<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1996
REGISTRATION NO. 333-4739
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
WIRED VENTURES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2721 94-3241954
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
520 THIRD STREET, FOURTH FLOOR
SAN FRANCISCO, CA 94107
(415) 276-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------
JEFFREY SIMON
CHIEF FINANCIAL OFFICER
WIRED VENTURES, INC.
520 THIRD STREET, FOURTH FLOOR
SAN FRANCISCO, CA 94107
(415) 276-5000
[email protected]
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------------
COPIES TO:
<TABLE>
<S> <C>
KENNETH L. GUERNSEY ROBERT T. CLARKSON
JODIE M. BOURDET KENNETH M. SIEGEL
ISOBEL A. JONES TAMARA G. MATTISON
BRADLEY P. MACMILLIN WILSON, SONSINI, GOODRICH & ROSATI, P.C.
COOLEY GODWARD LLP 650 PAGE MILL ROAD
ONE MARITIME PLAZA, 20TH FLOOR PALO ALTO, CA 94304
SAN FRANCISCO, CA 94111 (415) 493-9300
(415) 693-2000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement number for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the shares of Common Stock being registered. All the amounts shown are
estimates except for the SEC registration fee, the NASD filing fee and the
Nasdaq National Market application fee.
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<TABLE>
<S> <C>
SEC Registration fee...................................... $ 28,254
NASD filing fee........................................... 8,694
Nasdaq National Market application fee.................... 17,500
Blue Sky qualification fee and expenses................... 7,500
Printing and engraving expenses........................... 200,000
Legal fees and expenses................................... 300,000
Accounting fees and expenses.............................. 350,000
Transfer agent and registrar fees......................... 10,000
Directors and officers insurance premium.................. 250,000
Miscellaneous............................................. 128,052
----------
Total........................................... $1,300,000
----------
</TABLE>
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ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law authorizes a court to award
or a corporation's Board of Directors to grant indemnification to directors and
officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. The Registrant's Restated
Certificate and Restated Bylaws provide for mandatory indemnification of its
directors and permissive indemnification of officers, employees and other agents
to the maximum extent permitted by the Delaware General Corporation Law. The
Registrant has entered into indemnification agreements with its directors and
officers, a form of which is attached as Exhibit 10.1 hereto and incorporated
herein by reference. The indemnification agreements provide the Registrant's
directors with further indemnification to the maximum extent permitted by the
Delaware General Corporation Law. The Company is also in the process of
obtaining directors and officers insurance to insure its directors and officers
against certain liabilities under the Securities Laws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since its incorporation in March 1996, the Registrant has sold and issued the
following unregistered securities:
(a) On May 28, 1996, the Company issued 30,500,000 shares of its Series
A Preferred Stock to the equity owners of Wired Holdings Inc., Wired USA
Ltd., Wired Ventures, Ltd. and HotWired Ventures LLC, including Louis
Rossetto, Jane Metcalfe, Advance Magazine Publishers, Inc., Jackson Living
Trust dtd July 19, 1992, Nicholas Negroponte, H. William Jesse, Jr.,
Lawrence Wilkinson, Andrew Anker, Rex Ishibashi and Jeffrey Simon in
exchange for their interests therein.
(b) On May 28, 1996, the Company issued one share of Common Stock to
each of Jane Metcalfe and Louis Rossetto for $10.00 in cash per share.
(c) On May 28, 1996, the Company issued 1,250,000 shares of its Series B
Preferred Stock to 10 investors, including Advance Magazine Publishers,
Inc., for $10.00 in cash per share.
(d) On September 25, 1996, the Company issued one share of Common Stock
to each of Louis Rossetto and Jane Metcalfe for $5.00 in cash per share.
II-1
<PAGE> 3
All of such shares of Preferred Stock and Common Stock were subject to, but do
not reflect, a one-for-two reverse stock split to be effected in October 1996.
The securities described in the transaction described in paragraph (a) above
were exempt from registration under the Securities Act by virtue of Section
3(a)(10) thereunder in that they were issued in exchange for bona fide
outstanding securities and the terms and conditions of such issuance and
exchange were approved, after a hearing upon the fairness of such terms and
conditions upon which all persons to whom the Registrant proposed to issue
securities in such exchange had the right to appear, by the California
Commissioner of Corporations.
The sale and issuance of securities in the transactions described in paragraphs
(b) and (c) were deemed to be exempt from registration under the Securities Act
by virtue of Section 4(2) or Regulation D promulgated thereunder as transactions
not involving a public offering. The purchasers in each case represented their
intention to acquire the securities for investment only and not with a view to
the distribution thereof. Appropriate legends are affixed to the stock
certificates issued in such transactions. All recipients either received
adequate information about the Registrant or had access, through employment or
other relationships, to such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ ---------------------
<C> <S>
1.1a* Form of Underwriting Agreement (U.S. Version)
1.1b* Form of Underwriting Agreement (International Version)
</TABLE>
<TABLE>
<C> <S>
2.1* Form of Exchange Agreement, dated as of May 28, 1996, among the
Registrant and the holders of its Series A Preferred Stock
3.1* Amended and Restated Certificate of Incorporation of the Registrant
3.2* Bylaws of the Registrant
3.3* Amended and Restated Certificate of Incorporation to be effective upon
completion of the offering
4.1 Reference is made to Exhibits 3.1 through 3.3
4.2* Specimen stock certificate
4.3* Form of Investor Rights Agreement, dated May 28, 1996, among the
Registrant and certain of its stockholders
5.1* Opinion of Cooley Godward LLP
10.1* Form of Indemnification Agreement between the Registrant and each of
its executive officers and directors
10.2* 1996 Equity Incentive Plan, together with forms of agreements to be
used thereunder
10.3* 1996 Non-Employee Director Stock Option Plan, together with form of
agreement to be used thereunder
10.4a* Letter of Agreement, Loan Note and Related Guaranty, dated as of July
22, 1995, among the Registrant, Wired World LLC, Wired New York, Wired
UK, Guardian Media Group, Karadean Limited, Guardian Magazines Limited
and Guardian Newspapers Limited
10.4b* Agreement, Substitution Loan Note and Substitution Guaranty, dated as
of June 28, 1996, among the Registrant, Wired World LLC, Wired New
York, Wired UK, Guardian Media Group, Karadean Limited, Guardian
Magazines Limited and Guardian Newspapers Limited
10.5+* License Agreement, dated as of May 30, 1994, between the Registrant and
Dohosha Publishing Co., Ltd.
10.6+ Letter of Intent, dated as of April 5, 1996, between HotWired Ventures
LLC and Inktomi Corporation
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ ---------------------
<C> <S>
10.7+* Agreement, dated as of November 5, 1992, as amended on August 2, 1994,
April 11, 1995, and May 22, 1996, between the Registrant and
International Circulation Distributors - The Hearst Corporation
10.8+* Master Agreement for Neodata Services, dated as of June 20, 1994,
between the Registrant and Neodata Services, Inc.
10.9* Real Property Lease, dated as of May 20, 1994, between the Registrant
and 500 Third Street Associates
10.10* Real Property Lease, dated as of November 15, 1995, between the
Registrant and GORR Partners, LLC
10.11+ Letter Agreement, dated as of June 14, 1996, between the Registrant and
MSNBC Cable Channel, L.L.C.
10.12* Employment Agreement, dated as of October 12, 1995, between HotWired
Ventures LLC and Jeffrey Simon, as supplemented by Letter Agreement,
dated June 20, 1996, between the Registrant and Jeffrey Simon
10.13* Real Property Lease, dated as of June 21, 1996, between HotWired, Inc.
and GORR Partners, LLC
11.1 Statement re: Computation of Pro Forma Net Loss Per Share
16.1* Letter from Coopers & Lybrand LLC
21.1* Subsidiaries of the Registrant
23.1 Report on Financial Statement Schedule and Consent of Independent
Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to Page II-5.
27.1 Financial Data Schedule
</TABLE>
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* Previously filed as an exhibit to the Registration Statement.
+ Confidential treatment requested.
(b) FINANCIAL STATEMENT SCHEDULES.
Schedule II -- Valuation and Qualifying Accounts -- Page S-1.
All other schedules are omitted because they are not required, they are not
applicable or the information is already included in the financial statements or
notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the provisions described in Item 14 or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 5
The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of the
registration statement as of the time it was declared effective, and (2) for the
purpose of determining any liability under the Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this Amendment No. 3 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City and County of
San Francisco, State of California,
on the 22nd day of October, 1996.
WIRED VENTURES, INC.
By: Louis Rossetto*
- ---------------------------------------------
Louis Rossetto
Chief Executive Officer and Chair
of the Board
(Principal Executive Officer)
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Louis
Rossetto and Jeff Simon as his true and lawful attorney-in-fact and agent, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration Statement
on Form S-1, and to any registration statement filed under Rule 462 under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 3
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
-------- --- ----
<S> <C> <C>
Louis Rossetto* Chief Executive October 22, 1996
- -------------------------------------- Officer and Chair of
Louis Rossetto the Board (Principal
Executive Officer)
/s/ Jeffrey Simon Chief Financial October 22, 1996
- -------------------------------------- Officer and Secretary
Jeffrey Simon (Principal Financial
and Accounting
Officer)
Jane Metcalfe* President and Director October 22, 1996
- --------------------------------------
Jane Metcalfe
H. William Jesse, Jr.* Director October 22, 1996
- --------------------------------------
H. William Jesse, Jr.
Lawrence Director October 22, 1996
Wilkinson*
- --------------------------------------
Lawrence Wilkinson
Scott Director October 22, 1996
Sassa*
- --------------------------------------
Scott Sassa
*By: /s/ Jeffrey Simon
- --------------------------------------
Jeffrey Simon, Attorney-in-Fact
</TABLE>
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II-5
<PAGE> 7
EXHIBIT INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- --------------------- ----------
<C> <S> <C>
1.1a* Form of Underwriting Agreement (U.S. Version)
1.1b* Form of Underwriting Agreement (International Version)
2.1* Form of Exchange Agreement, dated as of May 28, 1996, among
the Registrant and the holders of its Series A Preferred Stock
</TABLE>
<TABLE>
<C> <S> <C>
3.1* Amended and Restated Certificate of Incorporation of the
Registrant
3.2* Bylaws of the Registrant
3.3* Amended and Restated Certificate of Incorporation to be
effective upon completion of the offering
4.1 Reference is made to Exhibits 3.1 through 3.3
4.2* Specimen stock certificate
4.3* Form of Investor Rights Agreement, dated May 28, 1996, among
the Registrant and certain of its stockholders
5.1* Opinion of Cooley Godward LLP
10.1* Form of Indemnification Agreement between the Registrant and
each of its executive officers and directors
10.2* 1996 Equity Incentive Plan, together with forms of agreements
to be used thereunder
10.3* 1996 Non-Employee Director Stock Option Plan, together with
form of agreement to be used thereunder
10.4a* Letter of Agreement, Loan Note and Related Guaranty, dated as
of July 22, 1995, among the Registrant, Wired World LLC, Wired
New York, Wired UK, Guardian Media Group, Karadean Limited,
Guardian Magazines Limited and Guardian Newspapers Limited
10.4b* Agreement, Substitution Loan Note and Substitution Guaranty,
dated as of June 28, 1996, among the Registrant, Wired World
LLC, Wired New York, Wired UK, Guardian Media Group, Karadean
Limited, Guardian Magazines Limited and Guardian Newspapers
Limited
10.5+* License Agreement, dated as of May 30, 1994, between the
Registrant and Dohosha Publishing Co., Ltd.
10.6+ Letter of Intent, dated as of April 5, 1996, between HotWired
Ventures LLC and Inktomi Corporation
10.7+* Agreement, dated as of November 5, 1992, as amended on August
2, 1994, April 11, 1995, and May 22, 1996, between the
Registrant and International Circulation Distributors - The
Hearst Corporation
10.8+* Master Agreement for Neodata Services, dated as of June 20,
1994, between the Registrant and Neodata Services, Inc.
10.9* Real Property Lease, dated as of May 20, 1994, between the
Registrant and 500 Third Street Associates
10.10* Real Property Lease, dated as of November 15, 1995, between
HotWired, Inc. and GORR Partners, LLC
10.11+ Letter Agreement, dated as of June 14, 1996, between the
Registrant and MSNBC Cable Channel, L.L.C.
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- --------------------- ----------
<C> <S> <C>
10.12* Employment Agreement, dated as of October 12, 1995, between
HotWired Ventures LLC and Jeffrey Simon, as supplemented by
Letter Agreement dated June 20, 1996, between Registrant and
Jeffrey Simon
10.13* Real Property Lease, dated as of June 21, 1996, between the
Registrant and GORR Partners, LLC
11.1 Statement re: Computation of Pro Forma Net Loss Per Share
16.1* Letter from Coopers & Lybrand LLC
21.1* Subsidiaries of the Registrant
23.1 Report on Financial Statement Schedule and Consent of
Independent Auditors
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1
24.1 Power of Attorney. Reference is made to Page II-5
27.1 Financial Data Schedule
</TABLE>
- ---------------
* Previously filed as an exhibit to the Registration Statement.
+ Confidential treatment requested.
<PAGE> 9
SCHEDULE II
WIRED VENTURES, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING CHARGED TO END
ACCOUNT DESCRIPTION OF PERIOD OPERATIONS DEDUCTIONS OF PERIOD
----------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Magazine advertising
Allowance for doubtful accounts.... $ -- $ 168 $ 22 $ 146
Newsstand and single copy
Allowance for newsstand returns.... -- 767 367 400
-------------------------------------------------------
$ -- $ 935 $ 389 $ 546
-------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994
Magazine advertising
Allowance for doubtful accounts.... $ 146 $ 482 $ 165 $ 463
Online advertising
Allowance for doubtful accounts.... -- 15 -- 15
Newsstand and single copy
Allowance for newsstand returns.... 400 1,480 336 1,544
-------------------------------------------------------
$ 546 $1,977 $ 501 $2,022
-------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995
Magazine advertising
Allowance for doubtful accounts.... $ 463 $ 304 $ -- $ 767
Online advertising
Allowance for doubtful accounts.... 15 8 -- 23
Newsstand and single copy
Allowance for newsstand returns.... 1,544 2,030 1,800 1,774
-------------------------------------------------------
$2,022 $2,342 $1,800 $2,564
-------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1996
Magazine advertising
Allowance for doubtful accounts.... $ 767 $ 184 $ 306 $ 645
Online advertising
Allowance for doubtful accounts.... 23 7 7 23
Newsstand and single copy
Allowance for doubtful accounts.... 1,774 3,727 3,623 1,878
-------------------------------------------------------
$2,564 $3,918 $3,936 $2,546
-------------------------------------------------------
</TABLE>
S-1
<PAGE> 1
EXHIBIT 10.6
LETTER OF INTENT
April 5, 1996
David A. Brewer
President
INKTOMI CORPORATION
2168 Shattuck Avenue, Suite 210
Berkeley, CA 94704
RE: SEARCH ENGINE SERVICE
This Letter of Intent is intended to summarize the principal terms of a
strategic relationship ("Strategic Partnership") between Inktomi Corporation
("Inktomi") and HotWired Ventures LLC ("HotWired"), pursuant to which the
parties will develop, implement, market and maintain an Internet
webcrawler/indexer search engine service, tentatively to be marketed as
"HotSearch, powered by Inktomi" (the "Search Engine"). The principal terms of
this Strategic Partnership are as follows:
1. INKTOMI'S DEVELOPMENT AND SUPPORT OBLIGATIONS. Inktomi, in
consultation with HotWired, will complete development of and provide its web
crawler/indexer search engine technology, consisting of Inktomi's proprietary
and in-licensed systems architecture and software and will implement the same
for the Search Engine (collectively, as implemented, the "Search Engine
Technology"), and will provide the Search Engine in accordance with the
Milestone Schedule set forth on Exhibit A attached hereto (the "Milestone
Schedule"). The Search Engine will perform the minimum functions set forth on
Exhibit B attached hereto, and Inktomi will develop and incorporate into the
Search Engine additional features and functions as mutually agreed by the
parties. During the term of the Strategic Partnership, Inktomi will provide
adequate ongoing technical support, maintenance and upgrades of the Search
Engine Technology, including second-line technical support to HotWired personnel
and Search Engine users. In addition, Inktomi will provide all required data
transmission capacity (bandwidth), disk storage and server capacity to host the
Search Engine. The code and other proprietary technology that are developed or
acquired by or on behalf of Inktomi and that comprise Inktomi's advertising
server shall be included in the definition of Inktomi's "Search Engine
Technology" hereunder.
2. HOTWIRED'S DEVELOPMENT AND SUPPORT OBLIGATIONS. HotWired, in
consultation with Inktomi, will develop and provide all editorial, graphics and
interface design for the Search Engine (collectively, the "Interface"), in
accordance with the Milestone Schedule. The interface design of the Search
Engine will be subject to the final approval of both parties. HotWired, in
consultation with Inktomi, will develop all online revenue streams and implement
all marketing and advertising sales for the Search Engine, in accordance with
the Milestone Schedule and subject to the marketing budget to be approved in
advance by the parties (the "Marketing Budget"). HotWired will commit the
minimum dedicated marketing/advertising personnel to the
1.
<PAGE> 2
Search Engine as set forth on Exhibit B. Inktomi will not take any marketing
actions relating to the Search Engine (excluding customer relations activities)
without prior notification to HotWired. HotWired will use its reasonable best
efforts to obtain bartered advertising and other benefits for the Search Engine.
In addition, HotWired will provide adequate first-line customer support services
for the Search Engine.
3. MUTUAL EXCLUSIVITY.
(a) During the term of the Strategic Partnership, unless
Inktomi has an uncured breach of its performance obligations, without Inktomi's
prior written consent, HotWired will not sell or resell advertising for or
market, or enter into any arrangement to sell or resell advertising for or
market, any third party's search engine service except for * and (iii) search
engine services to be offered following the termination, if any, of the
Strategic Partnership.
(b) During the term of the Strategic Partnership, unless
HotWired has an uncured breach of its performance obligations, without
HotWired's prior written consent, Inktomi will not provide, sell or resell, or
enter into any arrangement to provide, sell or resell, any search engine service
except for * and (v) search engine services to be offered following the
termination, if any, of the Strategic Partnership.
(c) With respect to any search engine service described in
Section 3(a)(i) or 3(b)(iii), HotWired or Inktomi, as applicable, will first
notify and confer with the other party regarding such other party's potential
participation in such service at least fifteen (15) days prior to entering into
any binding arrangement with any third party regarding the same.
4. INTELLECTUAL PROPERTY AND ATTRIBUTION.
(a) Inktomi and its licensors will retain all right, title and
interest in and to the Search Engine Technology, including all modifications,
fixes and upgrades thereto and derivative works thereof, even if ideas or
suggestions made by HotWired are included into subsequent versions of the Search
Engine Technology. HotWired will retain all right, title and
- ---------------
* Confidential Treatment Requested
2.
<PAGE> 3
interest in and to the Interface, the code and other proprietary technology that
are developed or acquired by or on behalf of HotWired and that comprise
HotWired's advertising server (which is complementary to Inktomi's advertising
server), the Search Engine's domain name registration and the trademarks, trade
names, service marks and related logos (collectively, "Marks") used in
connection with the Search Engine (excluding Inktomi's proprietary Marks).
(b) Inktomi and HotWired will jointly own the
usage/demographic data generated by the Search Engine (the "Data") excluding Web
index data which will remain the sole property of Inktomi. Inktomi will provide
HotWired with copies of the logs generated by the Search Engine upon request.
(c) Each of Inktomi and HotWired will license to the other
party on a royalty-free, non-exclusive basis the right to use applicable Marks
for the purpose of fulfilling such party's obligations with respect to the
Search Engine.
(d) Both Inktomi and HotWired will receive equal credit and
attribution for developing and delivering the Search Engine. Inktomi will
receive specific attribution and copyright credit for the development of the
Search Engine Technology. The Interface and Marks used in connection with the
Search Engine will receive proper HotWired copyright credit or trademark
attribution, as applicable.
5. CROSS-MARKETING OPPORTUNITIES. HotWired and Inktomi will participate
in cross- marketing opportunities as appropriate. The goal of these arrangements
will be for each party to provide comparable services to the other such that no
direct compensation will be required. Such arrangements will include, without
limitation, the following:
(a) The Search Engine will include graphical links to the
HotWired World Wide Web site(s) and vice versa.
(b) The Search Engine will include graphical links to the
Inktomi World Wide Web site and vice versa.
6. REVENUE AND COST SPLITTING.
(a) HotWired will pay Inktomi royalties for the Search Engine
Technology and related support services as follows: (i) for each of the first
three months following the commercial Launch of the Search Engine (as defined in
the Milestone Schedule), a royalty equal to * of the net revenues; and (ii) for
each month thereafter, a royalty equal to * of the net revenues, provided,
however, that if the total net revenues for any such month are equal to less
than * , then Inktomi shall instead receive a royalty equal to the first *
thereof (or such lesser amount, if the net revenues for such month are equal to
less than * ) and HotWired shall retain the remainder for such month. "Net
revenues" shall mean gross advertising and/or subscription revenues actually
received, less agency discounts (typically 15%) and frequency discounts actually
payable, but before any commissions payable to HotWired's advertising sales
representatives. Revenues will include any
- ---------------
* Confidential Treatment Requested.
3.
<PAGE> 4
nonmonetary revenues received from barter transactions. In such event, the
corresponding royalties paid to Inktomi hereunder will be paid in kind. HotWired
will pay Inktomi royalties in arrears on a monthly basis.
(b) In the event that either party generates revenue from the
direct sale, rental or repurposing of any of the jointly-owned Data generated by
the Search Engine (e.g., a syndicated research study based in whole or in part
on such Data), then the net revenues received by such party that are allocable
to the contribution of the Search Engine Data to such endeavor will be shared
between the parties as follows: * to Inktomi and * to HotWired.
(c) Costs payable to third parties and which have been
approved by the parties pursuant to the Marketing Budget or otherwise (which
costs will exclude staff and overhead costs of the parties) will be paid
directly by HotWired and split between the parties as follows: Upon receipt of
any third party invoice, HotWired will invoice Inktomi for * of such costs, and
Inktomi will remit such payment to HotWired not less than ten (10) business days
prior to the stated third party due date on the invoice by check or wire
transfer to HotWired. In the event that any such amount due from Inktomi is more
than thirty (30) days past due, such amount will be deducted from royalties due
and payable to Inktomi.
(d) HotWired will keep complete and accurate records
pertaining to the revenue streams generated by the Search Engine. Such records
will be maintained for a two-year period following the year in which any
payments pertaining to such revenue streams were due. Inktomi will have the
right to examine HotWired's records from time to time but no more than once
annually to determine the correctness of any payment made under the Strategic
Partnership. Such examination shall be conducted at reasonable times during
HotWired's normal business hours and upon at least ten (10) days' advance notice
and in a manner so as not to interfere unreasonably with the conduct of
HotWired's business. If any such examination indicates that HotWired has
underpaid Inktomi by more than five percent (5%) of the aggregate payments due
for the period subject to such examination, Hotwired will reimburse Inktomi for
the cost of such examination.
7. TERM AND TERMINATION.
(a) The Strategic Partnership will initially have a five
(5) year term whose measurement will commence upon execution hereof, provided
that either party may propose changes to the terms of the Strategic Partnership
annually if it (i) notifies the other party at least thirty (30) days in
advance of any anniversary date and (ii) delivers a proposal to the other party
outlining each of its proposed changes to the Strategic Partnership no later
than twenty (20) days in advance of such anniversary date. If the parties do
not reach agreement with respect to the proposed changes by the close of
business on such anniversary date, then, at the option of the notifying party,
the Strategic Partnership may be terminated, such termination to be effective
ninety (90) days following such anniversary date.
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4.
<PAGE> 5
(b) Either party may terminate the Strategic Partnership for
convenience (i.e. for any reason or no reason) during the term upon six (6)
months' prior written notice to the other party, subject to the provisions of
Section 8 below.
(c) Either party may terminate the Strategic Partnership upon
the material breach by the other party (without limitation, failure to meet a
milestone set forth on the Milestone Schedule will constitute a material
breach), if such breach remains uncured for thirty (30) days following written
notice to the breaching party.
8. POST-TERMINATION RIGHTS.
(a) Following any termination of the Strategic Partnership by
Inktomi for convenience subsequent to which Inktomi or its successor provides,
sells or resells a search engine substantially similar (i.e. in targeted market
and power/scope) to the Search Engine or following termination by either party
or its successor in connection with any acquisition of Inktomi or the Search
Engine Technology by an unaffiliated third party with a search engine business,
Inktomi or its successor will pay to HotWired an amount equal to the greater of:
(i) * of the Net Revenues generated by the Search
Engine during its last month of regular operations prior to the effective date
of termination; or
(ii) * of the Net Revenues generated by such
subsequent search engine service for each of the first three (3) months of
operation following the effective date of termination.
(b) Following any termination of the Strategic Partnership by
HotWired for convenience or following termination by either party or its
successor in connection with any acquisition of HotWired or HotWired's
advertising business by an unaffiliated third party, subsequent to which
HotWired or its successor sells or resells advertising for a search engine
substantially similar (i.e. in targeted market and power/scope) to the Search
Engine, HotWired or its successor will pay to Inktomi an amount equal to the
greater of:
(i) * of the Net Revenues generated by the Search
Engine during its last month of regular operations prior to the effective date
of termination; or
(ii) * of the Net Revenues generated by such
subsequent search engine service for each of the first three (3) months of
operation following the effective date of termination.
(c) Amounts payable by either party under this Section 8 will
be payable in one lump sum within one hundred twenty (120) days following the
effective date of termination.
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5.
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9. ADDITIONAL TERMS.
(a) Inktomi will provide to HotWired the information and Data
necessary to generate weekly reports, or the actual weekly reports (format and
content to be determined by the parties), for distribution to the Search
Engine's sponsors on all user traffic to the Search Engine. Both parties agree
to engage a third party auditor to verify the usage of the Search Engine and to
state usage in audited terms for advertisers, if necessary.
(b) HotWired and Inktomi currently have and will have no
relationship as agent and principal under the Strategic Partnership, including
without limitation in relation to advertising contracts. On all advertising
contracts entered into in connection with the Search Engine, HotWired will
reserve the right to terminate such contracts and pay back any sums on a pro
rata basis with Inktomi's approval, which will not be unreasonably withheld.
(i) "Confidential Information" of a party as used in
this Letter of Intent and any definitive Strategic Partnership agreements based
hereon shall mean any and all technical and non-technical information including
patent, copyright, trade secret, and proprietary information, techniques,
sketches, drawings, models, inventions, know-how, processed, apparatus,
equipment, algorithms, software programs, software source documents, and formula
related to the current, future and proposed products and services of such party,
and includes, without limitation, its respective information concerning
research, experimental work, development, design details and specifications,
engineering, financial information, procurement requirements, purchasing
manufacturing, customer and advertiser lists, business forecasts, sales and
merchandising and marketing plans and information. "Confidential Information"
also includes proprietary or confidential information of any third party that
may disclose such information to a party in the course of such party's business.
(ii) The parties agree that they will not make use
of, disseminate or in any way disclose Confidential Information of the other
party to any person, firm or business, except to the extent necessary to fulfill
the purposes contemplated by this Letter of Intent and any definitive Strategic
Partnership agreements based hereon and any purpose that other party may
hereafter authorize in writing. The parties agree that they shall treat all
Confidential Information of the other party with the same degree of care as they
accord to their own Confidential Information and the parties represent that they
exercise reasonable care to protect their own Confidential Information. Each
party will immediately give notice to the other party of any unauthorized use or
disclosure of such other party's Confidential Information. The parties agree to
assist each other in remedying any such unauthorized use or disclosure of the
other party's Confidential Information.
(iii) A party's obligations under paragraph (ii) with
respect to any portion of the other party's Confidential Information shall
terminate when such party can document that: (A) it was in the public domain at
or subsequent to the time it was communicated to the receiving party by the
other party through no fault of the receiving party; (B) it was rightfully in
the receiving party's possession free of any obligation of confidence at or
subsequent to the time it was communicated to the receiving party by the other
party; (C) it was
6.
<PAGE> 7
developed by employees or agents of the receiving party independently of and
without reference to any information communicated between the parties; or (D)
the communication was in response to a valid order by a court or other
governmental body, was otherwise required by law, or was necessary to establish
the rights of either party under this Letter of Intent or under any definitive
Strategic Partnership agreements based hereon. These confidentiality obligations
will remain in effect for a period beginning upon execution hereof and ending
three (3) years following any termination of the Strategic Partnership.
(iv) The parties agree that all documents and other tangible
objects containing or representing Confidential Information of a party and all
copies thereof which are in the possession of the other party shall be and
remain the property of the disclosing party and upon any termination of the
Strategic Partnership between the parties shall be returned to such disclosing
party, or destroyed, within thirty (30) days.
(c) Neither party will be responsible for any delay or failure
to perform obligations under the Strategic Partnership, other than the
obligation to pay money, due to causes beyond the party's reasonable control,
including but not limited to acts of God, strikes or other labor disputes,
riots, acts of war, governmental regulations imposed after the fact, third party
communication line failures, power failures, fires or other disasters.
(d) Neither party will make any public disclosure of the
specific terms of the Strategic Partnership, except with the prior approval of
the other party, not to be unreasonably withheld. The parties will agree upon
the text of a press release regarding this Letter of Intent and will not make
any public disclosure of its existence before such press release becomes public.
(e) This Letter of Intent and the definitive agreements based
hereon will be governed by California law, without giving effect to conflicts of
laws principles, and will not be assignable without the other party's written
consent except to a party that acquires a majority of the equity securities or
voting interests or substantially all of the assets of the assigning party.
Subject to the foregoing, the terms of the Strategic Partnership will be fully
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. The definitive agreements will contain
such additional terms and conditions, including but not limited to standard
warranties and cross-indemnities, as the parties shall agree.
It is the intention of Inktomi and HotWired to work expeditiously to
enter into one or more definitive agreements based on the foregoing terms.
Please sign and date this Letter of
7.
<PAGE> 8
Intent in the space provided below to confirm Inktomi's intent to be bound by
the mutual agreements set forth herein and return a signed copy to the
undersigned.
Very truly yours,
HOTWIRED VENTURES LLC
/s/ ANDREW L. ANKER
- -----------------------------
By: Andrew L. Anker
President
ACKNOWLEDGED AND AGREED:
INKTOMI CORPORATION
By: /s/ DAVID A. BREWER
--------------------------
David A. Brewer
President
8.
<PAGE> 9
EXHIBIT A
MILESTONE SCHEDULE
*
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9.
<PAGE> 10
EXHIBIT B
MINIMUM FUNCTIONALITY AND COMMITMENTS
*
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* Confidential Treatment Requested.
10.
<PAGE> 1
EXHIBIT 10.11
[NBC LETTERHEAD]
June 14, 1996
Mr. Rex Ishibashi
Wired Ventures, Inc.
520 Third Street, 4th Floor
San Francisco, California 94107
Dear Mr. Ishibashi:
This Letter Agreement sets forth the terms and conditions of the
agreement pursuant to which Wired Ventures, Inc. ("Wired") will provide MSNBC
Cable Channel, L.L.C. ("MSNBC") and one or more of its affiliates with the
series of television programs described in more detail herein. This Letter
Agreement will be binding upon both parties as of the date set forth above and
govern the relationship created hereby.
1. Overview: MSNBC is currently scheduled to launch a full-time news and
information cable television programming service on July 15, 1996 ("MSNBC
Cable"), which will be designed to complement a full-time news and information
online computer service to be produced by an MSNBC Affiliate as defined below
("MSNBC Online"). Wired has agreed to provide a weekly half-hour contemporary
discussion program which is consistent with the proposal presented by Wired to
MSNBC on May 2, 1996 (a copy of which is attached hereto as Exhibit A)
tentatively entitled "Netizen TV" (the "Program"). MSNBC desires to have Wired
produce the Program at Wired's cost for initial airing on MSNBC Cable, all as
described more fully herein.
2. Production:
2.1 The parties agree that, on the terms and subject to the conditions
of this Letter Agreement, Wired shall create and supply to MSNBC up to *
episodes of the Program for initial television distribution on MSNBC Cable and
potential additional television distribution by * (such affiliates,
collectively, the "MSNBC Affiliates") throughout the world. MSNBC Affiliates
shall not include broadcast stations affiliated with the NBC Television Network
which are not owned in whole or in part, controlled, or managed by the National
Broadcasting Company, Inc. or any of its subsidiaries.
2.2 Wired shall deliver to MSNBC at the address set forth in Section
17, or such other address provided by MSNBC in accordance with Section 17, all
production materials necessary for MSNBC to commence distribution of each
episode of the Program. Such materials shall be in the form of videotape or any
other physical storage source acceptable to MSNBC, or shall be sent via
electronic transmission, and shall arrive at MSNBC no later than 8:00 P.M.
eastern time on the day before the day on which MSNBC intends to air such
episode of the Program. As part of such materials, Wired shall furnish to MSNBC
an accurate musical cue
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1.
<PAGE> 2
sheet for each episode of the Program, setting forth the number, date and time
of the episode, the titles of all musical compositions used in each episode,
length of the pieces used, names of composers, lyricists, publishers, copyright
owners, the performance society or societies with which the compositions are
registered, the type of use and its context. Wired shall be responsible for
securing all synchronization and, if necessary, master use licenses that may be
required for distribution of the Program. Wired agrees that failure to deliver
such materials for any episode of the Program in accordance with this Letter
Agreement shall be deemed to be a material breach of this Letter Agreement by
Wired.
2.3 Wired shall be responsible for providing, at its sole expense, all
of the production services required to create the Program; provided, however,
that MSNBC agrees to use reasonable efforts to work with Wired to make the
facilities and resources of MSNBC and of MSNBC Affiliates available to Wired for
use in the production of the Program at the lowest rates commercially available.
MSNBC also agrees to arrange for the license of the artwork, logos and
non-restricted NBC News archival footage (the "MSNBC Material") to Wired for
inclusion in the Program at the lowest rates commercially available. Finally,
MSNBC agrees to appoint promptly after execution of this Letter Agreement one of
its employees as a program liaison who will assist Wired in obtaining the
resources of the MSNBC Affiliates as described above.
3. Broadcasting Obligations. *
4. Ownership and Use of the Program.
4.1 Except as set forth in Sections 4.2, 4.4 and 4.5 below, the parties
hereby agree that Wired shall own the Program, including but not limited to the
individual interviews and stories that make up the Program (the "Program
Materials"), and all right, title and interest therein and thereto, including,
without limitation, all copyrights and extensions and renewals thereof under
United States law, the Berne Convention, the Universal Copyright Convention and
throughout the world in perpetuity, provided that Wired hereby grants to MSNBC
(i) a perpetual, worldwide, royalty-free, exclusive license, with a right of
sublicense to MSNBC Affiliates, to reproduce, prepare derivative works,
distribute and publicly display or perform the Program in the form, or in a form
which is substantially similar to the form, in which such Program is delivered
to MSNBC via, and in connection with, any method of transmission other than
through the Internet, now or hereafter devised, which makes programs and other
audio and/or visual recordings of any length, available for viewing in a linear
predetermined presentation (e.g., broadcast television, cable television,
pay-per-view, pay television, satellite television, closed circuit television or
video-on-demand) and (ii) a perpetual, worldwide, royalty-free, non-exclusive
license, with a right of sublicense to third parties, to reproduce, prepare
derivative works, distribute and publicly display or perform excerpts and clips
from Program and the Program Materials for the purposes described in Section
4.4(i)(c).
4.2 MSNBC and the MSNBC Affiliates shall retain all of their rights and
ownership interests in any of MSNBC's and the MSNBC Affiliates' logos,
tradenames and/or trademarks which MSNBC may make available to Wired for use in
the Program as designated by MSNBC
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2.
<PAGE> 3
in writing ("MSNBC Marks") and in any MSNBC Material which MSNBC or the MSNBC
Affiliates may make available for use in the Program as contemplated in Section
2.3. MSNBC hereby grants Wired a non-exclusive, non-transferable, royalty-free
license during the Term to use the MSNBC Marks in the Program. Wired agrees that
it shall not use the MSNBC Marks or MSNBC Materials in any manner except as
provided herein and it shall not sublicense or authorize any other person or
entity to use the MSNBC Marks, the MSNBC Materials or any footage containing the
voice or image of any MSNBC or MSNBC Affiliate television personality, without
the prior written consent of MSNBC.
4.3 Wired shall retain all of its rights and ownership interests in
Wired's logos, tradenames and/or trademarks, including Netizen TV(TM), which
Wired uses in the Program ("Wired Marks") and in the graphics provided by Wired
for use in the Program as well as the design and the "look and feel" of the
Program (the "Wired Material"). Wired hereby grants MSNBC a non-exclusive,
non-transferable, royalty-free license during the Term to use the Wired Marks
and the Wired Material as presented in the Program only. MSNBC agrees that it
shall not use the Wired Marks or Wired Material in any manner except as provided
herein and it shall not sublicense or authorize any other person or entity to
use the Wired Marks or Wired Material except as provided herein.
4.4 Except for purposes of "Interactive Delivery" (as such term is
described below in Section 4.5), MSNBC and Wired hereby agree that the parties'
rights regarding distribution and use of the Program will be as follows: (i)
MSNBC will have the right in perpetuity to air and/or distribute: (a) the
Program on MSNBC Cable an unlimited number of times throughout the world, (b)
the Program for air and/or distribution by the MSNBC Affiliates an unlimited
number of times throughout the world and (c) *; (ii) Wired will have the right
in perpetuity to air and/or distribute in any media now or hereinafter invented
any material contained within the Program which is not MSNBC Material and does
not contain MSNBC Marks; provided that *
4.5 Use of the Program and any Program Materials for purposes of
Interactive Delivery shall be permitted only as mutually agreed by the parties;
provided, however, that Wired will be free to use the Program, Program Materials
and Wired Material on its own "The Netizen" internet site *. In particular, the
parties agree to negotiate with MSNBC Online in order to find a way to use such
Program and Program Material on the MSNBC Online service or to access such
material derived from such Program and Program Material from MSNBC Online *.
"Interactive Delivery" shall mean the delivery of the Program or Program
Materials for use by an end user to a monitor or viewing screen, whereby such
delivery occurs by means of telephone lines, cable television systems, optical
fiber connections, cellular phones, satellites, wireless broadcast or other
means of transmission now known or hereafter devised, provided that the end user
has the ability to selectively manipulate the presentation to effect substantive
content changes during its uses. For purposes of clarity, it is understood that
Interactive Delivery will not include transmission of any kind other than
through the Internet, now or hereafter devised, which makes programs and other
audio and/or visual recordings of any length, available for viewing in a linear
predetermined presentation (e.g., broadcast television, cable television, pay-
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*Confidential treatment requested
3.
<PAGE> 4
per-view, pay television, satellite television, closed circuit television or
video-on-demand) with or without selective manipulation available to the viewer.
5. Advance and Fees:
5.1 In consideration of Wired's provision of the Programs, MSNBC shall
pay Wired: (i) a non-refundable advance payment of * to be used as an up-front
payment for production of the Program, recoupable against the payments otherwise
owed by MSNBC to Wired pursuant to the terms of the next subsection, to be
payable upon execution of this Letter Agreement; and (ii), subject to the
provisions of Section 8.3, a fee of * per each completed episode of the Program
which Wired delivers to MSNBC, provided that MSNBC shall be under no obligation
to Wired to pay for any episode of the Program which MSNBC decides in its sole
discretion not to air due to Wired's failure to (i) deliver the episode on time,
(ii) meet MSNBC's standards of technical quality and program content for the
television broadcast as set forth in Section 6.4, or (iii) failure to obtain
proper music clearance for the episode. Wired shall invoice MSNBC for every
episode of the Program properly delivered hereunder, and MSNBC shall pay such
invoice no later than (30) days from the date that MSNBC receives it.
5.2 Wired agrees that it shall be responsible for making all payments
which may become due by reason of any distribution, exhibition, performance,
display, transmission, simulcast or license of the Program as authorized herein
(e.g. executory payments, or payments due under any applicable guild or union
collective bargaining agreement).
5.3 If the MSNBC Affiliates choose to air and/or distribute the
Program, MSNBC and Wired shall equally share in any license revenues received by
MSNBC arising therefrom; provided, however, that (i) MSNBC agrees that such
license revenues shall be consistent with license revenues paid by such MSNBC
Affiliates in connection with other NBC television products, (ii) MSNBC and
Wired shall mutually agree upon the license fee for any use of a full episode of
any Program by a MSNBC Affiliate within the United States pursuant to the terms
of Section 4.4(i)(b) and (iii) any costs of production which are incurred by
either MSNBC or Wired in preparing the Program for international distribution
will be deducted off-the-top prior to the splitting of such license revenues and
paid to the party providing the relevant production services.
6. Content, Editorial and Quality Control.
6.1 Except as set forth in the other provisions of this Section 6,
Wired shall be responsible for all elements of the Program and shall have
editorial control thereof.
6.2 *
6.3 MSNBC shall have the right to consult with Wired regarding the
content of the Program.
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*Confidential treatment requested
4.
<PAGE> 5
6.4 The Program shall comply with MSNBC's obligations and legal
responsibilities and with the established broadcasting program content, business
and advertising policies of MSNBC of which Wired has been or will be advised by
MSNBC or the MSNBC Affiliates (including without limitation the NBC News Policy
and Guidelines, and NBC Broadcast Standards and Practices), and with the Rules
and Regulations of the Federal Communications Commission and any other
governmental body having jurisdiction, and that failure to comply with any of
the foregoing may render the Program unacceptable. MSNBC agrees to promptly
inform Wired of any changes to these requirements which are within the control
of MSNBC and the MSNBC Affiliates. Credits contained in the Program shall
conform to NBC Code requirements and in no event shall such credits exceed
thirty seconds (:30) in length.
6.5 MSNBC shall have the right to record any Program hereunder on its
own videotape and may make edits or alterations thereon solely in order to
insert late-breaking news announcements or to conform to time segment
requirements or to MSNBC policy, provided that such edits or alterations shall
be made in a manner which accomplishes MSNBC's purposes but alters the content
of the Program as little as possible.
6.6 If the format for any episode of the Program delivered by Wired
deviates from the general format agreed upon and Wired is unable to deliver a
corrected Program in time for air date, MSNBC may edit the Program, and Wired
will be billed for expenses incurred.
6.7 If the tape for any episode of the Program delivered by Wired, when
viewed for technical quality and accurate timings, is found to be unairable and
it is necessary to request another Program tape, Wired shall be billed for
expenses incurred by the additional viewing and timing of the replacement tape.
7. Promotion.
7.1 Wired shall furnish MSNBC with trailers, glossy prints of still
photos, synopses, casts, and other promotional material available for the proper
promotion and exploitation of the Program, if available. Wired grants to MSNBC
the right to use and license others to use the Wired Marks and the name and
likeness of, and biographical material concerning, each star and featured
performer in the Program, and fictitious persons and locales therein, for
advertising, publicity and trade purposes. Except for promotions related to the
Program itself, Wired agrees that it will not place promotional material of any
kind within the Program itself, including, but not limited to, promotional
material related to Wired's own products and services, without the prior written
consent of MSNBC.
7.2 MSNBC agrees that it shall promote and publicize the Program in a
pattern and manner which is consistent with promotion of other weekly television
programs on MSNBC Cable. Wired agrees to use its own publications and
interactive resources in a pattern and matter which are reasonably designed to
promote and publicize the Program to Wired's readers and users.
8. Term and Cancellation.
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5.
<PAGE> 6
8.1 The term of this Letter Agreement will begin on the date first set
forth above and will end November 30, 1996, unless earlier terminated.
8.2 Either party will have the right to cancel this Letter Agreement at
any time by giving written notice that the other party has breached a material
term or condition of this Letter Agreement and the breaching party fails to cure
such breach within fifteen (15) days from the date of the written notice.
8.3 *
9. Renewal Rights; First Look Option.
9.1 If MSNBC has so notified Wired by no later than * of its desire to
purchase additional episodes of the Program ("Additional Episodes"), NBC and
Wired shall enter into exclusive negotiations for the purchase by MSNBC of such
Additional Episodes. If, after good faith negotiations, MSNBC and Wired are
unable to reach a mutually acceptable agreement by *, Wired shall be free to
contract with a third party, subject to the provisions of this Agreement and
provided that for a period of * following the parties failure to reach an
agreement, MSNBC shall have the right to match any offer made by a third party
for such Additional Episodes.
9.2 If, at any time during the initial term of this Agreement, Wired
determines to create any new television programming (a "New Program"), Wired
shall provide to MSNBC a *
10. Representations & Warranties:
10.1 Each party represents and warrants to the other that: (a) it has
the right, power and authority to enter into this Agreement; (b) this Agreement
is a binding and valid obligation; and (c) there is no claim or cause of action
that would prevent its performance hereunder.
10.2 Wired represents and warrants to MSNBC that: (a) the materials
contained in the Program, other than the MSNBC Materials and the MSNBC Marks:
(i) are fully owned and originally created by Wired, in the public domain or
fully licensed for use by MSNBC, the MSNBC Affiliates and/or Wired in accordance
with the terms of this Letter Agreement, (ii) will not contain any material
which is libelous, slanderous, obscene or otherwise unprotected by the United
States Constitution, (iii) will be free of any claims, liens or encumbrances,
(iv) will not subject MSNBC to liability for violation of any laws, rules or
regulations, including, but not limited to, any labor or union rules or
regulations, and (v) will not violate or infringe the copyright, trademark,
tradename, patent, literary, intellectual, artistic or dramatic right, right of
publicity or privacy or any other right of any entity or person, (b) Wired has
paid or will pay all amounts due to third parties in connection with performance
of its obligations hereunder, (c) the use of the Wired Marks will not violate or
infringe the trademark, tradename or other right of anyone; and (d) the
performing rights of all musical compositions contained in the Program
(including any commercials for the Program) are (i) controlled by Broadcast
Music, Inc.,
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6.
<PAGE> 7
America Society of Composers, Authors, and Publishers, or SESAC, Inc., (ii) in
the public domain; or (iii) controlled by Wired.
10.3 MSNBC represents and warrants to Wired that the use of the MSNBC
Marks and the MSNBC Material in the Program will not violate or infringe the
copyright, trademark, tradename, patent, literary, intellectual, artistic or
dramatic right, right of publicity or privacy or any other right of anyone.
11. Indemnity and Limitation of Liability:
11.1 Wired shall indemnify and hold harmless MSNBC and the MSNBC
Affiliates, parent and subsidiary companies, each Program sponsor and its
advertising agency, and the respective officers, directors, agents and employees
of each, from and against liability, actions, claims, demands, losses or damages
(including reasonable attorney's fees and any punitive damages) caused by or
arising out of (i) the broadcast or other authorized use by MSNBC of the Program
and any or all of the material and performances contained therein, other than
the MSNBC Marks or the MSNBC Material or (ii) breach by Wired of any of its
representations and warranties contained herein. Such indemnity includes without
limitation any claim involving allegedly wrongful use of ideas or material in
the Program.
11.2 MSNBC shall indemnify and hold harmless Wired from and against
liability, actions, claims, demands, losses or damages (including reasonable
attorney's fees and any punitive damages) caused by or arising out of MSNBC's
violation of its representations and warranties contained herein. MSNBC's review
and approval of any elements, material or Program furnished by Wired shall not
constitute a waiver by MSNBC of the indemnity provided by Wired.
11.3 The indemnitor may, and if any indemnitee requests in writing, the
indemnitor shall assume the defense of any claim, demand or action and shall,
upon request by the indemnitee, allow the indemnitee to cooperate in the
defense. The indemnitee shall give prompt notice of any claim, demand or action
covered by this indemnity. If the indemnitee settles any such claim, demand or
action without the prior written consent of the indemnitor, the indemnitor shall
be released from this indemnity in that instance.
12. Insurance: In addition to Wired's indemnity, Wired shall immediately obtain
and maintain in full force and effect until the end of MSNBC's broadcasting
rights to the Program a television producer's liability (errors and omissions)
policy, issued by a reputable company approved by MSNBC and naming MSNBC as an
additional insured, insuring Wired's obligations under this agreement for at
least *. Said policy shall be primary and not excess of or contributory to any
other insurance provided for the benefit of or by MSNBC. Wired shall furnish
MSNBC with a certificate of insurance within ten (10) days after the execution
of this Letter Agreement.
13. Waiver/Modification: No modification or amendment to, or waiver of, this
Letter Agreement will be binding and valid unless it is in writing and executed
by the party against
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7.
<PAGE> 8
whom enforcement is sought. No waiver of a breach of any provision of this
Letter Agreement or of any default hereunder shall be deemed a waiver of any
other breach or default of this Letter Agreement.
14. Governing Law: This Letter Agreement will be governed by and construed in
accordance with the internal laws of the State of New York. This Letter
Agreement shall be subject to all applicable laws, rules and regulations of the
government of the United States and the State of New York and any agency
thereof.
15. Assignment: Neither party may assign any rights or delegate any obligations
under this Letter Agreement without the prior written consent of the other
party.
16. Relationship of the Parties: It is understood that this Letter Agreement
does not create any partnership, joint venture or employment relationship
between the parties, that both parties are acting as independent contractors
with respect to each other, and that none of the employees of either party shall
be deemed to be employees of the other party for any purpose. Each party shall
pay and be solely responsible for all contributions, taxes and premiums payable
under any and all applicable, laws, rules or regulations with respect to
employees.
17. Notices: All notices required to be given hereunder shall be deemed to have
been given (a) on the date of delivery when delivered in person, (b) on the date
of transmission when sent by telecopier with return confirmation of receipt, or
(c) one business after deposit with a nationally recognized overnight courier
service, to the following addresses and telecopier numbers, or such other
addresses and telecopier numbers as the parties may designate in writing: If to
Wired: Wired Ventures, Inc., 520 Third Street, 4th Floor, San Francisco,
California 94107, Attention: Rex Ishibashi, Telecopier No. (415) 222-6200 with a
copy to Cooley Godward Castro Huddleson & Tatum, One Maritime Plaza, 20th Floor,
San Francisco, California 94111, Attn: Kenneth L. Guernsey, Telecopier No.:
(415) 951-3699. If to MSNBC: MSNBC Cable Channel, L.L.C., 30 Rockefeller Plaza,
3rd Floor East, New York, NY 10112, Attn: David Corvo, with a copy to: National
Broadcasting Company, Inc., Law Department, 30 Rockefeller Plaza, 10th Floor
East, New York, NY 10112, Telecopier No.: (212) 664-2147.
18. Survival: Sections 4, 5.2, 5.3, 6, 10, 11, 12, 14 and 18 will survive the
expiration or termination of this Letter Agreement.
19. Entire Agreement: This Letter Agreement constitutes the entire agreement
between the parties hereto and supersedes all previous agreements, promises,
proposals, representations, understandings and negotiations (whether written or
oral) between the parties with respect to the subject matter hereof.
20. Force Majeure: Neither party will be liable to the other party for failure
to perform its obligations hereunder because such performance is prevented by a
"Force Majeure Event." A "Force Majeure Event" shall mean an act of God, war
(whether declared or not), riot, embargo, act of governmental or military
authority, strike, labor dispute, fire or other similar cause beyond the party's
control. Notwithstanding the foregoing, a party failing to perform because
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8.
<PAGE> 9
of a Force Majeure Event shall immediately use its best efforts to mitigate the
impact of any Force Majeure Event and commence performance.
21. Taxes. Wired shall be responsible for any and all taxes arising out of the
production and delivery of the Program to MSNBC pursuant to the terms of this
Letter Agreement and shall hold MSNBC harmless and protected from the assertion
of any such taxes by any taxing jurisdiction.
Please indicate acceptance of the foregoing terms and conditions by
signing the enclosed copy of this letter and returning it to me as soon as
possible.
Very truly yours
MSNBC Cable Channel, L.L.C.
By: /s/ Mark Harrington
---------------------------
Name: Mark Harrington
Accepted and agreed this
18th day of June, 1996
WIRED VENTURES INC.
By: /s/ Rex O. Ishibashi
------------------------
Name: Rex O. Ishibashi
Title: Vice President - Corporate and Business Development
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9.
<PAGE> 1
EXHIBIT 11.1
WIRED VENTURES, INC. STATEMENT RE: COMPUTATION OF PRO FORMA NET LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
--------------- ----------------
<S> <C> <C>
Pro forma net loss....................... $ (6,505) $ (42,038)
-----------------------------------------
Weighted average number of preferred
shares outstanding(1).................. 14,312 13,938
Shares and options issued subject to SAB
No. 83:
Preferred stock issuances(1)........... 2,283 2,283
Stock option grants(2)................. 802 802
-----------------------------------------
3,085 3,085
-----------------------------------------
Shares used in computing pro forma net
loss per share......................... 17,397 17,023
-----------------------------------------
Pro forma net loss per share............. $ (0.37) $ (2.47)
-----------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Using if-converted method.
(2) Using treasury-stock method.
<PAGE> 1
EXHIBIT 23.1
REPORT ON FINANCIAL STATEMENT SCHEDULE AND
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Wired Ventures, Inc.
The audits referred to in our report dated October 18, 1996, included the
related consolidated financial statement schedule for each of the years in the
three-year period ended December 31, 1995 and the nine-month period ended
September 30, 1996, included in the Registration Statement. This consolidated
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this consolidated financial
statement schedule based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
We consent to the use of our reports included herein and to the references
to our firm under the headings "Selected Consolidated Financial Data" and
"Experts" in the Prospectus.
KPMG PEAT MARWICK LLP
San Francisco, California
October 20, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEPT-30-1996
<CASH> 3,997
<SECURITIES> 0
<RECEIVABLES> 4,865
<ALLOWANCES> 2,546
<INVENTORY> 0
<CURRENT-ASSETS> 10,308
<PP&E> 5,003
<DEPRECIATION> 1,497
<TOTAL-ASSETS> 18,271
<CURRENT-LIABILITIES> 17,099
<BONDS> 1,272
0
16
<COMMON> 0
<OTHER-SE> (464)
<TOTAL-LIABILITY-AND-EQUITY> 18,271
<SALES> 25,109
<TOTAL-REVENUES> 25,109
<CGS> 20,466
<TOTAL-COSTS> 20,466
<OTHER-EXPENSES> 20,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> (42,029)
<INCOME-TAX> 9
<INCOME-CONTINUING> (42,038)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,038)
<EPS-PRIMARY> (2.47)
<EPS-DILUTED> (2.47)
<FN>
</FN>
</TABLE>
