forth in 16 C.F.R. Section 801.1(b). This representation and warranty is made solely for the purpose of determining the applicability to the transactions contemplated by this Agreement of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR ACT”).

 

(d)            NO CONFLICTS.

 

The execution, delivery and performance of this Agreement by the Investor and the consummation by the Investor of the transactions contemplated hereby do not (i) result in a violation of the Investor’s certificate of incorporation or by-laws or (ii) conflict with, or constitute a default (or an event which with material notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, material indenture or material instrument to which the Investor or any of its subsidiaries is a Party, or result in a violation of any law, rule, regulation, order, judgment or decree applicable to the Investor, any of its subsidiaries or by which any property or asset of the Investor or any of its subsidiaries is bound or affected (except in the case of subclause (ii) for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect with respect to the Investor or materially impair the Investor’s ability to perform its obligations under this Agreement). No action, suit, dispute or proceeding is pending or, to the best knowledge of the Investor, threatened against the Investor which, if adversely

 

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determined, would prevent the Investor from carrying out its obligations under this Agreement. Except as contemplated by this Agreement, the Investor is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or to purchase the Additional Shares in accordance with the terms hereof.

 

(e)            INVESTMENT REPRESENTATION.

 

The Investor understands and acknowledges that none of the Additional Shares have been registered or qualified under the federal or applicable state securities laws and the Additional Shares are being sold to and purchased by the Investor in reliance upon applicable exemptions from such registration and qualification requirements. The Investor is an “ACCREDITED INVESTOR” within the meaning of the federal securities laws and acknowledges that it has been furnished with access to, and has been afforded access to, and afforded the opportunity to ask questions and receive answers concerning such information pertaining to the Additional Shares, the Company, and its assets and liabilities as it deemed necessary to decide whether to purchase the Additional Shares pursuant to the terms of this Agreement. The Additional Shares will be acquired by the Investor for investment only and not with a view to any public distribution thereof. The Investor understands that the Additional Shares are “RESTRICTED SECURITIES” within the meaning of the federal securities laws. The Investor agrees that it will not offer to sell or otherwise dispose of any of the Additional Shares in violation of the registration and qualification requirements of the federal and applicable state securities laws. All certificates to be delivered at the Closing evidencing the Additional Shares will contain appropriate legends incorporating any applicable securities laws restrictions.

 

(f)             DISCLAIMER.

 

The Investor shall not be deemed to have made to the Company any representation or warranty other than as expressly made by the Investor in this Section 2.2. Without limiting the generality of the foregoing, and without prejudice to any express representations and warranties made by the Investor in this Section 2.2, the Investor makes no representation or warranty to the Company with regard to any issues related to projections, estimates or budgets or other matters previously delivered to or made available to the Company with respect to future revenues, expenses, expenditures or future results of operations. Nothing in this Section 2.2(f) shall limit any remedy that may be available to Company pursuant to Applicable Law.

 

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ARTICLE III.

 

Covenants

3.1            [RESERVED].

 

3.2            INVESTOR’S STANDSTILL AGREEMENT.

 

(a)            STANDSTILL PERIOD.

 

Subject to subsection (b) below, during the period commencing on the Closing and ending [***] (the “STANDSTILL Period”), the Investor agrees that, except as specifically permitted by this Agreement, the Investor and each of its Affiliates will not, in any manner, directly or indirectly:

 

(i)             acquire, or offer or agree to acquire, any Common Stock of the Company or any of its successors, except by way of stock dividends or other distributions or offerings made available to holders of Common Stock generally, [***];

 

(ii)            disclose any intention, plan or arrangement inconsistent with the foregoing; or

 

(iii)           enter into any discussions, negotiations, arrangements or understanding with any third party with respect to, or aid, abet or encourage any action prohibited by, any of the foregoing.

 

(b)            EXCEPTIONS.

 

(i)             Notwithstanding any provision of this Section 3.2 to the contrary, the provisions of subsection (a) above shall terminate on the following events:

 

(A)           [***]; or

 

(B)            [***].

 

(ii)            Notwithstanding any provision of this Section 3.2 to the contrary, the provisions of subsection (a) above shall not be construed to prohibit or otherwise restrict [***].

 

(c)            NOTICE OF ACQUISITION; COMPLIANCE.

 

So long as the Investor complies with this Agreement, during the Standstill Period, the Investor agrees that within thirty (30) days following the Investor’s acquisition of Company Securities in any open market purchase or other purchase which is specifically permitted by this Agreement, it will give the Company notice of such acquisition. All open market purchases of shares of Company Securities by the Investor and its Affiliates shall be made in compliance with this Agreement and Applicable Laws.

 

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3.3            TRANSFER.

 

(a)            TRANSFER RESTRICTIONS.

 

The Investor shall not, at any time, directly or indirectly, sell or transfer, or offer to sell or transfer, all or any portion of the Additional Shares acquired pursuant to this Agreement, except:

 

(i)             as provided in Section 3.3(b);

 

(ii)            in transactions in compliance with Rule 144 promulgated under the Securities Act, as such rule exists on the date hereof as hereafter amended (or any successor or similar provision governing the resale of the restricted securities); or

 

(iii)           in any other bona fide sales or transfers to any Person pursuant to an exemption from the registration requirements of the Securities Act, but only if:

 

(A)           such Person, together with all of such Person’s Affiliates, certify to the Company that such Person, together with such Person’s Affiliates and associates (as defined in the Exchange Act), would not Beneficially Own or be a member of any Group that Beneficially Owns, after such sale or transfer, Voting Securities representing Beneficial Ownership of in excess of 12.5% of all then outstanding Voting Securities;

 

(B)            the Investor has previously delivered to the Company an opinion of counsel reasonably satisfactory to the Company to the effect that any sale or transfer pursuant to this Section 3.3 is exempt from registration under the Securities Act;

 

(C)            the Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition; and

 

(D)           the transferee(s) agrees by written instrument to be subject to the terms of this Agreement to the same extent as if such transferee(s) was the original investor hereunder.

 

(b)            PERMITTED TRANSFERS.

 

The Investor shall be permitted to sell Company Securities that are registered pursuant to an effective registration statement under the Securities Act under Article IV below.

 

(c)            RECOVERY OF LEGAL FEES.

 

The Company shall be entitled to recover from the Investor all costs and expenses (including, without limitation, court costs and reasonable attorneys fees) incurred by the Company in connection with the enforcement of this Article III against the Investor, or its

 

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Affiliates, and all actions or proceedings, in any way, manner or respect arising out of or relating to the enforcement by the Company of its rights under this Article III.

 

3.4            COMPLIANCE WITH SECTION 13.

 

The Investor shall, promptly and at all times after the date hereof, use Best Efforts to comply with its obligations to make any filings required by Section 13 of the Exchange Act..

 

3.5            DIRECTOR APPOINTMENTS AND ELECTION.

 

At the Closing, the Company shall appoint either John Ryan or William Krepick, whichever the Investor shall specify, to a seat on the Company’s Board of Directors with a term expiring at the Company’s annual shareholders meeting

in calendar year 2003.

 

ARTICLE IV.

 

Registration Rights

 

4.1            LEGEND.

 

(a)            LEGEND.

 

All certificates evidencing the Additional Shares shall bear the following legend, to the extent applicable, which legend will remain on such certificates until such time as the securities represented by such certificates are no longer subject to the legended restrictions, and there is delivered to the Company an opinion of counsel reasonably acceptable to the Company to the effect that such legend is no longer required (at which time new certificates shall be issued at the Company’s expense without such legend):

 

THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE STRATEGIC INVESTMENT AGREEMENT DATED AS OF SEPTEMBER 17, 2000 BETWEEN THE ISSUER AND MACROVISION CORPORATION AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF THE ISSUER. THIS SECURITY WAS SOLD IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR BASED ON OTHER WRITTEN EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE

 

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SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

 

(b)            REMOVAL OF SECURITIES ACT LEGEND.

 

The Company shall be obligated to reissue promptly unlegended certificates at the request of the Investor, if the Investor shall have obtained an opinion of counsel reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend.

 

(c)            REMOVAL OF BLUE SKY LEGEND.

 

Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal.

 

4.2            REGISTRATION ON FORM S-3.

 

If after the earlier of the [***] of the Closing and the occurrence of an event detailed in Section 3.2(b)(i)(B) the Company shall receive from the Investor a written request or requests (such requests shall state the number of Registrable Securities to be disposed of and the intended methods of disposition of such shares by the Investor) that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities, the Company will:

 

(a)            as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of the Investor’s Registrable Securities as are specified in such request; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 4.2:

 

(i)             if the Company shall have already effected two (2) registrations for the Investor under this Section 4.2

 

(ii)            if Form S-3 (or such successor or similar form) is not available for such offering by the Investor; or

 

(iii)           if the Investor, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate offering price to the public of less than $1,000,000; or

 

(iv)           if the Company shall furnish to the Investor a certificate signed by the President or Chief Executive Officer of the Company stating that, in the good faith

 

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judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a single period of not more than ninety (90) days after receipt of the request of the Investor under this Section 4.2 and provided that such right to delay a request shall be exercised by the Company no more than twice in any one-year period; or

 

(v)            during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following, the effective date of any other registration statement filed by the Company under the Securities

Act; or

 

(vi)           if the Compa