Exhibit 10.09
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
This Recapitalization and Stock Purchase Agreement ("Agreement") is made as
of this 31st day of July, 1996 by and between Command Audio Corporation, a
California corporation ("Company"), and Macrovision Corporation, a California
corporation ("Macrovision").
WHEREAS, Macrovision presently holds one million (1,000,000) shares of
Company's Common Stock and five hundred thousand (500,000) shares of Company's
Series A Preferred Stock; and
WHEREAS, Macrovision and Company desire that Macrovision invest an
additional One Million Dollars ($1,000,000) in Company, provide three hundred
fifty thousand (350,000) shares of Macrovision Common Stock to Company pursuant
to a Restricted Stock Acquisition Agreement, and surrender Macrovision's five
hundred thousand (500,000) shares of Company's Series A Preferred Stock in
exchange for six hundred four thousand (604,000) shares of Company's Common
Stock and three hundred ninety-six thousand (396,000) shares of Company's Series
B Preferred Stock upon the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK AND SERIES B PREFERRED STOCK.
(a) PURCHASE. Subject to the terms and conditions of this Agreement,
Company hereby issues and sells to Macrovision and Macrovision purchases from
Company upon the execution of this Agreement six hundred four thousand (604,000)
shares of Common Stock of Company and three hundred ninety-six thousand
(396,000) shares of Series B Preferred Stock of Company (collectively the
"Shares") for the aggregate consideration of One Million Dollars ($1,000,000)
consisting of Six Hundred Forty-Five Thousand Dollars ($645,000) in cash, a
Promissory Note in the form of Exhibit B hereto, and a Security Agreement in the
form of Exhibit C hereto, PLUS three hundred fifty thousand (350,000) shares of
Macrovision Common Stock subject to the terms and conditions of a Restricted
Stock Acquisition Agreement in the form attached hereto as Exhibit A, PLUS the
surrender and delivery to the Company of the five hundred thousand (500,000)
shares of Company's Series A Preferred Stock currently held by Macrovision. The
cash portion of the purchase price, Six Hundred Forty-Five Thousand Dollars
($645,000), shall be allocated to the Company's Common Stock. The cash portion
of such consideration shall be paid, the share certificates for the Series A
Preferred Stock shall be surrendered, and the Promissory Note and the Security
Agreement shall be executed and delivered to Company upon the signing of this
Agreement by both parties hereto.
(b) DELIVERY OF SHARES. The certificates representing the Shares
shall be delivered to Macrovision upon the signing of this Agreement by both
parties hereto, at which time Macrovision shall have all rights of a shareholder
of Company with respect to the Shares.
2. LEGEND ON SHARES. Each certificate representing the Shares shall have
conspicuously printed on it the following legend:
THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF THE VARIOUS STATES, AND HAS BEEN ISSUED AND SOLD PURSUANT TO AN
EXEMPTION FROM THE ACT, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED BY THE HOLDER THEREOF AT ANY TIME, EXCEPT (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, FILED UNDER THE ACT COVERING THE
SECURITY, OR (2) UPON DELIVERY TO COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO COMPANY THAT THIS SECURITY MAY BE TRANSFERRED WITHOUT
REGISTRATION.
3. INVESTMENT REPRESENTATIONS. As an inducement to Company to issue the
Shares to Macrovision, and in order to establish the suitability for Macrovision
of such an investment, Macrovision hereby makes the following representations
and warranties, and authorizes Company to rely upon the same:
(a) INVESTMENT INTENT. Macrovision is aware of and familiar with
Company's business affairs and financial condition and has acquired sufficient
information about Company to reach a knowledgeable and informed decision to
acquire the Shares. Macrovision is acquiring the Shares which are Series B
Preferred Stock for its own account and not with a view to or for sale in
connection with any distribution of such Shares.
(b) RELATIONSHIP. Macrovision has either a preexisting personal or
business relationship with Company or its partners, officers, directors or
controlling persons.
(c) EXPERIENCE. Macrovision and/or its professional advisors who are
not compensated by or affiliated with Company or a selling agent of Company
("Representatives"), if any, have such business or financial experience so that
Macrovision has the capacity to protect its own interests in connection with the
purchase of Shares hereunder.
(d) RISKS. Macrovision understands that an investment in Company is
speculative, that any possible profits therefrom are uncertain, and that
Macrovision must bear the economic risks of the investment in Company for an
indefinite period of time. Macrovision is able to bear these economic risks and
to hold the Shares for an indefinite period.
(e) INFORMATION. Macrovision and its Representatives, if any, have
received all information and data with respect to Company which Macrovision or
its Representatives have requested and have deemed relevant in connection with
an evaluation of the merits and risks of this investment in Company, and do not
desire any further information or data with respect to Company prior to the
purchase of the Shares.
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(f) DOMICILE. Macrovision has its principal place of business in the
State of California.
(g) SECURITIES LAWS. Macrovision understands that the Shares have
not been registered under the Securities Act of 1933, as amended (the "1933
Act"), in reliance on certain exemptions from registration provided by the
Securities and Exchange Commission; and that the Shares have not been registered
under the "blue sky" laws of any state, including that the Shares have not been
qualified or a permit obtained for issuance of securities from the California
Department of Corporations or any other agency of the State of California.
(h) TRANSFERS. Macrovision understands that the Shares which are
Series B Preferred Stock may have to be held indefinitely unless they are
subsequently registered under the 1933 Act and qualified or registered under
other applicable securities laws, rules and regulations, or unless an exemption
from such qualification or registration is available.
(i) LEGENDS. Macrovision understands and agrees that (i) the legend
set forth in Section 2 will be placed on certificate(s) evidencing the Shares
and on certificate(s) issued to permitted transferees; (ii) the stock records of
Company will be noted with respect to such restrictions; (iii) Company will not
be under any obligation to register the Shares or to comply with any exemption
available for sale of the Shares without registration; and (iv) the information
or conditions necessary to permit routine sales of securities of Company under
Rule 144 of the 1933 Act are not now available and it is not likely that they
will become available.
4. RIGHT OF FIRST REFUSAL.
(a) THE RIGHT. Prior to any sale or issuance by Company of any
Equity Securities, Company shall give Macrovision the first right to purchase
all or part of Macrovision's Available Share of such Equity Securities on the
same terms as Company is willing to sell such Equity Securities to potential
investors. For purposes of this first right of purchase, the term "Equity
Securities" means Common Stock of the Company and any other securities having
voting rights in the election of the Company's Board of Directors not contingent
upon default, or any securities evidencing an ownership interest in the Company,
or any securities convertible into or exercisable or exchangeable for any shares
of the foregoing, or any agreement or commitment to issue any of the foregoing,
or any right to acquire any of the foregoing. The term "Available Share" means
(i) nineteen and eight-tenths percent (19.8%) of any offering of Equity
Securities that do not have voting rights, and (ii) the portion of any offering
of Equity Securities having voting rights that, if issued to Macrovision, would
cause Macrovision to have, immediately following the issuance of all such Equity
Securities, stock and other securities representing nineteen and eight-tenths
percent (19.8%) of the number of votes represented by all then issued and
outstanding shares of the Company's Common Stock, shares of the Company's
Preferred Stock and other voting securities of the Company.
(b) NOTICE. Prior to any sale or issuance by Company of any Equity
Securities, Company shall notify Macrovision, in writing, of its intention to
sell and issue such securities, setting forth the general terms under which it
proposes to make such sale.
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Macrovision shall have twenty (20) days after the date of delivery of such
notice (the "Right Notice Date") to notify Company in writing that it elects to
purchase all or a portion of the Equity Securities required to be offered to it.
(c) MACROVISION'S FAILURE TO NOTIFY. If, within twenty (20) days
after the Right of Notice Date, Macrovision does not notify Company that it
desires to purchase all or a portion of Macrovision's Available Share of the
Equity Securities offered to Macrovision in such notice upon the terms and
conditions set forth in such notice, then Company may, during a period of ninety
(90) days following the end of such twenty (20) day period, sell and issue such
Equity Securities with respect to which Macrovision's option was not exercised
at a price and upon terms and conditions no more favorable in any material
respect to other purchasers than those set forth in the notice to Macrovision.
In the event that Company has not sold such Equity Securities to other
purchasers within said ninety (90) day period, Company shall not thereafter
issue or sell any Equity Securities without first offering such securities to
Macrovision in the manner provided above.
(d) PAYMENT. If Macrovision gives Company notice that it desires to
purchase all or part of the Equity Securities offered by Company, then such
purchase will be pursuant to the terms and conditions agreed to by the other
purchasers of such Equity Securities and payment for such Equity Securities
shall be made against delivery of the securities at the executive offices of
Company at the time of the scheduled closing of the purchase with such other
purchasers or, if later, at 2:00 p.m. California time on the later to occur of
the following dates: (a) the third business day following the expiration or
earlier termination of all applicable waiting periods imposed on such purchase
and sale by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, the
Exon-▇▇▇▇▇▇ Amendment to the Omnibus Trade and Competitiveness Act of 1988 and
any successor legislation or other applicable law, and (b) such other date as
Company and Macrovision may agree. Company shall take all such action (except
registration under the Securities Act) as may reasonably be required by any
regulatory authority in connection with the exercise by Macrovision of the right
to purchase Equity Securities as set forth in this Section 4.
(e) REDUCED OFFERING. Notwithstanding any other provisions of this
Section 4 and any notice Macrovision may have given of its intention to purchase
shares hereunder, Macrovision will have no obligation to purchase any Equity
Securities unless other purchasers are purchasing all of the Equity Securities
covered by Company's notice to Macrovision under Section 4(b) (the "Offered
Equity Securities"), other than Macrovision's Available Share. If less than all
of the Offered Equity Securities are sold by Company, Macrovision will be
entitled to purchase at any closing a lesser amount of such Equity Securities
than the amount of which Macrovision had notified Company previously, such
lesser amount being not less than the same percentage portion of the smaller
offering than the portion of which Macrovision notified Company with respect to
the larger offering.
(f) LIMITATION. The right of refusal contained in this Section 4
shall not apply to the following issuances by Company of Shares of Company's
Common Stock:
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(i) shares of Common Stock issued or issuable to employees,
officers, directors and consultants pursuant to stock options or stock purchase
plans or agreements, or the issuance to such persons of options or warrants to
purchase such shares, provided that each such issuance is approved unanimously
by Company's Board of Directors.
(ii) shares of Common Stock issued upon conversion of the
Series B Preferred Shares.
(iii) shares of Common Stock issued or issuable upon a stock
dividend, stock split, recapitalization or the like.
(iv) shares of Common Stock issued pursuant to the acquisition of
another corporation by Company by merger, purchase of all or substantially all
of the assets, or other reorganization.
(v) shares of Common Stock issued in an initial public offering.
5. ATTORNEYS' FEES. In the event either party shall commence any action
or proceeding against the other party by reason of any breach or claimed breach
in the performance of any of the terms or conditions of this Agreement or to
seek a judicial declaration of rights under this Agreement, the prevailing party
in such action shall be entitled to recover reasonable attorneys' fees and costs
from the non-prevailing party.
6. CONTROLLING LAW. This Agreement is entered into and to be performed
in California, and it shall be interpreted and enforced under, and all questions
relating thereto shall be determined in accordance with the laws of the State of
California.
7. WAIVER. No waiver of any provision of this Agreement shall be deemed
or shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
8. PARTIAL INVALIDITY. The illegality, invalidity or unenforceability of
any provision of this Agreement under the law of any jurisdiction shall not
affect its legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
9. ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and as a complete and exclusive statement of
the terms of their agreement with respect to its subject matter. This Agreement
may not be contradicted by evidence of any prior or contemporaneous agreement,
oral or written, and this Agreement may not be explained or supplemented by
evidence of consistent additional terms. This Agreement supersedes, merges, and
voids all prior representations, statements, negotiations, understandings,
proposed agreements, and other agreements, written or oral, relating to its
subject matter.
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10. AMENDMENTS. This Agreement may not be amended, modified or
supplemented except by a writing executed by both parties.
11. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each an original but all one and the same instrument.
12. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the successors and assigns of Company and any successors and permitted assigns
of Macrovision, and shall be binding upon the successors and assigns of Company
and of Macrovision.
13. NOTICES. Any notice or other communication required or permitted
under this Agreement shall be in writing and either personally delivered or
deposited in the first class United States mail, prepaid, certified or
registered, return receipt requested, addressed as follows:
(a) If to Company:
Command Audio Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Street Tower
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) If to Macrovision:
Macrovision Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
with a copy to:
Wise & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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Notice shall be deemed to have been given upon receipt. Either party may change
its address by giving written notice of such change to the other party in the
manner provided in this Section.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
MACROVISION CORPORATION COMMAND AUDIO CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. Krepick By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------- ---------------------------
Title: President Title: President
------------------------ ------------------------
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Exhibit A to
Recapitalization and Stock Purchase Agreement
MACROVISION CORPORATION
RESTRICTED STOCK ACQUISITION AGREEMENT
This Restricted Stock Acquisition Agreement ("Agreement") is made as of
this 31st day of July, 1996 by and between Macrovision Corporation, a California
corporation ("Macrovision"), and Command Audio Corporation, a California
corporation ("CAC").
WHEREAS, Macrovision desires to issue and transfer shares of its Common
Stock to CAC, and CAC desires to acquire such shares upon the terms and
conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. ACQUISITION OF COMMON STOCK.
1.1 ACQUISITION. Subject to the terms and conditions of this
Agreement, Macrovision hereby agrees to issue and transfer to CAC, and CAC
agrees to acquire from Macrovision upon the execution of this Agreement, three
hundred fifty thousand (350,000) shares of Common Stock of Macrovision
(individually a "Share" or collectively the "Shares") in partial consideration
for common stock and Series B preferred stock of CAC to be received by
Macrovision pursuant to the Recapitalization and Stock Purchase Agreement
entered into between CAC and Macrovision to which the form of this Agreement is
attached as EXHIBIT A.
1.2 DELIVERY OF SHARES. The certificates representing the Shares
shall be held in escrow by Wise & ▇▇▇▇▇▇▇ LLP, attorneys for Macrovision, as
provided below.
2. UNVESTED SHARES. For purposes of this Agreement, the term "Unvested
Shares" initially shall mean all three hundred fifty thousand (350,000) of the
Shares being issued by Macrovision to CAC pursuant to this Agreement. Subject
to Section 3 below, the Shares shall become "Vested Shares", upon the later of
(a) the effective date of a first underwritten registration of an offering of
the Common Stock of Macrovision pursuant to the Securities Act of 1933, as
amended (the "1933 Act"), and (b) the occurrence of the following:
2.1 RECEIVER PROTOTYPE. As to one hundred thousand (100,000) Shares,
if and when CAC completes the development of a working prototype receiver having
the following characteristics and functionality:
(a) Tunable to an FM radio signal.
(b) Receives a digitized stream of voice-coded and ASCII text
program material (collectively, "files") from a subcarrier frequency of a
broadcast FM radio signal.
(c) Stores files in random access "Flash" memory.
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(d) Recalls files from memory based on user commands issued by
either keypad or voice.
(e) Converts voice-coded files to audible form and demonstrates
acceptable audio quality at not more than 4.8 kilobits per second.
(f) Converts ASCII text files to audible form (synthesized
speech).
(g) Presents converted files through an imbedded speaker, a
headphone ▇▇▇▇ or a separate radio (using a built-in FM transmitter).
(h) Has basic data base navigation functions, such as pause,
continue, skip, return to beginning, go to end, and save.
2.2 MANUFACTURING ALLIANCE. As to an additional one hundred fifty
thousand (150,000) Shares, if and when the conditions of Section 2.1 have been
met and CAC enters into a written agreement or agreements with one or more
leading consumer electronics manufacturer(s) and distributor(s), which
agreements are approved by CAC's Board of Directors and satisfy CAC's current
business plan requirements for a manufacturing and distribution alliance,
providing to such manufacturer(s) and distributor(s) the right and obligation to
manufacture and sell receivers under one or more nationally-recognized consumer
electronics brand name(s).
2.3 CONTENT ALLIANCE. As to an additional one hundred thousand
(100,000) Shares, if and when the conditions of Section 2.1 have been met and
CAC enters into written agreements, approved by CAC's Board of Directors, with
four (4) nationally-recognized providers of audio programming under which
program content is made available to CAC for broadcast to customers.
3. SURRENDER OF UNVESTED SHARES. Notwithstanding any provision contained
in this Agreement to the contrary, CAC shall surrender and transfer the Unvested
Shares to Macrovision if any of the following circumstances occurs ("Surrender
Events"):
3.1 NOT VESTED BY DATE SPECIFIED. Such Shares, for any reason,
continue to be Unvested Shares on December 31, 1998; or such Shares, for any
reason, continue to be Unvested Shares on November 30, 1996, and a first
underwritten registration of the offering of the Common Stock of Macrovision
pursuant to the 1933 Act has not become effective on or before November 30,
1996.
3.2 ADDITIONAL EVENTS. Any one or more of the following specified
events occurs:
(a) The United States Patent Office determines that no patent is
issuable to CAC with respect to any one or more of the patent applications
listed on EXHIBIT A attached hereto, or the United States Patent Office or a
court of competent jurisdiction
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determines that any one or more of the patents listed on EXHIBIT A attached
hereto or that issue with respect the patent applications listed on EXHIBIT A
attached hereto is invalid.
(b) A major change occurs which presents a clear, material, near
term threat to the continued viability of CAC's business, as evidenced by
actions of CAC's Board of Directors indicating a significant departure from
CAC's current business plan.
4. NO EFFECT ON OTHER TRANSACTIONS. The surrender of Unvested Shares
pursuant to Section 3 above shall not affect in any way the rights and
obligations of Macrovision and CAC under the Recapitalization and Stock Purchase
Agreement and/or under any other agreement or agreements between the parties
hereto.
5. SHAREHOLDER RIGHTS; PROXY FOR UNVESTED SHARES. Until such time as
Macrovision actually exercises its Repurchase Option under this Agreement, CAC
shall have all the rights of a shareholder of Macrovision with respect to the
Shares, except as set forth in Section 6 and except that CAC shall provide
Macrovision an irrevocable proxy with respect to Unvested Shares and CAC shall
have no rights to receive any dividend distributions whether in cash or property
(other than any dividend paid in shares of Macrovision stock) with respect to
any Unvested Shares. CAC hereby assigns to Macrovision any and all rights that
CAC otherwise might have to receive such dividend distributions with respect to
Unvested Shares. CAC hereby grants to, and executes in favor of, Macrovision's
corporate secretary an irrevocable proxy to vote or give written consent with
respect to, or to abstain from voting or consenting, the Unvested Shares, which
irrevocable proxy is coupled with an interest in such Unvested Shares as
specified in this Agreement.
6. RESTRICTION ON TRANSFER. CAC shall not sell, transfer, pledge,
hypothecate or otherwise dispose of any Unvested Shares.
7. ESCROW. As security for the faithful performance of the terms of this
Agreement and to ensure the availability for delivery of CAC's Shares upon
exercise of the Repurchase Option herein provided for, CAC agrees to deliver to
and deposit with Wise & ▇▇▇▇▇▇▇ LLP, attorneys for Macrovision, or such other
person designated by Macrovision, as escrow agent in this transaction ("Escrow
Agent"), two stock assignments duly endorsed (with date and number of Shares
left blank) in the form attached hereto as EXHIBIT B, together with the
certificate or certificates evidencing the Shares. Said documents are to be
held by the Escrow Agent and delivered by the Escrow Agent pursuant to the Joint
Escrow Instructions of Macrovision and CAC set forth in EXHIBIT C attached
hereto and incorporated by this reference; said instructions shall also be
delivered to the Escrow Agent upon the execution hereof.
8. STOCK SPLITS, ETC. If, from time to time during the term of this
Agreement:
(a) there is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or amount of or on
any of the Shares; or
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(b) there is any consolidation, merger or sale of all, or
substantially all, of the assets of Macrovision;
then, in such event, any and all new, substituted or additional securities or
other property, if any, to which CAC is entitled by reason of his ownership of
the Shares shall be immediately subject to this Agreement and be included in the
term the "Shares" for all purposes with the same force and effect as the Shares
presently subject to the vesting provisions and other terms of this Agreement.
9. LEGENDS ON SHARES. Each certificate representing the Shares shall
have conspicuously printed on it the following legends, among other legends:
THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF THE VARIOUS STATES, AND HAS BEEN ISSUED AND SOLD PURSUANT TO AN
EXEMPTION FROM THE ACT, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED BY THE HOLDER THEREOF AT ANY TIME, EXCEPT (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, FILED UNDER THE ACT COVERING THE
SECURITY, OR (2) UPON DELIVERY TO COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO COMPANY THAT THIS SECURITY MAY BE TRANSFERRED WITHOUT
REGISTRATION.
SALE, TRANSFER, OR HYPOTHECATION OF THIS SECURITY IS RESTRICTED BY THE
PROVISIONS OF A RESTRICTED STOCK ACQUISITION AGREEMENT ENTERED INTO BY
COMPANY AND THIS SHAREHOLDER (INCLUDING RIGHTS OF FIRST REFUSAL), A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF COMPANY, AND ALL OF THE
PROVISIONS OF WHICH ARE INCORPORATED HEREIN.
10. INVESTMENT REPRESENTATIONS. As an inducement to Macrovision to issue
the Shares to CAC, and in order to establish the suitability for CAC of such an
investment, CAC hereby makes the following representations and warranties, and
authorizes Macrovision to rely upon the same:
(a) INVESTMENT INTENT. CAC is aware of and familiar with
Macrovision's business affairs and financial condition and has acquired
sufficient information about Macrovision to reach a knowledgeable and informed
decision to acquire the Shares. CAC is acquiring the Shares for its own account
and not with a view to or for sale in connection with any distribution of the
Shares.
(b) RELATIONSHIP. CAC has either a preexisting personal or business
relationship with Macrovision or its partners, officers, directors or
controlling persons.
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(c) EXPERIENCE. CAC and/or its professional advisors who are not
compensated by or affiliated with Macrovision or a selling agent of Macrovision
("Representatives"), if any, have such business or financial experience so that
CAC has the capacity to protect its own interests in connection with the
purchase of Shares hereunder.
(d) RISKS. CAC understands that an investment in Macrovision is
speculative, that any possible profits therefrom are uncertain, and that CAC
must bear the economic risks of the investment in Macrovision for an indefinite
period of time. CAC is able to bear these economic risks and to hold the Shares
for an indefinite period. CAC understands that there may never become effective
an underwritten registration of the offering of the Common Stock of Macrovision
pursuant to the 1933 Act.
(e) INFORMATION. CAC and its Representatives, if any, have received
all information and data with respect to Macrovision which CAC or its
Representatives have requested and have deemed relevant in connection with an
evaluation of the merits and risks of this investment in Macrovision, and do not
desire any further information or data with respect to Macrovision prior to the
purchase of the Shares.
(f) DOMICILE. CAC has its principal place of business in the State
of California, and does not have any present intention of moving its principal
place of business from California.
(g) SECURITIES LAWS. CAC understands that the Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), in
reliance on certain exemptions from registration provided by the Securities and
Exchange Commission; and that the Shares have not been registered under the
"blue sky" laws of any state, including that the Shares have not been qualified
or a permit obtained for issuance of securities from the California Department
of Corporations or any other agency of the State of California.
(h) TRANSFERS. CAC understands that the Shares may have to be held
indefinitely unless they are subsequently registered under the 1933 Act and
qualified or registered under other applicable securities laws, rules and
regulations, or unless an exemption from such qualification or registration is
available.
(i) LEGENDS. CAC understands and agrees that (i) the legends set
forth in Section 9 will be placed on certificate(s) evidencing the Shares and on
certificate(s) issued to permitted transferees; (ii) the stock records of
Macrovision will be noted with respect to such restrictions; (iii) Macrovision
will not be under any obligation to register the Shares or to comply with any
exemption available for sale of the Shares without registration; and (iv) the
information or conditions necessary to permit routine sales of securities of
Macrovision under Rule 144 of the 1933 Act are not now available and it is
possible that they never will become available.
(j) FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
CAC's representations set forth above, CAC further agrees that it shall in no
event make any disposition of all or any portion of the Shares, unless and
until:
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(i) (A) There is then in effect a Registration Statement under
the 1933 Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or (B) (1) CAC shall have notified
Macrovision of the proposed disposition and shall have furnished Macrovision
with a detailed statement of the circumstances surrounding the proposed
disposition, (2) CAC shall have furnished Macrovision with an opinion of CAC's
counsel to the effect that such disposition will not require registration of
such Shares under the 1933 Act, and (3) such opinion of CAC's counsel shall have
been reasonably concurred in by counsel for Macrovision and Macrovision shall
have advised CAC of such concurrence;
(ii) The Shares proposed to be transferred are Vested Shares; and
(iii) Macrovision has declined to exercise its right of first
refusal as set forth in Section 11 below.
11. RIGHT OF FIRST REFUSAL FOR VESTED SHARES.
(a) GRANT. Macrovision is hereby granted the right of first refusal
with respect to any proposed sale or other transfer of any Vested Shares. For
purposes of this Section 11, the term "transfer" shall include any assignment,
pledge, encumbrance or other disposition of the Vested Shares.
(b) NOTICE OF INTENDED DISPOSITION. In the event CAC desires to
accept a bona fide third-party offer to purchase or otherwise acquire any or all
of the Vested Shares (the shares subject to such offer to be hereinafter called
the "Target Shares"), CAC shall promptly (i) deliver to Macrovision written
notice of the offer and the basic terms and conditions thereof, including the
proposed purchase price, and (ii) provide satisfactory proof that the
disposition of the Target Shares to the third-party offeror would not be in
contravention of the representations made by CAC in Section 10 above.
(c) EXERCISE OF RIGHT. Macrovision (or its assignees) shall, for a
period of twenty (20) days following receipt of the notice of intended
disposition under Section 11(b) above, have the right to repurchase any or all
of the Target Shares specified in the notice of intended disposition, at
Macrovision's election either (i) for a cash purchase price of Eight Dollars and
Fifty-Seven Cents ($8.57) per Share (which amount shall be appropriately
adjusted if any event described in Section 8 occurs) or (ii) upon substantially
the same terms and conditions specified in such notice. Such right shall be
exercisable by written notice given to CAC prior to the expiration of the twenty
(20) day exercise period. If such right is exercised with respect to all the
Target Shares specified in the notice of intended disposition, Macrovision (or
its assignees) shall effect the repurchase of the Target Shares, including
payment of the purchase price, not more than five (5) business days thereafter,
except as provided below; and at such time CAC shall deliver to Macrovision the
certificates representing the Target Shares to be repurchased, each certificate
to be properly endorsed for transfer. To the extent any of the Target Shares
are at any time held in escrow under Section 7 above, the certificates for such
shares shall automatically be released from escrow and surrendered to
Macrovision for cancellation. The
6
Target Shares so purchased shall thereupon be canceled and cease to be issued
and outstanding shares of Macrovision's Common Stock. However, should the
purchase price specified in the notice of intended disposition be payable in
property other than cash or evidences of indebtedness, Macrovision (or its
assignees) shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If CAC and Macrovision (or its
assignees) cannot agree on such cash value within ten (10) days after
Macrovision's receipt of the notice of intended disposition, the valuation shall
be made by an appraiser of recognized standing selected by CAC and Macrovision
(or its assignees) or, if they cannot agree on an appraiser within twenty (20)
days after Macrovision's receipt of such notice, each shall select an appraiser
of recognized standing and the two appraisers shall designate a third appraiser
of recognized standing, whose appraisal shall be determinative of such value.
The closing of Macrovision's purchase of stock under this Section 11 shall be
held on the LATER of (i) the fifth business day following Macrovision's (or its
assignees') exercise of its repurchase rights hereunder or (ii) if a valuation
of any property is required, the fifteenth day after such valuation is made.
(d) NON-EXERCISE OF RIGHT. In the event Macrovision does not give
CAC written notice of its intent to exercise its right of first refusal within
twenty (20) days following the date of Macrovision's receipt of the notice of
intended disposition under Section 11(b), CAC shall, for a period of thirty (30)
days thereafter, have the right to sell or otherwise dispose of the Target
Shares upon terms and conditions (including the purchase price) no more
favorable to the third party purchaser than those specified in the notice of
intended disposition given to Macrovision; PROVIDED, HOWEVER, that any such sale
or disposition must not be effected in contravention of the representations made
by CAC in Section 10 above. To the extent any of the Target Shares are at the
time held in escrow under Section 7 above, the certificates for such shares
shall automatically be released from escrow and surrendered to CAC. The third-
party purchaser shall acquire the Target Shares free and clear of all the terms
and provisions of this Agreement. In the event CAC does not sell or otherwise
dispose of the Target Shares within the specified thirty (30) day period,
Macrovision's right of first refusal shall continue to be applicable to any
subsequent disposition of the Target Shares by CAC.
(e) RESTRICTIVE LEGEND. Until such time as Macrovision's right of
first refusal lapses and ceases to have effect pursuant to the provisions of
this Section 11, the stock certificate(s) for the Shares shall be endorsed with
the following additional legend:
"The shares represented by this certificate may not be sold,
assigned, transferred, pledged or encumbered, except in conformity with the
terms of the Restricted Stock Acquisition Agreement between Macrovision and the
registered holder of the shares (or his predecessor in interest). Such
agreement grants certain rights of first refusal to Macrovision (or its assigns)
upon the sale, assignment, transfer, pledge or encumbrance of the shares. A
copy of such agreement is on file at the principal office of Macrovision."
12. VOID TRANSFERS. CAC, as a condition to purchasing the Shares, agrees
not to sell, transfer or pledge any Shares subject to the restriction on
transfer described in Section 6, other than in the manner expressly permitted in
this Agreement, and any such sale, transfer or pledge of the Shares in violation
of this Agreement shall be void. Macrovision shall not be required
7
(a) to transfer on its books any Shares which shall have been sold or
transferred in violation of this Agreement, or (b) to treat as the owner of such
Shares, or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such Shares shall have been so transferred.
13. "MARKET STAND-OFF". In connection with the first underwritten
registration of the offering of the Common Stock of Macrovision, Macrovision (or
a representative of the underwriters) may require that CAC not sell or otherwise
transfer or dispose of any Shares not registered under the 1933 Act during a
period (not to exceed one hundred eighty (180) days) following the effective
date of the registration statement of Macrovision filed under the 1933 Act,
provided that the principal shareholders, or the officers and directors, of
Macrovision enter into similar agreements. Additionally, for a period of one
(1) year following the expiration of any such "market stand-off" period (or if
no such "market stand-off" period is required, for a period of one (1) year
following the effective date of the registration statement for the Macrovision's
first underwritten offering of Common Stock), CAC shall not sell in any calendar
week Common Stock representing more than the greater of (a) one-quarter of one
percent (1/4%) of the Macrovision's outstanding Common Stock and (b) one-quarter
of the average weekly reported trading volume for the Macrovision's Common Stock
during the four calendar weeks immediately preceding the week in which the CAC's
sale is to occur.
14. ATTORNEYS' FEES. In the event either party shall commence any action
or proceeding against the other party by reason of any breach or claimed breach
in the performance of any of the terms or conditions of this Agreement or to
seek a judicial declaration of rights under this Agreement, the prevailing party
in such action shall be entitled to recover reasonable attorneys' fees and costs
from the non-prevailing party.
15. CONTROLLING LAW. This Agreement is entered into and to be performed
in California, and it shall be interpreted and enforced under, and all questions
relating thereto shall be determined in accordance with the laws of the State of
California.
16. WAIVER. No waiver of any provision of this Agreement shall be deemed
or shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
17. PARTIAL INVALIDITY. The illegality, invalidity or unenforceability of
any provision of this Agreement under the law of any jurisdiction shall not
affect its legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
18. ENTIRE AGREEMENT. This Agreement, together with its Attachments and
Exhibits, is intended by the parties as a final expression of their agreement
and as a complete and exclusive statement of the terms of their agreement with
respect to its subject matter. This Agreement may not be contradicted by
evidence of any prior or contemporaneous agreement, oral or written, and this
Agreement may not be explained or supplemented by evidence of consistent
additional terms. This Agreement supersedes, merges, and voids all prior
representations, statements,
8
negotiations, understandings, proposed agreements, and other agreements, written
or oral, relating to its subject matter.
19. AMENDMENTS. This Agreement may not be amended, modified or
supplemented except by a writing executed by both parties.
20. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each an original but all one and the same instrument.
21. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the successors and assigns of Macrovision and any successors and permitted
assigns of CAC, and shall be binding upon the successors and assigns of
Macrovision and of CAC.
22. NOTICES. Any notice or other communication required or permitted
under this Agreement shall be in writing and either personally delivered or
deposited in the first class United States mail, prepaid, certified or
registered, return receipt requested, addressed as follows:
(a) If to Macrovision:
Macrovision Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
with a copy to:
Wise & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) If to CAC:
Command Audio Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Notice shall be deemed to have been given upon receipt. Either party may
change its address by giving written notice of such change to the other party in
the manner provided in this Section.
23. PLEDGE OF VESTED SHARES. Notwithstanding the provisions of Sections 7
and 11(a) above, CAC shall have the right to pledge Vested Shares for the sole
purpose of securing a loan; provided, however, that any pledgee of such Vested
Shares must first agree in writing (i) to be
9
bound by the provisions of Section 11 above with respect to any attempt by the
pledgee to sell or otherwise transfer the ownership of any of the Vested Shares,
and (ii) that no registration rights with respect to any of the Vested Shares
shall be deemed transferred to or exercisable by the pledgee as a result of the
pledge of such Vested Shares. Upon receipt by Macrovision of such written
agreement from the intended pledgee, Macrovision shall instruct the Escrow Agent
to release Vested Shares to CAC for the sole purpose of facilitating a pledge of
such Vested Shares as set forth in this Section 23, and then only for so long as
such Vested Shares are required for such pledge.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
COMMAND AUDIO CORPORATION: MACROVISION CORPORATION
By: By:
---------------------------- ----------------------------
Title: Title:
------------------------- -------------------------
10
EXHIBITS TO THIS AGREEMENT:
Exhibit A - List of Significant Patents and Patent Applications
Exhibit B - Assignments Separate from Certificate
Exhibit C - Joint Escrow Instructions
11
EXHIBIT A
List of Significant Patents and Patent Applications
EXHIBIT B
Assignments Separate From Certificate
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
_____________________ _____________________ (________) shares of the Common
Stock of MACROVISION CORPORATION, a California corporation, standing in the
undersigned's name on the books of said corporation represented by Certificate
No. ____ herewith, and does hereby irrevocably constitute and appoint
____________________________, as attorney-in-fact, to transfer the said stock on
the books of the said corporation with full power of substitution in the
premises.
Dated:
------------ --------------------------------
(signature)
Name:
---------------------------
(print)
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
___________________ _________________ (_________) shares of the Common Stock of
MACROVISION CORPORATION, a California corporation, standing in the undersigned's
name on the books of said corporation represented by Certificate No. ____
herewith, and does hereby irrevocably constitute and appoint
_________________________, as attorney-in-fact, to transfer the said stock on
the books of the said corporation with full power of substitution in the
premises.
Dated:
------------ --------------------------------
(signature)
Name:
---------------------------
(print)
EXHIBIT C
Joint Escrow Instructions
JOINT ESCROW INSTRUCTIONS
These Joint Escrow Instructions are entered into as of July 31, 1996.
RECITALS
MACROVISION CORPORATION, a California corporation ("Macrovision"), and the
undersigned purchaser of stock ("CAC") desire to appoint Wise & ▇▇▇▇▇▇▇ LLP, a
Limited Liability Partnership including a Professional Corporation, or any such
other person so designated by Macrovision as their agent ("Agent") with respect
to certain certificate(s) evidencing shares of Macrovision's common stock
purchased by CAC pursuant to the Restricted Stock Acquisition Agreement (the
"Agreement"), between Macrovision and CAC dated the date hereof, to which a copy
of these Joint Escrow Instructions is attached as EXHIBIT C.
ESCROW INSTRUCTIONS
Macrovision and CAC hereby authorize and direct Agent to hold the
documents and certificate(s) delivered to Agent pursuant to these Escrow
Instructions and to take the following actions with respect thereto, and
Macrovision and CAC hereby agree as follows:
1. CAC hereby delivers and/or agrees to deliver to Agent CAC's
certificate(s) evidencing the stock purchased under the Agreement ("Stock") and
two (2) Assignments Separate from Certificate executed in blank. CAC
irrevocably authorizes Macrovision to deposit with Agent any certificates
evidencing shares of Macrovision's stock acquired by CAC pursuant to the
Agreement.
2. The provisions of these Escrow Instructions shall apply for so long
as the Stock is "Unvested Shares" as defined in the Agreement, and thereafter
until the right of first refusal set forth in Section 11 of the Agreement
lapses. This escrow shall terminate as to all or any portion of the Stock when
it has become "Vested Shares" as defined in the Agreement and the right of first
refusal set forth in Section 11 of the Agreement no longer applies to it.
3. In the event that a "Surrender Event" as defined in the Agreement
shall occur, Macrovision shall give to CAC and Agent a written notice (the
"Surrender Notice") which states (a) the number of Unvested Shares remaining,
and (b) specifies the Surrender Event that has occurred. CAC and Macrovision
hereby irrevocably authorize and direct Agent to transfer and deliver the
Unvested Shares as specified in the Surrender Notice, and upon Agent's receipt
of the Surrender Notice, Agent shall deliver to Macrovision the certificate(s)
evidencing the shares of Stock to be transferred to Macrovision.
4. Macrovision may at any time release some or all of the Stock from the
provisions of these Escrow Instructions by giving written notice to CAC and
Agent directing delivery to CAC of the shares of Stock to be released.
5. To facilitate the exercise of Macrovision's rights upon any Surrender
Event and the performance of these instructions, CAC does hereby constitute and
appoint Agent as CAC's attorney-in-fact and agent for the term of this escrow to
execute with respect to such securities all stock certificates, stock
assignments or other instruments which shall be necessary or appropriate to make
such securities negotiable and complete any transaction herein contemplated,
including Macrovision's exercise of its right of first refusal. CAC understands
that such appointment is coupled with an interest and is irrevocable. Subject
to the provisions of these Escrow Instructions and the restrictions of Sections
5 and 6 of the Agreement, CAC shall exercise all rights and privileges of a
stockholder of Macrovision while the Stock is held by Agent; provided, however,
CAC may not sell, transfer, dispose of or in any manner encumber any shares of
the Stock while such shares of Stock are held by Agent hereunder.
6. If at the time of termination of this escrow, Agent shall have in its
possession any documents, securities, or other property belonging to CAC Agent
shall deliver all of same to CAC and shall be discharged of all further
obligations hereunder.
7. Agent's duties hereunder may be altered, amended, modified or revoked
only by a writing signed by Macrovision and CAC, and approved by Agent.
8. Agent shall not be personally liable for any act Agent may do or omit
to do hereunder as escrow agent, agent for Macrovision, or attorney-in-fact for
CAC while acting in good faith and in the exercise of Agent's own good judgment,
and any act done or omitted by Agent pursuant to the advice of Agent's own
attorneys shall be conclusive evidence of such good faith.
9. Agent is hereby expressly authorized to disregard any and all
warnings by any of the parties hereto or by any other person, firm, corporation,
or other entity, excepting only orders or process of courts of law, and is
hereby expressly authorized to comply with and obey orders, judgments or decrees
of any court. In the event Agent obeys or complies with any such order, judgment
or decree of any court, Agent shall not be liable to any of the parties hereto
or to any other person, firm, corporation, or other entity by reason of such
compliance notwithstanding that any such order, judgment or decree shall be
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
10. Agent shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver any agreements or documents called for by the Agreement or
any documents or papers deposited or called for hereunder.
11. Agent shall not be liable for the barring of any rights under the
Statute of Limitations with respect to these Escrow Instructions or any
documents deposited with Agent.
12. Agent may resign from its duties hereunder at any time upon written
notice to Macrovision and CAC and delivery of all documents and certificates
held in this escrow to the successor escrow agent. If a successor escrow agent
has not been appointed within thirty (30)
C2
days, Agent may deliver all such documents and certificates to Macrovision, at
which time, all further responsibilities and duties of Agent shall cease.
13. If prior to the termination of these Escrow Instructions Agent shall
resign or otherwise cease to operate as escrow agent, a successor escrow agent
shall be designated by the Board of Directors of Macrovision. The Board of
Directors of Macrovision may, at any time, substitute another party in Agent's
place as escrow agent hereunder, and CAC hereby expressly accepts such
substitution.
14. Any notices required or permitted hereunder shall be in writing and
shall be deemed effectively given if delivered personally upon receipt, if
mailed by registered or certified mail (return receipt requested), first-class
postage prepaid, or transferred via telex or facsimile, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Macrovision, to:
MACROVISION CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
(b) if to CAC, to:
COMMAND AUDIO CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
(c) if to Agent, to:
Wise & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
15. The provisions of these Escrow Instructions shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to the conflict of
law principles thereof.
C3
17. By signing these Escrow Instructions, Agent becomes a party hereby
only for the purpose of said Escrow Instructions; Agent does not become a party
to the Agreement.
18. Agent shall be entitled to reimbursement by Macrovision for
reasonable costs and expenses incurred in connection with the performance of the
services provided for herein.
19. These Escrow Instructions contain the entire understanding of
Macrovision and CAC, and there are no other contracts, agreements,
understandings, representations, warranties, or covenants with respect to the
subject matter contained herein.
IN WITNESS WHEREOF, Macrovision and CAC have executed these Escrow
Instructions as of the date first above written.
COMPANY:
MACROVISION CORPORATION
By:
-----------------------------
▇▇▇▇▇▇▇ ▇. Krepick, President
PURCHASER:
COMMAND AUDIO CORPORATION
By:
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
ESCROW AGENT:
WISE & ▇▇▇▇▇▇▇ LLP
By:
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Partner
C4
Exhibit B
PROMISSORY NOTE
$355,000.00 July 31, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, MACROVISION CORPORATION ("Promisor") promises to pay to
Command Audio Corporation ("Promisee") or order, at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other place as Promisee or holder hereof may
from time to time designate, the principal sum of Three Hundred Fifty-Five
Thousand Dollars ($355,000.00).
1. INTEREST RATE. Interest shall accrue on the unpaid principal portion
of this Note at the rate of four percent (4%) per annum, simple interest.
2. PAYMENT SCHEDULE. Principal and accrued interest shall be due and
payable on September 30, 1996.
3. PREPAYMENT. Promisor shall have the right to prepay all or any part
of the unpaid balance hereof at any time, without penalty.
4. SECURITY AGREEMENT. Promisor has entered into a Security Agreement of
even date herewith to secure the payment of all amounts due hereunder.
5. WAIVERS. Promisor waives any right of demand, presentment, notice of
nonpayment, protest or notice of dishonor.
6. AMENDMENT OF NOTE. This Note may be terminated or amended only by
prior written consent of Promisee.
7. SEVERABILITY. If for any reason any of the provisions of this Note
shall be determined to be inoperative or invalid, the validity and effect of the
other provisions hereof shall not be affected thereby and such other provisions
shall remain in full force and effect.
8. ATTORNEYS FEES. In the event an action is brought by Promisee to
enforce or to interpret the terms of this Note, the prevailing party in such
action shall be entitled to its reasonable attorney's fees in addition to any
other relief to which that party may be entitled.
9. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
the conflict of law principles thereof.
MACROVISION CORPORATION
By:
---------------------------
------------------------------
(Printed Name)
------------------------------
(Printed Title)
Exhibit C
SECURITY AGREEMENT
This Security Agreement is made as of July 31, 1996, by and between
Macrovision Corporation, a California corporation ("Macrovision"), and Command
Audio Corporation, a California corporation ("CAC").
1. SECURITY INTEREST GRANTED BY MACROVISION. Macrovision hereby creates
and grants to CAC a present and continuing security interest in the collateral
defined in Section 2 below (the "Collateral") to secure the payment of all of
all amounts due to CAC under the Promissory Note (the "Note") issued by CAC as
of even date herewith (the "Obligations").
2. COLLATERAL. The Collateral subject to the security interest created
and granted by this Security Agreement consists of the following: all inventory,
chattel paper, accounts receivable, contract rights, equipment, general
intangibles, and fixtures, whether now existing or hereafter acquired.
3. PRIORITY. To the extent that CAC has duly perfected its security
interest hereunder, Macrovision will not hereafter create or permit the creation
of any security interest in the Collateral, in whole or in part, prior to the
security interest created hereby, except a purchase money security interest in
replacements or accessions to the Collateral.
4. RIGHT OF POSSESSION. Subject to the terms and conditions of this
Agreement, unless and until an Event of Default (as defined in Section 6 hereof)
occurs, Macrovision will be entitled to the use, possession and enjoyment of the
Collateral.
5. COVENANTS WITH RESPECT TO THE COLLATERAL. During the term of this
Agreement:
(a) PRESERVATION. Macrovision will take all reasonable steps to
preserve and protect the Collateral and the value of the same.
(b) TAXES. Macrovision will pay all taxes on the Collateral as they
become due.
(c) FILINGS. Macrovision at its own expense will execute and deliver
such instruments and documents, and cooperate fully in the filing thereof, as
CAC reasonably requests, to evidence, perfect or preserve CAC's interest
hereunder, including without limitation this Agreement, financing statements and
similar documents; provided CAC will prepare and furnish such instruments and at
CAC's expense.
6. EVENTS OF DEFAULT. An Event of Default, as used, herein, will occur if
any or all of the following remain uncured after fifteen (15) days' written
notice thereof to Macrovision:
(a) If Macrovision fails to make any payment under the Note when due;
or
(b) If Macrovision is in breach of any warranty, statement, promise,
term or condition contained herein or attempts to transfer any of its rights in
the Collateral, in whole or in part, whether voluntarily or by operation of law,
in violation of this Security Agreement.
7. REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default that
is not waived in writing by CAC, CAC will be entitled to proceed to enforce its
rights, including but not limited to all of the rights and remedies available to
a secured party upon default under the California Commercial Code with respect
to the collateral, including the right to possess, own, sell, lease and
otherwise dispose of the Collateral or any portion thereof at public or private
sale on commercially reasonable terms and upon twenty (20) days' prior written
notice to Macrovision or such longer period as may be required by law. CAC
also will have the right, at any time upon the occurrence and during the
continuance of an Event of Default, and upon written notice to Macrovision of
its intention to do so, to notify the account debtors under any accounts
receivable with respect to the Collateral ("Accounts Receivable") of the
assignment of such Accounts Receivable to CAC and to direct such account debtors
to make payment of all amounts due or to become due directly to CAC and, upon
such notification and at the expense of Macrovision, to enforce collection of
any such Accounts Receivable, and to adjust, settle or compromise the amount
or, payment thereof, in the same manner and to the same extent as Macrovision
might have done. Except as provided above, Macrovision may continue to collect
at its own expense, all amounts due or to become due to it, and in connection
with such collections, at its own expense may take such action as it reasonably
may deem necessary or advisable to enforce such collection. CAC will have all
other rights and remedies provided herein and all other rights and remedies
available at law or in equity.
8. TERMINATION. This Security Agreement and the security interest
created hereby will terminate only upon termination of the Note or on
Macrovision's discharge in full of the Obligations. Promptly upon termination
of this Security Agreement, CAC will execute and cooperate fully in the filing
of any termination statements reasonably requested by Macrovision.
9. WAIVER. Time and each of the terms, conditions and covenants of this
Security Agreement are declared to be of the essence, and acceptance by CAC of
any payment or performance after it is due will not constitute a waiver by CAC
of any provision of this Security Agreement or of the Note. No waiver of any
existing default will be a waiver of any subsequent default, and all of CAC's
rights under this Agreement are cumulative and not alternative and are in
addition to those otherwise available hereunder, at law or in equity.
10. ASSIGNMENT AND DELEGATION. No party may assign its rights, delegate
its duties or transfer the Collateral in its possession hereunder, except as
explicitly permitted hereby, without the prior written consent of the other
party, and any attempt to do so without that consent will be void.
Macrovision will not unreasonably withhold its consent to such assignment,
delegation or transfer by CAC at any time after the occurrence of an Event
Default.
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11. GOVERNING LAW. This Security Agreement will be governed by and
construed in accordance with the laws of the State of California.
12. SEVERABILITY. If any provision of this Security Agreement or the
application of any such provision to either party is held by a court of
competent jurisdiction to be unenforceable or contrary to law, such provision
will be enforced to the maximum extent possible, and the other provisions of
this Security Agreement will remain in full force and effect.
13. AMENDMENT. No amendment of any provision of this Security Agreement
will be effective unless evidenced by a writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the date first above written.
MACROVISION CORPORATION
By:
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-------------------------
(Printed Name)
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(Printed Title)
COMMAND AUDIO CORPORATION
By:
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(Printed Name)
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(Printed Title)
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