<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1998
REGISTRATION STATEMENT NO. 333-52663
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
POINTCAST INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 77-0315081
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
---------------
501 MACARA AVENUE
SUNNYVALE, CA 94086
(408) 990-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DAVID W. DORMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHAIRMAN OF THE BOARD
POINTCAST INCORPORATED
501 MACARA AVENUE
SUNNYVALE, CA 94086
(408) 990-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
LARRY W. SONSINI, ESQ. SCOTT C. DETTMER, ESQ.
JUDITH M. O'BRIEN, ESQ. BENNETT L. YEE, ESQ.
DONNA M. PETKANICS, ESQ. JONATHAN J. NOBLE, ESQ.
BRUCE M. MCNAMARA, ESQ. GUNDERSON DETTMER STOUGH
WILSON SONSINI GOODRICH & ROSATI VILLENEUVE FRANKLIN & HACHIGIAN, LLP
PROFESSIONAL CORPORATION 155 CONSTITUTION DRIVE
650 PAGE MILL ROAD MENLO PARK, CA 94025
PALO ALTO, CA 94304 (650) 321-2400
(650) 493-9300
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, 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, 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(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
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 WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 to the Form S-1 Registration Statement is being filed
for the sole purpose of filing additional exhibits.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in
connection with the sale of Common Stock being registered. All amounts are
estimates except the SEC registration fee, the NASD filing fee and the Nasdaq
National Market listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC registration fee........................................... $15,267
NASD filing fee................................................ 5,675
Nasdaq National Market listing fee............................. *
Printing and shipping fees..................................... *
Legal fees and expenses........................................ *
Accounting fees and expenses................................... *
Directors and officers liability insurance..................... *
Blue Sky qualification fees and expenses....................... *
Transfer agent and registrar fees.............................. *
Miscellaneous fees............................................. *
-------
Total........................................................ $ *
=======
</TABLE>
- --------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
<TABLE>
<CAPTION>
EXHIBIT
DOCUMENT NUMBER
-------- -------
<S> <C>
Form of Underwriting Agreement................................... 1.1
Amended and Restated Certificate of Incorporation................ 3.2
Bylaws of Registrant............................................. 3.3
Amended and Restated Investors' Rights Agreement................. 4.1
Form of Indemnification Agreement entered into by the Registrant
with each of its directors and executive officers............... 10.1
</TABLE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since March 31, 1995, the Registrant has issued and sold the following
securities:
1. Since March 31, 1995, the Registrant issued and sold 1,386,155 shares
of Common Stock to directors, employees and consultants at prices ranging
from $0.06 to $7.50 per share, upon exercise of stock options pursuant to
the Registrant's 1994 Stock Plan and pursuant to Common Stock Purchase
Agreements.
2. On December 7, 1995, the Registrant issued and sold an aggregate of
2,449,634 shares of Series B Preferred Stock to a total of seven investors
at $2.11 per share, for an aggregate purchase price of $5,169,578.08.
3. On February 9, 1996, the Registrant issued and sold an aggregate of
971,038 shares of Series C Preferred Stock to a total of five investors at
$3.00 per share, for an aggregate purchase price of $2,913,108.00.
4. From July 19, 1996 to July 31, 1996, the Registrant issued and sold an
aggregate of 2,540,356 shares of Series D Preferred Stock to a total of 14
investors at $14.25 per share, for an aggregate purchase price of
$36,200,006.50.
II-1
<PAGE>
5. From September 12, 1997 to January 13, 1998, the Registrant issued and
sold an aggregate of 1,533,607 shares of Series E Preferred Stock to a
total of nine investors at $14.25 per share, for an aggregate purchase
price of $21,853,838.00.
6. On July 31, 1995, the Registrant granted warrants to purchase an
aggregate of 26,280 shares of Series B Preferred Stock to one investor at
$2.1104 per share.
7. On December 10, 1996, the Registrant granted a warrant to purchase an
aggregate of 701,756 shares of Series D Preferred Stock to two investors at
$14.25 per share.
8. On December 11, 1997, the Registrant granted warrants to purchase an
aggregate of 208,334 shares of Common Stock to two investors at $7.50 per
share.
The sale of the above securities was deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) of the Securities Act
or Regulation D promulgated thereunder, or Rule 701 promulgated under Section
3(b) of the Securities Act as transactions by an issuer not involving any
public offering or transactions pursuant to compensation benefit plans and
contracts relating to compensation as provided under such Rule 701. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof, and appropriate legends were
affixed to the share certificates issued in such transactions. All recipients
had adequate access, through their relationships with the Registrant, to
information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Registrant.
3.2* Amended and Restated Certificate of Incorporation.
3.3* Bylaws of Registrant.
4.1 Amended and Restated Investors' Rights Agreement dated September
12, 1997.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati regarding legality of
the securities being issued.
10.1** Form of Indemnification Agreement entered into by Registrant with
each of its directors and executive officers.
10.2 Stock Option Agreement with Philip J. Koen dated as of May 28,
1997.
10.3** 1994 Stock Plan and related agreements, as amended.
10.4** 1998 Employee Stock Purchase Plan and related agreements.
10.5*** 1998 Director Option Plan and related agreements.
10.6 PointCast Japan, L.L.C. Limited Liability Company Agreement by and
between the Registrant and TransCosmos, Incorporated dated as of
May 30, 1997.
10.7 Assignment of Commercial Exploitation Rights Agreement by and
among the Registrant, TransCosmos, Incorporated and PointCast
Japan, L.L.C. effective as of May 30, 1997.
10.8 Assignment of Commercial Exploitation Rights by and between
PointCast Japan, L.L.C. and PointCast K.K. effective as of July
25, 1997.
10.9 Commercial Exploitation Rights Agreement by and between
TransCosmos, Incorporated and the Registrant effective as of May
30, 1997.
10.10+ Administrative Services and Management Agreement by and between
PointCast K.K. and TransCosmos, Incorporated dated as of July 25,
1997.
10.11+ Sub-License of Technology and Trademark Rights by and between
PointCast Japan, L.L.C. and PointCast K.K. effective as of July
25, 1997.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.12+ Maintenance and Support Agreement by and between the Registrant
and PointCast K.K. dated as of July 25, 1997.
10.13 Technology and Trademark License Agreement by and between the
Registrant and PointCast Japan, L.L.C. effective as of May 30,
1997.
10.14** Employment Agreement by and between the Registrant and David
Dorman dated as of November 1, 1997 and related agreements.
10.15** Lease Agreement by and between John Arrillaga, Trustee, UTA dated
7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated
7/20/77 as amended, and the Registrant dated as of January 22,
1997.
10.16** Sublease by and between the Registrant and Internet Shopping
Network, Inc. dated as of August 29, 1997.
10.17** Lease Agreement by and between John Arrillaga, Trustee, UTA dated
7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated
7/30/77 as amended, and the Registrant dated as of May 21, 1996,
and the amendment thereto.
10.18+ Services Agreement by and between Electronic Data Systems
Corporation and the Registrant dated as of December 19, 1996.
10.19** Part-Time Employment and Non-Competition Agreement by and between
the Registrant and Christopher R. Hassett.
10.20** Part-Time Employment and Non-Competition Agreement by and between
the Registrant and Gregory P. Hassett.
10.21 Preferred Stock Purchase Warrant granted to Lighthouse Capital
Partners, L.P. dated as of August 10, 1995.
10.22 Common Stock Purchase Warrant granted to Benchmark Capital
Partners, L.P. dated as of December 11, 1997.
10.23 Common Stock Purchase Warrant granted to Benchmark Founders' Fund,
L.P. dated as of December 11, 1997.
10.24 Series D Preferred Stock Purchase Warrant granted to Cable News
Network, Inc. dated as of December 10, 1996.
10.25 Series D Preferred Stock Purchase Warrant granted to Time Inc. New
Media dated as of December 10, 1996.
10.26 Loan and Security Agreement by and between MetLife Capital
Corporation and the Registrant dated as of November 18, 1997.
10.27 Revolving Credit Loan & Security Agreement by and between Comerica
Bank-California and the Registrant dated as of August 4, 1997.
16.1** Letter of Arthur Andersen LLP, Independent Auditors.
21.1** Subsidiaries.
23.1* Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit
5.1).
23.2** Consent of Price Waterhouse LLP, Independent Accountants.
24.1** Power of Attorney.
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
*** Corrected version of previously filed document.
+ Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately
with the Securities and Exchange Commission pursuant to the application
for confidential treatment.
II-3
<PAGE>
(b) Financial Statement Schedule
<TABLE>
<S> <C>
Schedule II--Valuation and Qualifying Accounts........................ S-1
</TABLE>
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
consolidated 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,
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Registrant's
Restated Certificate of Incorporation, the Registrant's Bylaws, the
Registrant's indemnification agreements 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 Securities 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 hereunder, 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 Securities Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Sunnyvale, State of California, on this 20th day of May 1998.
PointCast Incorporated
*
By: _________________________________
DAVID W. DORMAN,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the May 20, 1998
- ------------------------------------- Board, President
(DAVID W. DORMAN) and Chief Executive
Officer (Principal
Executive Officer)
/s/ Philip J. Koen Senior Vice
- ------------------------------------- President, Finance May 20, 1998
(PHILIP J. KOEN) and Chief Financial
Officer (Principal
Financial and
Accounting Officer)
* Director May 20, 1998
- -------------------------------------
(SANFORD R. CLIMAN)
* Director May 20, 1998
- -------------------------------------
(JONATHAN FEIBER)
* Director May 20, 1998
- -------------------------------------
(CHARLES GESCHKE)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director May 20, 1998
- -------------------------------
(KEVIN R. HARVEY)
* Director May 20, 1998
- -------------------------------
(GREGORY P. HASSETT)
* Director May 20, 1998
- -------------------------------
(STEVEN HEYER)
* Director May 20, 1998
- -------------------------------
(ANDREW S. RACHLEFF)
/s/ Philip J. Koen
*By: __________________________
PHILIP J. KOEN
Attorney-in-Fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Registrant.
3.2* Amended and Restated Certificate of Incorporation.
3.3* Bylaws of Registrant.
4.1 Amended and Restated Investors' Rights Agreement dated September
12, 1997.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati regarding legality of
the securities being issued.
10.1** Form of Indemnification Agreement entered into by Registrant with
each of its directors and executive officers.
10.2 Stock Option Agreement with Philip J. Koen dated as of May 28,
1997.
10.3** 1994 Stock Plan and related agreements, as amended.
10.4** 1998 Employee Stock Purchase Plan and related agreements.
10.5*** 1998 Director Option Plan and related agreements.
10.6 PointCast Japan, L.L.C. Limited Liability Company Agreement by and
between the Registrant and TransCosmos, Incorporated dated as of
May 30, 1997.
10.7 Assignment of Commercial Exploitation Rights Agreement by and
among the Registrant, TransCosmos, Incorporated and PointCast
Japan, L.L.C. effective as of May 30, 1997.
10.8 Assignment of Commercial Exploitation Rights by and between
PointCast Japan, L.L.C. and PointCast K.K. effective as of July
25, 1997.
10.9 Commercial Exploitation Rights Agreement by and between
TransCosmos, Incorporated and the Registrant effective as of May
30, 1997.
10.10+ Administrative Services and Management Agreement by and between
PointCast K.K. and TransCosmos, Incorporated dated as of July 25,
1997.
10.11+ Sub-License of Technology and Trademark Rights by and between
PointCast Japan, L.L.C. and PointCast K.K. effective as of July
25, 1997.
10.12+ Maintenance and Support Agreement by and between the Registrant
and PointCast K.K. dated as of July 25, 1997.
10.13 Technology and Trademark License Agreement by and between the
Registrant and PointCast Japan, L.L.C. effective as of May 30,
1997.
10.14** Employment Agreement by and between the Registrant and David
Dorman dated as of November 1, 1997 and related agreements.
10.15** Lease Agreement by and between John Arrillaga, Trustee, UTA dated
7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated
7/20/77 as amended, and the Registrant dated as of January 22,
1997.
10.16** Sublease by and between the Registrant and Internet Shopping
Network, Inc. dated as of August 29, 1997.
10.17** Lease Agreement by and between John Arrillaga, Trustee, UTA dated
7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated
7/30/77 as amended, and the Registrant dated as of May 21, 1996,
and the amendment thereto.
10.18+ Services Agreement by and between Electronic Data Systems
Corporation and the Registrant dated as of December 19, 1996.
10.19** Part-Time Employment and Non-Competition Agreement by and between
the Registrant and Christopher R. Hassett.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.20** Part-Time Employment and Non-Competition Agreement by and between
the Registrant and Gregory P. Hassett.
10.21 Preferred Stock Purchase Warrant granted to Lighthouse Capital
Partners, L.P. dated as of August 10, 1995.
10.22 Common Stock Purchase Warrant granted to Benchmark Capital
Partners, L.P. dated as of December 11, 1997.
10.23 Common Stock Purchase Warrant granted to Benchmark Founders' Fund,
L.P. dated as of December 11, 1997.
10.24 Series D Preferred Stock Purchase Warrant granted to Cable News
Network, Inc. dated as of December 10, 1996.
10.25 Series D Preferred Stock Purchase Warrant granted to Time Inc. New
Media dated as of December 10, 1996.
10.26 Loan and Security Agreement by and between MetLife Capital
Corporation and the Registrant dated as of November 18, 1997.
10.27 Revolving Credit Loan & Security Agreement by and between Comerica
Bank-California and the Registrant dated as of August 4, 1997.
16.1** Letter of Arthur Andersen LLP, Independent Auditors.
21.1** Subsidiaries.
23.1* Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit
5.1).
23.2** Consent of Price Waterhouse LLP, Independent Accountants.
24.1** Power of Attorney.
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
*** Corrected version of previously filed document.
+ Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately
with the Securities and Exchange Commission pursuant to the application
for confidential treatment.
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
POINTCAST INCORPORATED
FIRST. The name of the corporation is PointCast Incorporated.
SECOND. The address of the corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware
19801. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The total number of shares which the corporation shall have
authority to issue is 1,000 shares of capital stock, and the par value of each
such share is $.001 per share.
FIFTH. The name and mailing address of the incorporator are:
Naomi Kuhn
Corporate Paralegal
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
SIXTH. The Board of Directors of the corporation is expressly authorized
to adopt, amend or repeal the by-laws of the corporation, but the stockholders
may make additional by-laws and may alter or repeal any by-law whether adopted
by them or otherwise.
SEVENTH. Elections of directors need not be by written ballot except and
to the extent provided in the by-laws of the corporation.
EIGHTH. A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law
as the same exists or may hereafter be amended. Any repeal or modification of
this Article EIGHTH shall not adversely affect any right or protection of a
director of the corporation existing hereunder with respect to any act or
omission occurring prior to such repeal or modification.
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is the act and deed of such incorporator and that
the facts stated therein are true.
/s/ Naomi Kuhn
----------------------------
Incorporator
<PAGE>
EXHIBIT 4.1
POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SEPTEMBER 12, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. Restrictions on Transferability; Registration Rights................................... 2
1.1 Certain Definitions.......................................................... 2
1.2 Restrictions on Transfer..................................................... 3
1.3 Restrictive Legend........................................................... 4
1.4 Notice of Proposed Transfers................................................. 4
1.5 Requested Registration....................................................... 5
1.6 Company Registration......................................................... 7
1.7 Registration on Form S-3..................................................... 8
1.8 Limitations on Subsequent Registration Rights................................ 9
1.9 Expenses of Registration..................................................... 9
1.10 Registration Procedures...................................................... 10
1.11 Indemnification.............................................................. 11
1.12 Information by Holder........................................................ 12
1.13 Rule 144 Reporting........................................................... 13
1.14 Transfer of Registration Rights.............................................. 13
1.15 Standoff Agreement........................................................... 13
1.16 Termination of Rights........................................................ 14
SECTION 2. Affirmative Covenants of the Company and Holders....................................... 14
2.1 Financial Information........................................................ 14
2.2 Additional Financial Information............................................. 14
2.3 Inspection................................................................... 15
2.4 Assignment of Rights to Financial Information................................ 15
2.5 Proprietary Information Agreement............................................ 15
2.6 Termination of Covenants...................................................... 15
2.7 Right of First Offer.......................................................... 15
2.8 Voting Agreement and Grant of Proxy with Respect to Reorganization
or Sale of Assets Transaction................................................. 17
SECTION 3. Miscellaneous........................................................................... 18
3.1 Assignment.................................................................... 18
3.2 Third Parties................................................................. 18
3.3 Governing Law................................................................. 18
3.4 Counterparts.................................................................. 18
3.5 Notices....................................................................... 18
3.6 Severability.................................................................. 18
3.7 Amendment and Waiver.......................................................... 18
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
3.8 Effect of Amendment or Waiver................................................ 19
3.9 Rights of Holders............................................................ 19
3.10 Delays or Omissions.......................................................... 19
</TABLE>
EXHIBIT A Schedule of Investors
EXHIBIT B Irrevocable Proxy
-ii-
<PAGE>
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
----------------------------------------------
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 12th day of September, 1997, by and among PointCast
Incorporated, a California corporation (the "Company"), the persons set forth on
the Schedule of Investors attached hereto as Exhibit A (the "Investors") and,
---------
with respect to Sections 1.2, 1.6 and 2.8, Christopher R. Hassett and Gregory P.
Hassett (the "Founders") and Lighthouse Capital Partners, L.P. ("Lighthouse").
RECITALS
A. The Company sold and issued to certain of the Investors (the "Series A
Holders") 6,421,385 shares of the Series A Preferred Stock of the Company
pursuant to that certain Series A Preferred Stock Purchase Agreement between the
Company and the Series A Holders dated as of June 3, 1994 (the "Series A
Agreement"); the Company sold and issued to certain of the Investors (the
"Series B Holders") 3,674,446 shares of the Series B Preferred Stock of the
Company pursuant to that certain Series B Preferred Stock Purchase Agreement
between the Company and the Series B Holders dated as of December 7, 1995 (the
"Series B Agreement"); the Company sold and issued to certain investors (the
"Series C Holders") 1,456,554 shares of Series C Preferred Stock of the Company
pursuant to that certain Series C Preferred Stock Purchase Agreement between the
Company and the Series C Holders dated as of February 9, 1996 (the "Series C
Agreement"); the Company sold and issued to certain investors (the "Series D
Holders") 3,810,527 shares of Series D Preferred Stock of the Company pursuant
to that certain Series D Preferred Stock Purchase Agreement between the Company
and the Series D Holders dated as of July 19, 1996 (the "Series D Agreement");
and the Company has issued warrants to purchase an aggregate of 1,052,632 shares
of Series D Preferred Stock (the "Series D Warrants"). Pursuant to that certain
Amended and Restated Investor Rights Agreement dated as of July 19, 1996 (the
"Prior Agreement") the Company granted to such Series A Holders, Series B
Holders, Series C Holders, Series D Holders and Lighthouse certain rights.
B. Pursuant to that certain Series E Preferred Stock Purchase Agreement
of even date herewith (the "Series E Agreement"), the Company has agreed to sell
to certain of the Investors (the "Series E Holders") a total of 2,200,000 shares
of Series E Preferred Stock of the Company and, as an inducement for such Series
E Holders to purchase such shares, the Company, the Series A Holders, the Series
B Holders, the Series C Holders, the Series D Holders and Lighthouse have agreed
to enter into this Agreement to supersede, amend and restate the rights granted
to the Series A Holders, Series B Holders, Series C Holders, Series D Holders
and Lighthouse in the Prior Agreement (all rights of first refusal under
Section 2.8 of such Prior Agreement in respect of the Series E Preferred Stock
hereby being expressly waived).
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
<PAGE>
SECTION 1.
Restrictions on Transferability;
--------------------------------
Registration Rights
-------------------
1.1 Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency at the time administering the Securities Act.
"Common Stock" means shares of the Company's common stock.
------------
"Conversion Shares" means the Common Stock issued or issuable upon
-----------------
conversion of the Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Holder" shall mean any Investor holding Registrable Securities and
------
any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof and
Lighthouse. Christopher R. Hassett and Gregory P. Hassett shall be deemed to be
Holders, but only with respect to Sections 1.2, 1.6 and 2.8.
"Initiating Holders" shall mean any Investors, transferees of
------------------
Investors under Section 1.14 hereof or Lighthouse who in the aggregate are
Holders of not less than twenty-five percent (25%) of the Registrable
Securities.
The terms "register," "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
---------------------
Company in complying with Sections 1.5, 1.6 and 1.7 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company).
"Registrable Securities" means the Shares or Conversion Shares or
----------------------
other securities issued or issuable with respect to the Shares or Conversion
Shares upon any stock split, stock dividend, recapitalization, or similar event,
or any Common Stock otherwise issued or issuable with
-2-
<PAGE>
respect to the Shares or Conversion Shares; provided, however, that shares of
-------- -------
Common Stock or other securities shall only be treated as Registrable Securities
if and so long as they have not been (A) sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect thereto are removed
upon the consummation of such sale. The Common Stock held by Christopher R.
Hassett and Gregory P. Hassett shall be deemed Registrable Securities, but only
with respect to a registration effected pursuant to Section 1.6 below.
"Restricted Securities" shall mean the securities of the Company
---------------------
required to bear the legend set forth in Section 1.3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
----------------
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for the Holders (as
limited by Section 1.9).
"Shares" shall mean the shares of Series E Preferred Stock sold to the
------
Investors pursuant to the Series E Agreement (whether at the initial closing or
any subsequent closings), the shares of Series D Preferred Stock sold to the
Series D Holders pursuant to the Series D Agreement, the shares of Series C
Preferred Stock sold to the Series C Holders pursuant to the Series C Agreement,
the shares of Series B Preferred Stock sold to the Series B Holders pursuant to
the Series B Agreement, the shares of Series A Preferred Stock sold to the
Series A Holders pursuant to the Series A Agreement, the shares of Series B
Preferred Stock issuable upon exercise of the Lighthouse Warrants, and the
shares of Series D Preferred Stock issuable upon exercise of the Series D
Warrants.
1.2 Restrictions on Transfer. The Shares and the Conversion Shares shall
------------------------
not be sold, assigned, pledged or otherwise transferred (collectively,
"Transfer") except upon the conditions specified in this Agreement. Any
permitted purchaser, assignee, transferee or pledgee (collectively , a
"Transferee") shall, in any and all events, agree in writing to be bound by all
of the conditions of this Agreement as a prior condition to receiving any Shares
or Conversion Shares. Any party to this Agreement proposing to Transfer Shares
or Conversion Shares shall cause any proposed Transferee of the Shares and the
Conversion Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
1.3 Restrictive Legend. Each certificate representing (i) the Shares,
------------------
(ii) the Conversion Shares, and (iii) any other securities issued in respect of
the securities referenced in clauses (i) and (ii) upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of Section 1.4 below) be stamped
or otherwise
-3-
<PAGE>
imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY. THIS CONDITION TO TRANSFER SHALL TERMINATE ON THE EFFECTIVE
DATE OF THE COMPANY'S INITIAL PUBLIC OFFERING."
Each Investor and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.
1.4 Notice of Proposed Transfers. The holder of each certificate
----------------------------
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) a written opinion of legal
counsel who shall, and whose legal opinion shall be, reasonably satisfactory to
the Company, addressed to the Company, to the effect that the proposed transfer
of the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission to the effect
that the transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, or (iii) any other evidence reasonably satisfactory to counsel to the
Company, whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the holder to the Company. The Company will not require such a
legal opinion or "no action" letter (a) in any transaction in compliance with
Rule 144, (b) in any transaction in which an Investor which is a corporation
distributes Restricted Securities after six (6) months after the purchase
thereof solely to its majority owned subsidiaries or affiliates for no
consideration, or (c) in any transaction in which
-4-
<PAGE>
an Investor which is a partnership distributes Restricted Securities after six
(6) months after the purchase thereof solely to partners thereof for no
consideration; provided that each transferee agrees in writing to be subject to
--------
the terms of this Section 1.4. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear, except if such transfer is
made pursuant to Rule 144, the appropriate restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act.
1.5 Requested Registration.
----------------------
(a) Request for Registration. In case the Company shall receive from
------------------------
Initiating Holders a written request that the Company effect any registration,
qualification or compliance with respect to the Registrable Securities, the
Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within thirty (30) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
-------- -------
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.5:
(1) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act;
(2) Prior to the earlier of (a) six (6) months following the
effective date of the first public offering of the Common Stock of the Company
to the general public which is effected pursuant to a registration statement
filed with, and declared effective by, the Commission under the Securities Act
(the "Initial Public Offering") or (b) July 19, 2001;
(3) During the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on the date six
(6) months immediately following the effective date of, any registration
statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee
-5-
<PAGE>
benefit plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective and
that the Company's estimate of the date of filing such registration statement is
made in good faith;
(4) After the Company has effected two (2) such registrations
pursuant to this subparagraph 1.5(a), each such registration has been declared
or ordered effective and the securities offered pursuant to each such
registration have been sold; or
(5) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a period not to
exceed ninety (90) days from the date of receipt of written request from the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve (12) month period.
Subject to the foregoing clauses (1) through (5), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
------------
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the under writing, to the extent requested, to the
extent provided herein.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders (which managing underwriter shall
be reasonably acceptable to the Company). Notwithstanding any other provision
of this Section 1.5, if the managing underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing the
registration statement, provided, however, that the number of shares of
-------- -------
Registrable Securities to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from the underwriting.
No Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares.
-6-
<PAGE>
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to ninety (90) days after the
effective date of such registration.
1.6 Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time, the
----------------------
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests made within thirty (30) days after receipt of such written notice from
the Company by any Holder, but only to the extent that such inclusion will not
diminish the number of securities included by holders of the Company's
securities who have demanded such registration pursuant to Section 1.5 hereof.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
holders who have demanded such registration). Notwithstanding any other
provision of this Section 1.6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting (up to the
exclusion of all Registrable Securities in the event of the Company's Initial
Public Offering), on a pro rata basis based on the total number of securities
--- ----
(including, without limitation, Registrable Securities) entitled to registration
pursuant to registration rights granted to the participating Holders by the
Company; provided, however, that if such offering is not the Initial Public
Offering, no such reduction may reduce the number of securities being sold by
the Holders to less than thirty percent (30%) of the shares being sold in such
offering. To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder or other holder to the nearest 100 shares. If any
Holder or other holder disapproves of the terms of any such underwriting, he or
she may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded
-7-
<PAGE>
or withdrawn from such underwriting shall be withdrawn from such registration,
and shall not be transferred in a public distribution prior to ninety (90) days
after the effective date of the registration statement relating thereto.
(c) Right to Terminate Registration. The Company shall have the right
-------------------------------
to terminate or withdraw any registration initiated by it under this Section 1.6
prior to the effectiveness of such registration, whether or not any Holder has
elected to include securities in such registration.
1.7 Registration on Form S-3.
------------------------
(a) Following the Initial Public Offering, the Company shall use its
best efforts to become eligible to use the Form S-3 registration statement for
public offerings of its capital stock. If any Holder or Holders of Registrable
Securities requests that the Company file a registration statement on Form S-3
(or any successor form to Form S-3) for a public offering of shares of the
Registrable Securities, the reasonably anticipated aggregate price to the public
of which, net of underwriting discounts and commissions, would exceed $500,000,
and the Company is a registrant entitled to use Form S-3 to register the
Registrable Securities for such an offering, the Company shall use its best
efforts to cause such Registrable Securities to be registered for the offering
on such form. The Company will (i) promptly give written notice of the proposed
registration to all other Holders, and (ii) as soon as practicable, use its best
efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within thirty (30) days after receipt of such written notice from
the Company. The substantive provisions of Section 1.5(b) shall be applicable
to each registration initiated under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act; (ii) during the period
starting with the date sixty (60) days prior to the Company's estimated date of
filing of, and ending on the date four (4) months immediately following the
effective date of, a registration statement (other than with respect to a
registration statement relating to a Rule 145 transaction, an offering solely to
employees or any other registration which is not appropriate for the
registration of Registrable Securities), provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective; (iii) during any 12-month period in which the
Company has effected at least three (3) such registrations pursuant to this
Section 1.6 or Section 1.7 of the Prior Agreement; or (iv) if the Company shall
furnish to such Holder a certificate signed by the President of the Company
stating that, in the good faith judgment of the Board of Directors, it would be
seriously detrimental to the
-8-
<PAGE>
Company or its shareholders for registration statements to be filed in the near
future, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed ninety (90)
days from the receipt of the request to file such registration by such Holder or
Holders; provided, however, that the Company may not utilize this right more
than once in any twelve (12) month period.
1.8 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date hereof, the Company shall not enter into any agreement granting any holder
or prospective holder of any securities of the Company registration rights with
respect to such securities unless such new registration rights are subordinate
to the registration rights granted Holders hereunder, including, without
limitation, provision for a standoff obligation no shorter than that provided
for in this Agreement.
1.9 Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration pursuant to Sections 1.5, 1.6 and 1.7 and the
reasonable cost of one special legal counsel to represent all of the Holders
together in any such registration shall be borne by the Company. If a
registration proceeding is begun upon the request of Initiating Holders pursuant
to Section 1.5, but such request is subsequently withdrawn, then the Holders of
Registrable Securities to have been registered may either: (i) bear all
Registration Expenses of such proceeding, pro rata on the basis of the number of
shares to have been registered, in which case the Company shall be deemed not to
have effected a registration pursuant to subparagraph 1.5(a) of this Agreement;
or (ii) require the Company to bear all Registration Expenses of such
proceeding, in which case the Company shall be deemed to have effected a
registration pursuant to subparagraph 1.5(a) of this Agreement. Notwith
standing the foregoing, however, if at the time of the withdrawal, the Holders
have learned of a material adverse change in the condition, business or
prospects of the Company from that known to the Holders at the time of their
request, then the Holders shall not be required to pay any of said Registration
Expenses. In such case, the Company shall be deemed not to have effected a
registration pursuant to subparagraph 1.5(a) of this Agreement. Unless
otherwise stated, all other Selling Expenses relating to securities registered
on behalf of the Holders shall be borne by the Holders of the registered
securities included in such registration pro rata on the basis of the number of
shares so registered.
1.10 Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed; and
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as
-9-
<PAGE>
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement.
(c) Furnish to the Holders participating in such registration and to
the under writers of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 1, on
the date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent
-10-
<PAGE>
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.11 Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any under writer within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, preliminary
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation or any alleged violation by the Company of any rule or regulation
promulgated under the Securities Act or the Exchange Act or any state securities
law applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, as such expenses are incurred, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling person or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as such expenses are incurred, in each case to the extent,
but only to the
-11-
<PAGE>
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder and stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section 1.11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that an Indemnified Party (together with all
other Indemnified Parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the Indemnifying Party, if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
proceeding. The failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 1.11 unless the failure to give such notice is materially prejudicial to
an Indemnifying Party's ability to defend such action. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
1.12 Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.13 Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
-12-
<PAGE>
(c) So long as an Investor owns any Restricted Securities, to furnish
to the Investor forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the Initial Public Offering),
and of the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as an Investor may reasonably request in availing itself of any rule
or regulation of the Commission allowing an Investor to sell any such securities
without registration.
1.14 Transfer of Registration Rights. The rights to cause the Company to
-------------------------------
register securities granted Investors under Sections 1.5, 1.6 and 1.7 may be
assigned to a transferee or assignee reasonably acceptable to the Company in
connection with any transfer or assignment of Registrable Securities by an
Investor (together with any affiliate); provided that (a) such transfer may
--------
otherwise be effected in accordance with applicable securities laws, (b) notice
of such assignment is given to the Company, and (c) such transferee or assignee
(i) is a wholly-owned subsidiary or constituent partner (including limited
partners, retired partners, spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession) of such Investor, or (ii) acquires from such
Investor at least 100,000 shares of Restricted Securities (as appropriately
adjusted for stock splits and the like).
1.15 Standoff Agreement. Each Holder agrees in connection with any
------------------
registration of the Company's securities (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan), upon request of the Company or the underwriters managing any under
written offering of the Company's securities, not to sell, make any short sale
of, loan, pledge (or otherwise encumber or hypothecate), grant any option for
the purchase of, or otherwise directly or indirectly dispose of any Registrable
Securities (other than those included in the registration) without the prior
written consent of the Company and such managing underwriters for such period of
time, not to exceed 180 days, as the Board of Directors establishes pursuant to
its good faith negotiations with such managing underwriters; provided, however,
-------- -------
that the Investors shall not be subject to such lockup unless the officers and
directors of the Company who own stock of the Company shall also be bound by
such restrictions.
1.16 Termination of Rights. The rights of any particular Holder to cause
---------------------
the Company to register securities under Sections 1.5 and 1.6 shall terminate
with respect to such Holder on the fifth anniversary of the effective date of
the Company's Initial Public Offering.
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<PAGE>
SECTION 2.
Affirmative Covenants of the Company and Holders
------------------------------------------------
The Company and Holders, as applicable, hereby covenant and agree as
follows:
2.1 Financial Information. So long as an Investor is a holder of 90,000
---------------------
Shares and/or shares of Common Stock issued upon the conversion thereof (as
adjusted for any stock splits, consolidations and the like), the Company will
furnish to such Investor the following reports:
(a) As soon as practicable after the end of each fiscal year, and in
any event within ninety (90) days thereafter, audited consolidated balance
sheets and statements of share holders' equity of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and consolidated
statements of income and cash flows of the Company and its subsidiaries, if any,
for such year, prepared in accordance with generally accepted accounting
principles and setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and certified by independent
public accountants of national standing selected by the Company; and
(b) As soon as practicable, but in any event within forty-five (45)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, unaudited balance sheets of the Company and its subsidiaries, if
any, as of the end of each such quarter, and consolidated statements of income
and cash flows of the Company and its subsidiaries, if any, for each such
quarter, all prepared in accordance with generally accepted accounting
principles.
2.2 Additional Financial Information. So long as an Investor is a holder
--------------------------------
of 100,000 Shares and/or shares of Common Stock issued upon the conversion
thereof (as adjusted for any stock splits, consolidations and the like), the
Company will, in addition to the information furnished to such Investor pursuant
to Section 2.1 above, furnish to such Investor the following reports:
(a) As soon as practicable after the end of each calendar month, and
in any event within 30 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of each calendar month, and
consolidated statements of income and cash flows for such period and for the
current fiscal year to date, together with a comparison of such statements to
the Company's operating plan then in effect; and
(b) As soon as practicable upon approval or adoption by the Company's
Board of Directors, the Company will furnish such Investor with the Company's
budget and operating plan (including projected balance sheets and profit and
loss and cash flow statements) for such fiscal year.
2.3 Inspection. The Company shall permit each Investor and its
----------
representatives, at such Investor's expense, to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor; provided, however, that
the Company shall not
-14-
<PAGE>
be obligated pursuant to this Section 2.3 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information.
2.4 Assignment of Rights to Financial Information.
---------------------------------------------
(a) The rights granted pursuant to Section 2.1 may be assigned by an
Investor to a third party who acquires at least 80,000 Shares and/or shares of
Common Stock issued upon conversion thereof (as adjusted for any stock splits,
consolidations and the like) from such Investor and who is not a competitor, or
affiliated in any manner with a competitor, of the Company, provided that the
Company receives notice twenty (20) days prior to such assignment; and
(b) The rights granted pursuant to Section 2.2 may be assigned by an
Investor to a third party who acquires at least 100,000 Shares and/or shares of
Common Stock issued upon conversion thereof (as adjusted for any stock splits,
consolidations and the like) from such Investor and who is not a competitor, or
affiliated in any manner with a competitor, of the Company, provided that the
Company receives notice twenty (20) days prior to such assignment.
2.5 Proprietary Information Agreement. The Company shall require each
---------------------------------
person employed by, or who consults for, the Company to execute a proprietary
information confidentiality and nondisclosure agreement in substantially the
form provided to the Investors.
2.6 Termination of Covenants. The covenants set forth in Sections 2.1
------------------------
through 2.5 shall terminate on, and be of no further force or effect after, the
closing of the Company's Initial Public Offering.
2.7 Right of First Offer. Subject to the terms and conditions specified
--------------------
in this Section 2.7, the Company hereby grants to each Investor a right of first
offer with respect to future sales by the Company of its Securities (as
hereinafter defined).
Each time the Company proposes to offer subsequent to the offering
under the Series E Agreement any shares of, or securities convertible into or
exercisable for any shares of, any class of its capital stock ("Securities"),
the Company shall first make an offering of such Securities to each Investor in
accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail ("Notice") to
each Investor stating (i) its bona fide intention to offer such Securities, (ii)
the number of such Securities to be offered, (iii) the price, if any, for which
it proposes to offer such Securities, and (iv) the terms of such offer.
(b) Within fifteen (15) calendar days after receipt of the Notice, the
Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to an amount of such Securities equal to that
portion of such Securities which equals the proportion that the number of shares
of Common Stock then issued or issuable to the Investor upon conversion of the
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred
-15-
<PAGE>
Stock and Series E Preferred Stock held by the Investor bears to the sum of the
number of shares of Common Stock then issued plus the number of shares of Common
Stock issuable upon conversion of all convertible securities of the Company then
outstanding. For purposes of this Section 2.7, the term "Investor" includes any
general partners or affiliates of an Investor. An Investor shall be entitled to
apportion the right of first offer hereby granted among itself and its partners
and affiliates in such proportions as it deems appropriate.
(c) If all Securities which the Investors are entitled to purchase
pursuant to this Section 2.7 are not elected to be obtained as provided in
subsection 2.7(b) hereof, the Company may, during the thirty (30) day period
following the expiration of the period provided in subsection 2.7(b) hereof,
offer such unsubscribed Securities to any person or persons at a price not less
than, and upon terms no more favorable to the offeree than, those specified in
the Notice. If the Company does not enter into an agreement for the sale of the
Securities within such period, or if such agreement is not consummated within
thirty (30) days of the execution thereof, the right provided hereunder shall be
deemed to be revived.
(d) The right of first offer in this Section 2.7 shall not be
applicable (i) to the issuance or sale of up to 6,000,000 shares of capital
stock (or options therefor) after the date hereof to employees, officers,
directors or consultants for the primary purpose of soliciting or retaining
their services, provided that any such issuance or sale is approved by the
Company's Board of Directors, (ii) to the issuance or sale of the Company's
securities to leasing entities or financial institutions in connection with
commercial leasing or borrowing transactions provided that any such issuance or
sale is approved by the Company's Board of Directors, (iii) to or after
consummation of a bona fide, underwritten firm commitment public offering of
shares of Common Stock, registered under the Securities Act, at a price per
share not less than $9.50 (subject to appropriate adjustment for stock splits,
stock dividends, combinations and recapitalizations and the like) which results
in aggregate proceeds to the Company of at least $20,000,000, (iv) conversions
of convertible securities or (v) any issuances of any of the shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock authorized as of the date of this
Agreement.
2.8 Voting Agreement and Grant of Proxy with Respect to Reorganization or
---------------------------------------------------------------------
Sale of Assets Transaction. If a reorganization (as defined in Section 181 of
- --------------------------
the California Corporations Code) or a transaction in which all or substantially
all of the Company's assets are proposed to be sold (collectively, a
"Reorganization") is proposed to be presented to the shareholders of the Company
for approval, then the Holders agree as follows:
(a) Agreement to Vote in Accordance with Preliminary Vote; Grant of
---------------------------------------------------------------
Proxy. Not less than 12 business days prior to the date a vote is to be taken by
- -----
(or written consent to be mailed to) the shareholders of the Company with
respect to a Reorganization, the Secretary of the Company (the "Secretary")
shall send via overnight courier or facsimile transmission to each Holder a
complete description of such Reorganization and a questionnaire (the
"Questionnaire"), to be completed by each Holder and returned to the Secretary,
upon which each Holder shall indicate
-16-
<PAGE>
whether such Holder would approve the Reorganization at a formal vote or written
consent of the shareholders of the Company. Each Holder shall complete the
Questionnaire and return it to the Secretary within 10 business days of the date
the Questionnaire was deemed given in accordance with Section 3.5 hereof. Upon
the earlier of (i) the date the Secretary receives all completed Questionnaires
or (ii) 11 business days after the Questionnaires are deemed given to the
Holders, the Secretary shall tabulate the responses to the Questionnaires. If
the Holders of a majority of the shares of stock represented on the completed
and returned Questionnaires (without regard to how many shares in the aggregate
are held by all Holders) approve the Reorganization (without regard for any
series, class or other voting rights, if any, contained in the Amended and
Restated Articles of Incorporation of the Company from time to time), then each
Holder agrees that, regardless of whether such Holder indicated on the
Questionnaire that such Holder would vote to approve such Reorganization, such
Holder will approve the proposed Reorganization at the time the proposed
Reorganization is formally presented to the shareholders for their approval, and
grants to the Secretary a limited, irrevocable proxy to so vote each Holder's
shares, such proxy to be substantially in the form attached hereto as Exhibit B
---------
and to be executed and delivered to the Secretary at the Closing (as defined in
the Series E Agreement).
(b) Covenant not to Impede Transaction. If a majority approval by the
----------------------------------
Holders who timely return Questionnaires of the proposed Reorganization is
indicated pursuant to the procedure set forth in subsection 2.8(a) above, then
each Holder further agrees not to in any way impede the consummation of the
proposed Reorganization. This covenant shall include, without limitation, the
obligation not to seek dissenters' appraisal rights or take any other action
that would reasonably be taken (in the discretion of the Company's Board of
Directors after consulting with the Company's counsel and independent public
accountants) to prevent the proposed Reorganization from being eligible to be
accounted for as a pooling of interests.
(c) Termination of Voting Agreement. All agreements and covenants set
-------------------------------
forth in this Section 2.8 shall terminate on, and be of no further force and
effect after, the earlier of (i) the first anniversary of the date of this
Agreement and (ii) the closing of the Initial Public Offering.
SECTION 3.
Miscellaneous
-------------
3.1 Assignment. Except as otherwise provided herein, the terms and
----------
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
-------------
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
-17-
<PAGE>
3.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California in the United States of America.
3.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.5 Notices. Any notice required or permitted by this Agreement shall
-------
be in writing and shall be sent by either (a) prepaid registered or certified
mail, return receipt requested, (b) overnight courier or (c) facsimile,
addressed to the other party at the address shown on Exhibit A hereto or at such
---------
other address for which such party gives notice hereunder. Such notice shall be
deemed to have been given three (3) days after deposit in the mail, one (1) day
after mailing via overnight courier or one (1) day after transmission via
facsimile, provided that such facsimile was confirmed tele phonically on the
date of transmission.
3.6 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
3.7 Amendment and Waiver. Any provision of this Agreement may be amended
--------------------
with the written consent of the Company and the Holders (other than Messrs.
Christopher R. Hassett and Gregory P. Hassett) of at least fifty-five percent
(55%) of the outstanding shares of the Registrable Securities; provided,
--------
however, that Messrs. Christopher R. Hassett and Gregory P. Hassett shall have
- -------
the right to consent (or withhold consent) on any amendment to this Agreement
that modifies their rights hereunder. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities and the Company. In addition, the Company may waive performance of
any obligation owing to it, as to some or all of the Holders of Registrable
Securities, or agree to accept alternatives to such performance, without
obtaining the consent of any Holder of Registrable Securities. In the event
that an underwriting agreement is entered into between the Company and any
Holder, and such underwriting agreement contains terms differing from this
Agreement, as to any such Holder the terms of such underwriting agreement shall
govern.
3.8 Effect of Amendment or Waiver. The Investors and their successors
-----------------------------
and assigns acknowledge that by the operation of Section 3.7 hereof the holders
of fifty-five percent (55%) of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.
3.9 Rights of Holders. Each holder of Registrable Securities shall have
-----------------
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of
-18-
<PAGE>
any securities of the Company as a result of exercising or refraining from
exercising any such right or rights.
3.10 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
[This space intentionally left blank]
-19-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
POINTCAST INCORPORATED
Signature: /s/ Philip J. Koen
---------------------------
Name: Philip J. Koen
--------------------------------
Senior Vice President
Title: Chief Financial Officer
-------------------------------
-20-
<PAGE>
FOUNDERS:
/s/ Christopher R. Hassett
----------------------------------
Christopher R. Hassett
----------------------------------
Gregory P. Hassett
LIGHTHOUSE CAPITAL PARTNERS L.P.
By:
-------------------------------
Title:
----------------------------
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<PAGE>
FOUNDERS:
----------------------------------
Christopher R. Hassett
/s/ Gregory P. Hassett
----------------------------------
Gregory P. Hassett
LIGHTHOUSE CAPITAL PARTNERS L.P.
By:
-------------------------------
Title:
----------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED FOUNDERS' CO-SALE AGREEMENT
Dated as of , 1997
- --------------------------------
LIGHTHOUSE CAPITAL PARTNERS, L.P.
By: LIGHTHOUSE MANAGEMENT PARTNERS,
L.P., its general partner
By: LIGHTHOUSE CAPITAL PARTNERS, INC.,
its general partner
By: /s/ Richard D. Stubblefield
-------------------------------------
Name: Richard D. Stubblefield
-----------------------------------
Title: Managing Director
----------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: Encompass Group, Inc.
Name: Mr. Yasuki Matsumoto
---------------------------------------
(Please print or type)
Signature: /s/ Yasuki Matsumoto
----------------------------------
Title: President
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR:
Name: Asahi Shimbun Publishing Co.
---------------------------------------
(Please print or type)
Signature: /s/ Asahi Shimbun Publishing Co.
----------------------------------
Title: President/CEO
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 16, 1997
- ------------------------------
INVESTOR:
Name: Roger S. Siboni
---------------------------------------
(Please print or type)
Signature: /s/ Roger S. Siboni
----------------------------------
Title: Deputy Chairman
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 17, 1997
- ------------------------------
INVESTOR:
Name: Shozo Okuda
---------------------------------------
(Please print or type)
Signature: /s/ Shozo Okuda
----------------------------------
Title: President, Trans Cosmos USA, Inc.
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of October 22, 1997
- ----------------------------
INVESTOR: Ambac Investments, Inc.
Name: David L. Boyle
---------------------------------------
(Please print or type)
Signature: /s/ David L. Boyle
----------------------------------
Title: Chairman, President and Chief
--------------------------------------
Executive Officer
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of October 22, 1997
- ----------------------------
INVESTOR: PCN Corp., LLC
Name: W. Grant Gregory
---------------------------------------
(Please print or type)
Signature: /s/ W. Grant Gregory
----------------------------------
Title: Manager
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of December 31, 1997
- -----------------------------
INVESTOR: CPO HOLDINGS, INC.
Name: Robert W. Stearns
---------------------------------------
(Please print or type)
Signature: /s/ Robert W. Stearns
----------------------------------
Title: President
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of December 31, 1997
- -----------------------------
INVESTOR:
Name: David Dorman
---------------------------------------
(Please print or type)
Signature: /s/ David Dorman
----------------------------------
Title: President & CEO
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: BENCHMARK CAPITAL PARTNERS, L.P.
By Benchmark Capital Management
Co. L.L.C.
Name:
---------------------------------------
(Please print or type)
Signature: /s/ Andrew Rachleff
----------------------------------
Title: Member
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: BENCHMARK FOUNDERS' FUND, L.P.
By Benchmark Capital Management
Co. L.L.C.
Name:
---------------------------------------
(Please print or type)
Signature: /s/ Andrew Rachleff
----------------------------------
Title: Member
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September , 1997
- -----------------------------
INVESTOR: Mohr, Davidow Ventures III
By: WLPJ Partners, General Partner
Name: Jonathan D. Feiber
---------------------------------------
(Please print or type)
Signature: /s/ Jonathan D. Feiber
----------------------------------
Title: General Partner
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: Merrill, Pickard Anderson & Eyre V, L.P.
By: MPAE V Management Co., L.P.
Name:
---------------------------------------
(Please print or type)
Signature: /s/ Andrew Rachleff
----------------------------------
Title: General Partner
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: MPAE V Affiliates Fund, L.P.
By: MPAE V Management Co., L.P.
Name:
---------------------------------------
(Please print or type)
Signature: /s/ Andrew Rachleff
----------------------------------
Title: General Partner
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: WS Investment Company 95B
Name: Mary Anne Pedroni
---------------------------------------
(Please print or type)
Signature: /s/ Mary Anne Pedroni
----------------------------------
Title: Acting Administrator
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: WS Investment Company 94A
Name: Mary Anne Pedroni
---------------------------------------
(Please print or type)
Signature: /s/ Mary Anne Pedroni
----------------------------------
Title: Acting Administrator
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR:
Name: Allen Morgan
---------------------------------------
(Please print or type)
Signature: /s/ Allen Morgan
----------------------------------
Title:
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ---------------------------------------------
INVESTOR: CPO HOLDINGS, INC.
Name: Robert W. Stearns
---------------------------------------
(Please print or type)
Signature: /s/ Robert W. Stearns
----------------------------------
Title: President
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: Gannet International
Communications, Inc.
Name: Evan A. Ray
---------------------------------------
(Please print or type)
Signature: /s/ Evan A. Ray
----------------------------------
Title: Vice President
--------------------------------------
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<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 8, 1997
- -----------------------------
INVESTOR:
Name: Thomas Unterman
---------------------------------------
(Please print or type)
Signature: /s/ Thomas Unterman
----------------------------------
Title: Senior Vice Presidnet and
--------------------------------------
Chief Financial Officer
--------------------------------------
-42-
<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September , 1997
- -----------------------------
INVESTOR:
Name: Carey P. Hendrickson
---------------------------------------
(Please print or type)
Signature: /s/ Carey P. Hendrickson
----------------------------------
Title: Vice President/Strategic and
--------------------------------------
Financial Planning
--------------------------------------
-43-
<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 8, 1997
- -----------------------------
INVESTOR:
Name: Cowles Media Company
---------------------------------------
(Please print or type)
Signature: /s/ Jim Viera
----------------------------------
Title: V.P.
--------------------------------------
-44-
<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR:
By: General Electric Capital Corporation
Name: John A. McKinley, Jr.
---------------------------------------
(Please print or type)
Signature: /s/ John A. McKinley, Jr.
----------------------------------
Title: Chief Technology Officer
--------------------------------------
-45-
<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR:
Name: CUC International, Inc.
---------------------------------------
(Please print or type)
Signature: /s/ Cosmo Corigliano
----------------------------------
Title: Senior Vice President & CFO
--------------------------------------
-46-
<PAGE>
COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Dated as of September 12, 1997
- ------------------------------
INVESTOR: Freedom Communications, Inc.
Name: David L. Kuykendell
---------------------------------------
(Please print or type)
Signature: /s/ David L. Kuykendell
----------------------------------
Title: SVP - CFO
--------------------------------------
-47-
<PAGE>
EXHIBIT A
---------
SCHEDULE OF INVESTORS
---------------------
<TABLE>
<S> <C>
Benchmark Capital Partners, L.P. WS Investment Company 95B
2480 Sand Hill Road, Suite 200 c/o Wilson Sonsini Goodrich & Rosati, P.C.
Menlo Park, CA 94025 650 Page Mill Road
Attn: Andrew S. Rachleff Palo Alto, CA 94304-1050
Attn: Allen L. Morgan
Benchmark Founders' Fund, L.P. WS Investment Company 94A
2480 Sand Hill Road, Suite 200 c/o Wilson Sonsini Goodrich & Rosati, P.C.
Menlo Park, CA 94025 650 Page Mill Road
Attn: Andrew S. Rachleff Palo Alto, CA 94304-1050
Attn: Allen L. Morgan
Mohr, Davidow Ventures III
3000 Sand Hill Road Allen L. Morgan
Building 1, Suite 240 c/o Latham & Watkins.
Menlo Park, CA 94025 75 Willow Road
Attn: Jon Feiber Menlo Park, CA 94025
Merrill, Pickard, Anderson & Eyre V, L.P.
2480 Sand Hill Road, Suite 200 Point Fund
Menlo Park, CA 94025 c/o Kenneth D. Cron
Attn: Andrew S. Rachleff CMP Publications, Inc.
600 Community Drive
MPAE V Affiliates Fund, L.P. Manhasset, NY 11030
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025 SOFTBANK Holdings, Inc.
Attn: Andrew S. Rachleff 10 Langley Road
Suite 403
Adobe Systems Incorporated Newton Center, MA 02159
345 Park Avenue Attn: Charles R. Lax
San Jose, CA 95110-2704
Attn: Jack Bell CPQ Holdings, Inc.
c/o Compaq
P.O. Box 692000
Houston, TX 77269-2000
Attn: Robert W. Stearns
</TABLE>
<PAGE>
EXHIBIT A
---------
SCHEDULE OF INVESTORS
---------------------
(continued)
<TABLE>
<S> <C>
Gannett International Communications, Inc. General Electric Capital Corporation
1100 Wilson Boulevard 260 Longridge Road
Arlington, VA 22234 Third Floor
Attn: Carolyn Martin, Director, Gannett New Media Stamford, CT 06927
with a copy to: Thomas Chapple Attn: Thomas A. Crowley
Senior Vice President,
General Counsel & Secretary
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, VA 22234
The Times Mirror Company CUC International Inc.
Times Mirror Square 707 Summer Street
Los Angeles, CA 90053 Stamford, CT 06901
(For federal express: 220 West First Street Attn: Cosmo Corigliano
Los Angeles, CA 90012)
Attn: Thomas Unterman, Senior Vice President
and Chief Financial Officer
Knight-Ridder Investments, Inc. Pulitzer Publishing Company
50 W. San Fernando, 7th Floor 900 N. Tucker Boulevard
San Jose, CA 95112 St. Louis, MO 63010
Attn: Robert Ingle Attn: Ron Ridgway
McClatchy Newspapers, Inc. Central Newspapers, Inc
2100 Q Street 135 N. Pennsylvania Street, #1200
Sacramento, CA 95816 Indianapolis, IN 46204
Attn: Jim Smith Attn: Thomas MacGillivray
A. H. Belo Corporation Freedom Communications, Inc.
400 S. Record Street 17666 Fitch
17th Floor Irvine, CA 92714
Dallas, TX 75202 Attn: David Kuykendall
Attn: Michael Perry
Cowles Media Company
329 Portland Avenue
Minneapolis, MN 55415
Attn: Jim Viera
</TABLE>
-2-
<PAGE>
EXHIBIT A
---------
SCHEDULE OF INVESTORS
---------------------
(continued)
<TABLE>
<S> <C>
Asahi Shimbun Publishing KPMG Peat Marwick LLP
5-3-2 Tsukiji 345 Park Avenue
Chuo-Ku, Tokyo 104-11 New York, NY 10010
JAPAN Attn: Mark Zuffante
Attn: Jun-Ichi Ohmae
Trans Cosmos Inc. Emcompass Group
4040 Lake Washington Boulevard, NE 4040 Lake Washington Boulevard, NE
Suite 205 Suite 205
Kirkland, WA 98033 Kirkland, WA 98033
Attn: Mr. Yasuki Matsumoto Attn: Mr. Yasuki Matsumoto
Ambac Financial Group, Inc. Gregory & Hoenemeyer, Inc.
One State Street Plaza 660 Steamboat Road
New York, NY 10004 Greenwich, CT 06830
Attn: Mr. David Boyle Attn: Mr. W. Grant Gregory, Jr.
David Dorman
c/o PointCast Incorporated
501 Macara Ave.
Sunnyvale, CA 94086
</TABLE>
-3-
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Andrew S. Rachleff 1,910,037 shares of Series B Preferred Stock
- -----------------------------
(Signature)
223,920 shares of Series C Preferred Stock
Andrew S. Rachleff
- ----------------------------- 114,746 shares of Common Stock
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Andrew S. Rachleff 222,463 shares of Series B Preferred Stock
- -----------------------------
(Signature)
26,080 shares of Series C Preferred Stock
Andrew S. Rachleff
- ----------------------------- 16,038 shares of Common Stock
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
Mohr, Davidow Ventures III 3,190,750 shares of Series A Preferred Stock
By: WLPJ Partners,
General Partner 710,834 shares of Series B Preferred Stock
1,000,000 shares of Series C Preferred Stock
269,066 shares of Common Stock
By: /s/ Jonathan D. Feiber
--------------------------
Jonathan D. Feiber, General Partner
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Andrew S. Rachleff 105,925 shares of Series A Preferred Stock
- -----------------------------
(Signature)
_____ shares of Series _ Preferred Stock
Andrew S. Rachleff _____ shares of Series _ Preferred Stock
- -----------------------------
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Andrew S. Rachleff 3,084,825 shares of Series A Preferred Stock
- -----------------------------
(Signature)
710,834 shares of Series B Preferred Stock
Andrew S. Rachleff
- ----------------------------- 200,000 shares of Series C Preferred Stock
(Print or Type Name)
225,150 Shares of Common Stock
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
WS Investment Company 95B
/s/ Mary Anne Petroni 35,500 shares of Series B Preferred Stock
- -----------------------------
(Signature)
______ shares of Series _ Preferred Stock
Mary Anne Petroni
Acting Administrator ______ shares of Series _ Preferred Stock
- -----------------------------
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
WS Investment Company 95B
/s/ Mary Anne Petroni 28,717 shares of Series A Preferred Stock
- -----------------------------
(Signature)
______ shares of Series _ Preferred Stock
Mary Anne Petroni
Acting Administrator ______ shares of Series _ Preferred Stock
- -----------------------------
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Allen Morgan 11,168 shares of Series A Preferred Stock
- -----------------------------
(Signature)
13,700 shares of Series B Preferred Stock
Allen Morgan
- ----------------------------- 6,554 shares of Series C Preferred Stock
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Evan A. Ray 315,790 shares of Series D Preferred Stock
- -----------------------------
(Signature)
_____ shares of Series _ Preferred Stock
Evan A. Ray
- ----------------------------- _____ shares of Series _ Preferred Stock
(Print or Type Name)
Vice President
Gannet International Communications, Inc.
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 8, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Thomas Unterman 315,790 shares of Series D Preferred Stock
- -----------------------------
(Signature)
______ shares of Series _ Preferred Stock
Thomas Unterman
- ----------------------------- ______ shares of Series _ Preferred Stock
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Carey P. Hendrickson 21,052 shares of Series D Preferred Stock
- -----------------------------
(Signature)
______ shares of Series _ Preferred Stock
Vice President
Strategic and Financial Planning
- ----------------------------- ______ shares of Series _ Preferred Stock
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 8, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited to
the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ James J. Viera 21,052 shares of Series D Preferred Stock
- -----------------------------
(Signature)
______ shares of Series _ Preferred Stock
James J. Viera, VP
Cowles Media Company
- ----------------------------- ______ shares of Series _ Preferred Stock
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 5, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ John A. McKinley, Jr. 315,790 shares of Series D Preferred Stock
- -----------------------------
(Signature)
_____ shares of Series _ Preferred Stock
John A. McKinley, Jr.
Chief Technology Officer _____ shares of Series _ Preferred Stock
- -----------------------------
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
/s/ Cosmo Corigliano 210,527 shares of Series D Preferred Stock
- -----------------------------
(Signature)
_______ shares of Series _ Preferred Stock
CUC International Inc.
- ----------------------------- _______ shares of Series _ Preferred Stock
(Print or Type Name)
<PAGE>
EXHIBIT B
---------
IRREVOCABLE PROXY
-----------------
1. Subject to paragraph 3 below, the undersigned, as owner of shares of
capital stock of PointCast Incorporated, a California corporation (the
"Company"), the number and description of which shares are set forth below (the
"Shares"), hereby revokes all previous proxies and appoints the Secretary of the
Company (at the time this proxy is exercised) as proxyholder to attend and vote
at any and all meetings of the shareholders of the Company, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy, as well as to execute any and all written consents of
shareholders of the Company executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
the undersigned had personally attended the meeting or had personally voted the
shares or had personally signed the written consent.
2. The undersigned authorizes the proxyholder to substitute another
person as proxyholder and to file the substitution instrument with the Secretary
of the Company.
3. This proxy is granted pursuant to Section 2.8 of that certain Investor
Rights Agreement dated as of September 12, 1997 (the "Investor Rights
Agreement"). The right of the proxyholder to vote the Shares shall be limited
to the circumstances set forth in Section 2.8 of the Investor Rights Agreement.
This proxy shall terminate on, and be of no further force and effect after, the
earlier of (i) the first anniversary of the date of the Investor Rights
Agreement and (ii) the closing of the Initial Public Offering (as such term is
defined in the Investor Rights Agreement).
4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e)
of Section 705 of the California Corporations Code.
FREEDOM COMMUNICATIONS, INC.
/s/ David L. Kuykendell 21,052 shares of Series D Preferred Stock
- -----------------------------
(Signature)
______ shares of Series _ Preferred Stock
David L. Kuykendell
- ----------------------------- ______ shares of Series _ Preferred Stock
(Print or Type Name)
Senior Vice President and
Chief Executive Officer
<PAGE>
EXHIBIT 10.2
POINTCAST INCORPORATED
1994 STOCK PLAN
STOCK OPTION AGREEMENT -- EARLY EXERCISE
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
Name: Phil Koen
----------------------------------------
Address:
-------------------------------------
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option Agreement,
as follows:
Grant Number 81
-------------------------------
Date of Grant June 4, 1997
-------------------------------
Vesting Commencement Date May 28, 1997
-------------------------------
Exercise Price per Share $ $1.00
------------------------------
Total Number of Shares Granted 509,187
-------------------------------
Total Exercise Price $ $509,187
------------------------------
Type of Option: Incentive Stock Option
-----
X Nonstatutory Stock Option
-----
Term/Expiration Date: June 24, 2007
------------------------------
Exercise and Vesting Schedule:
-----------------------------
This Option is exercisable immediately, in whole or in part, conditioned
upon Optionee entering into a Restricted Stock Purchase Agreement with respect
to any unvested Option Shares. The Shares subject to this Option shall vest and
be released from the Company's repurchase option, as set forth in the Restricted
Stock Purchase Agreement, according to the following schedule:
<PAGE>
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to your remaining in Continuous Status
as an Employee or Consultant as of such vesting dates. Notwithstanding the
foregoing, in the event of a bona fide acquisition of the Company pursuant to a
merger of the Company with or into another business entity (other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior to the merger continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation) with or into another
corporation or a sale of all or substantially all of the assets of the Company,
One Hundred percent (100%) of the shares subject to the Option shall become
fully vested and exercisable immediately prior to the effective time thereof.
Termination Period:
------------------
This Option may be exercised, to the extent vested, for thirty (30) days
after termination of Optionee's Continuous Status as an Employee or Consultant,
or such longer period as may be applicable upon death or disability of Optionee
as provided in the Plan, but in no event later than the Term/Expiration Date as
provided above.
II. AGREEMENT
---------
1. Grant of Option. PointCast Incorporated (the "Company"), hereby
---------------
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the total number of shares of Common Stock (the
"Shares") set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price") subject to the terms,
definitions and provisions of the 1994 Stock Plan (the "Plan") adopted by the
Company, which is incorporated herein by reference.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an ISO as defined in Section 422
of the Code. However, if this Option is intended to be an ISO, to the extent
that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as
a Nonstatutory Stock Option ("NSO").
2. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
-----------------
(a) Subject to subsections 2(i)(b) through 2(i)(e) below, this
option may be exercised in whole or in part at any time. Vested Shares shall not
be subject to the Company's
-2-
<PAGE>
repurchase right (as set forth in the Restricted Stock Purchase Agreement,
attached hereto as Exhibit C-1).
(b) As a condition to exercising this Option for unvested Shares,
the Optionee must execute the Restricted Stock Purchase Agreement.
(c) This Option may not be exercised for a fraction of a Share.
(d) In the event of Optionee's death, disability or other
termination of the employment or consulting relationship, the exercisability of
the Option is governed by Sections 6, 7 and 8 below, subject to the limitation
contained in subsection 2(i)(e).
(e) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.
(ii) Method of Exercise. This Option shall be exercisable by written
------------------
notice (in the form attached as Exhibit A) which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements with respect to
such shares of Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee
and, together with an executed copy of the Restricted Stock Purchase Agreement,
if applicable, shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice and Restricted Stock Purchase
Agreement shall be accompanied by payment of the Exercise Price. This Option
shall be deemed to be exercised upon receipt by the Company of such written
notice and Restricted Stock Purchase Agreement accompanied by the Exercise
Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
--------------------------
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B, and shall
read the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
4. Lock-Up Period. Optionee hereby agrees that if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or
-3-
<PAGE>
otherwise transfer any Shares or other securities of the Company during the 180-
day period (or such longer period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the "Market Standoff
Period") following the effective date of a registration statement of the Company
filed under the Securities Act; provided, however, that such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on behalf
of the Company to the public in an underwritten public offering under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
5. Method of Payment. Payment of the Exercise Price shall be by any of
-----------------
the following, or a combination thereof, at the election of the Optionee:
(i) cash; or
(ii) check; or
(iii) surrender of other shares of Common Stock of the Company which
(A) in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or
(iv) to the extent permitted by the Administrator, delivery of a
properly executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the Exercise Price; or
(v) full recourse promissory note, in the form attached hereto
as Exhibit C-6.
6. Restrictions on Exercise. This Option may not be exercised until such
------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
7. Termination of Relationship. In the event an Optionee's Continuous
---------------------------
Status as an Employee or Consultant terminates, Optionee may, to the extent the
Option was vested at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not vested in this Option at the date of
such termination, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.
-4-
<PAGE>
8. Disability of Optionee. Notwithstanding the provisions of Section 6
----------------------
above, in the event of termination of an Optionee's Continuous Status as an
Employee or Consultant as a result of his or her disability, Optionee may, but
only within twelve (12) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
the Stock Option Agreement), exercise the Option to the extent the Option was
vested at the date of such termination; provided, however, that if such
disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code, in the case of an ISO such ISO shall cease to be treated as an ISO and
shall be treated for tax purposes as an NSO on the ninety-first (91st) day
following such termination. To the extent that Optionee is not vested in the
Option at the date of termination, or if Optionee does not exercise such Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
9. Death of Optionee. In the event of termination of Optionee's
-----------------
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 10 below), by Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance, but only to the extent the Option was vested at the date of
death. To the extent that Optionee is not vested in the Option at the date of
death, or if the Option is not exercised within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
10. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
11. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
12. Tax Consequences. Set forth below is a brief summary as of the date
----------------
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(i) Exercise of ISO. If this Option qualifies as an ISO, there will
---------------
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
-5-
<PAGE>
(ii) Exercise of ISO Following Disability. If the Optionee's
------------------------------------
Continuous Status as an Employee or Consultant terminates as a result of
disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Optionee must exercise an ISO within three months of such termination for the
ISO to be qualified as an ISO.
(iii) Exercise of NSO. There may be a regular federal income tax
---------------
liability upon the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee, the Company will be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise. If the Optionee is subject to
Section 16 of the Exchange Act, then the date of income recognition may be
deferred for up to six months.
(iv) Disposition of Shares. In the case of an NSO, if Shares are
---------------------
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and are disposed of at least two years after the
date of grant, any gain realized on disposition of the Shares will also be
treated as long-term capital gain for federal income tax purposes. If Shares
purchased under an ISO are disposed of within such one-year period or within two
years after the date of grant, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the difference between the Exercise Price and the lesser of (1) the fair
market value of the Shares on the date of exercise, or (2) the sale price of the
Shares.
(v) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the date of grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
(vi) Section 83(b) Election for Unvested Shares Purchased Pursuant to
----------------------------------------------------------------
Nonqualified Stock Options. With respect to the exercise of a nonqualified
- --------------------------
stock option for unvested Shares, an election may be filed by the Optionee with
the Internal Revenue Service within 30 days of the purchase of the Shares,
--------------
electing pursuant to Section 83(b) of the Code to be taxed currently on any
difference between the purchase price of the Shares and their Fair Market Value
on the date of purchase. This will result in a recognition of taxable income to
the Optionee on the date of exercise, measured by the excess, if any, of the
fair market value of the Shares, at the time the Option is exercised over the
purchase price for the Shares. Absent such an election, taxable income will be
measured and recognized by Optionee at the time or times on which the Company's
Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of
his or her own tax consultants in connection with the purchase of the Shares and
-6-
<PAGE>
the advisability of filing of the Election under Section 83(b) and similar tax
provisions. A form of Election under Section 83(b) is attached hereto as
Exhibit C-5 for reference.
(vii) Section 83(b) Election for Unvested Shares Purchased Pursuant
-------------------------------------------------------------
to Incentive Stock Options. With respect to the exercise of an incentive stock
- --------------------------
option for unvested Shares, an election may be filed by the Optionee with the
Internal Revenue Service within 30 days of the purchase of the Shares, electing
--------------
pursuant to Section 83(b) of the Code to be taxed currently on any difference
between the purchase price of the Shares and their Fair Market Value on the date
of purchase for alternative minimum tax purposes. This will result in a
recognition of income to the Optionee on the date of exercise, for alternative
minimum tax purposes, measured by the excess, if any, of the fair market value
of the Shares, at the time the option is exercised, over the purchase price for
the Shares. Absent such an election, alternative minimum taxable income will be
measured and recognized by Optionee at the time or times on which the Company's
Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of
his or her tax consultants in connection with the purchase of the Shares and the
advisability of filing of the Election under Section 83(b) and similar tax
provisions. A form of Election under Section 83(b) for alternative minimum tax
purposes is attached hereto as Exhibit C-5 for reference.
OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON OPTIONEE'S
BEHALF.
PointCast Incorporated
/s/ David Dorman
By:_______________________________
-7-
<PAGE>
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
12/30/97 /s/ Philip J. Koen
Dated: _____________________ _____________________________________
Optionee
Residence Address:
_____________________________________
_____________________________________
_____________________________________
-8-
<PAGE>
EXHIBIT A
---------
1994 STOCK PLAN
EXERCISE NOTICE
PointCast Incorporated
501 Macara Ave.
Sunnyvale, CA 94806
Attn: Secretary
Exercise of Option. Effective as of today, October 30, 1997, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
200,000 shares of the Common Stock (the "Shares") of PointCast Incorporated
(the "Company") under and pursuant to the 1994 Stock Plan, as amended (the
"Plan") and the [_] Incentive [X] Nonstatutory Stock Option Agreement (the
"Option Agreement") dated May 19, 1997.
Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
Rights as Shareholder. Until the stock certificate evidencing such
---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 12 of the Plan.
Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.
Company's Right of First Refusal. Before any Shares held by Optionee
--------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
Notice of Proposed Transfer. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
<PAGE>
Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
Purchase Price. The purchase price ("Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.
Holder's Right to Transfer. If all of the Shares proposed in the
--------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.
Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate as to any Shares 90 days after the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
2
<PAGE>
Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY
THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF
WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
Optionee understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner, a
copy of which is attached to Exhibit B, the Investment Representation Statement.
Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.
Successors and Assigns. The Company may assign any of its rights
----------------------
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the
3
<PAGE>
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.
Interpretation. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
Governing Law; Severability. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
Notices. Any notice required or permitted hereunder shall be given in
-------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
Further Instruments. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
full Exercise Price for the Shares.
Entire Agreement. The Plan and Notice of Grant/Option Agreement are
----------------
incorporated herein by reference. This Agreement, the Plan, the Option
Agreement, the Restricted Stock Purchase Agreement, and the Investment
Representation Statement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof.
Submitted by: Accepted by:
OPTIONEE: PointCast Incorporated
/s/ Philip J. Koen /s/ David Dorman
_______________________________ By:_________________________________
President
Its:________________________________
Address: Address:
- ------- -------
22000 Dorsey Way 501 Macara Ave
Saratoga, CA 95070 Sunnyvale, CA 94086
4
<PAGE>
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : Philip J. Koen
COMPANY : POINTCAST INCORPORATED
SECURITY : COMMON STOCK
AMOUNT : 200,000 SHARES
DATE : October 30, 1997
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through
a broker in an unsolicited "broker's
<PAGE>
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934); and, in the case of an
affiliate, (2) the availability of certain public information about the Company,
(3) the amount of Securities being sold during any three month period not
exceeding the limitations specified in Rule 144(e), and (4) the timely filing of
a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that
any such other registration exemption will be available in such event.
(e) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
/s/ Philip J. Koen
__________________________________
Date: 12/30, 1997
2
<PAGE>
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
----------------------------------------------------
Title 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: Restriction on Transfer. (a) The issuer of any security upon
---------- -----------------------
which a restriction on transfer has been imposed pursuant to Sections 260.102.6,
260.141.10 or 260.534 shall cause a copy of this section to be delivered to each
issuee or transferee of such security at the time the certificate evidencing the
security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a sale
or transfer of such security, or any interest therein, without the prior written
consent of the Commissioner (until this condition is removed pursuant to Section
260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of the
Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse, or any custodian
or trustee for the account of the transferor or the transferor's ancestors,
descendants, or spouse; or to a transferee by a trustee or custodian for the
account of the transferee or the transferee's ancestors, descendants or spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code (either acting
as such or as a finder) to a resident of a foreign state, territory or country
who is neither domiciled in this state to the knowledge of the broker-dealer,
nor actually present in this state if the sale of such securities is not in
violation of any securities law of the foreign state, territory or country
concerned;
(8) to a broker-dealer licensed under the Code in a principal transaction,
or as an underwriter or member of an underwriting syndicate or selling group;
(9) if the interest sold or transferred is a pledge or other lien given by
the purchaser to the seller upon a sale of the security for which the
Commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112, 25113 or
25121 of the Code, of the securities to be transferred, provided that no order
under Section 25140 or subdivision (a) of Section 25143 is in effect with
respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such corporation, or
by a wholly owned subsidiary of a corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or 25113
of the Code, provided that no order under Section 25140 or subdivision (a) of
Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign states, territories or countries who are
neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or to
the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law or by
the administrator of the unclaimed property law of another state if, in either
such case, such person (i) discloses to potential purchasers at the sale that
transfer of the securities is restricted under this rule, (ii) delivers to each
purchaser a copy of this rule, and (iii) advises the Commissioner of the name of
each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an issuer
transaction that is subject to the qualification requirement of Section 25110 of
the Code but exempt from that qualification requirement by subdivision (f) of
Section 25102; provided that any such transfer is on the condition that any
certificate evidencing the security issued to such transferee shall contain the
legend required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
3
<PAGE>
EXHIBIT C-1
-----------
1994 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made between Philip J. Koen (the "Purchaser") and
PointCast Incorporated (the "Company") as of May 19, 1997.
RECITALS
--------
(1) Pursuant to the exercise of the stock option granted to Purchaser under
the Company's 1994 Stock Plan and pursuant to the Stock Option Agreement (the
"Option Agreement") dated May 19, 1997 by and between the Company and Purchaser
with respect to such grant, which Option Agreement is hereby incorporated by
reference, Purchaser has elected to purchase Two Hundred Thousand (200,000)
shares which have not become vested under the vesting schedule set forth in the
Option Agreement ("Unvested Shares"). The Unvested Shares and the shares subject
to the Option Agreement which have become vested are sometimes collectively
referred to herein as the "Shares".
(2) As required by the Option Agreement, as a condition to Purchaser's
election to exercise the option, Purchaser must execute this Restricted Stock
Purchase Agreement, which sets forth the rights and obligations of the parties
with respect to Shares acquired upon exercise of the Option.
1. Repurchase Option.
-----------------
(a) If Purchaser's Continuous Status as an Employee or Consultant is
terminated for any reason, including for cause, death, and disability, the
Company shall have the right and option to purchase from Purchaser, or
Purchaser's personal representative, as the case may be, all of the Purchaser's
Unvested Shares as of the date of such termination at the price paid by the
Purchaser for such Shares (the "Repurchase Option").
(b) Upon the occurrence of such a termination, the Company may
exercise its Repurchase Option by delivering personally or by registered mail,
to Purchaser (or his transferee or legal representative, as the case may be),
within ninety (90) days of the termination, a notice in writing indicating the
Company's intention to exercise the Repurchase Option and setting forth a date
for closing not later than thirty (30) days from the mailing of such notice. The
closing shall take place at the Company's office. At the closing, the holder of
the certificates for the Unvested Shares being transferred shall deliver the
stock certificate or certificates evidencing the Unvested Shares, and the
Company shall deliver the purchase price therefor.
<PAGE>
(c) At its option, the Company may elect to make payment for the
Unvested Shares to a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser stating the name and
address of the bank, date of closing, and waiving the closing at the Company's
office.
(d) If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within ninety (90) days following
the termination, the Repurchase Option shall terminate.
2. Transferability of the Shares; Escrow.
-------------------------------------
(a) Purchaser hereby authorizes and directs the secretary of the
Company, or such other person designated by the Company, to transfer the
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.
(b) To insure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 1, Purchaser hereby appoints the secretary, or any other person
designated by the Company as escrow agent, as its attorney-in-fact to sell,
assign and transfer unto the Company, such Unvested Shares, if any, repurchased
by the Company pursuant to the Repurchase Option and shall, upon execution of
this Agreement, deliver and deposit with the secretary of the Company, or such
other person designated by the Company, the share certificates representing the
Unvested Shares, together with the stock assignment duly endorsed in blank,
attached hereto as Exhibit C-2. The Unvested Shares and stock assignment shall
be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of
the Company and Purchaser attached as Exhibit C-3 hereto, until the Company
exercises its purchase right as provided in Section 1, until such Unvested
Shares are vested, or until such time as this Agreement no longer is in effect.
Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to
the Purchaser the certificate or certificates representing such Shares in the
escrow agent's possession belonging to the Purchaser, and the escrow agent shall
be discharged of all further obligations hereunder; provided, however, that the
escrow agent shall nevertheless retain such certificate or certificates as
escrow agent if so required pursuant to other restrictions imposed pursuant to
this Agreement.
(c) The Company, or its designee, shall not be liable for any act it
may do or omit to do with respect to holding the Shares in escrow and while
acting in good faith and in the exercise of its judgment.
(d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by the Purchaser with respect to any Unvested Shares
purchased by Purchaser and shall acknowledge the same by signing a copy of this
Agreement.
-3-
<PAGE>
3. Ownership, Voting Rights, Duties. This Agreement shall not affect in
--------------------------------
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein.
4. Legends. The share certificate evidencing the Shares issued hereunder
-------
shall be endorsed with the following legend (in addition to any legend required
under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
5. Adjustment for Stock Split. All references to the number of Shares
--------------------------
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
6. Notices. Notices required hereunder shall be given in person or by
-------
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at their respective principal executive offices.
7. Survival of Terms. This Agreement shall apply to and bind Purchaser
-----------------
and the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.
8. Section 83(b) Elections.
-----------------------
(a) Election for Unvested Shares Purchased Pursuant to Nonqualified
---------------------------------------------------------------
Stock Options. Purchaser hereby acknowledges that he or she has been informed
- -------------
that, with respect to the exercise of a nonqualified stock option for Unvested
Shares, that unless an election is filed by the Purchaser with the Internal
Revenue Service and, if necessary, the proper state taxing authorities, within
------
30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the
- -------
Code to be taxed currently on any difference between the purchase price of the
Shares and their fair market value on the date of purchase, there will be a
recognition of taxable income to the Optionee, measured by the excess, if any,
of the fair market value of the Shares, at the time the Company's Repurchase
Option lapses over the purchase price for the Shares. Optionee represents that
Optionee has consulted any tax consultant(s) Optionee deems advisable in
connection with the purchase of the Shares or the filing of the Election under
Section 83(b). A form of Election under Section 83(b) is attached hereto as
Exhibit C-4 for reference.
(b) Election for Unvested Shares Purchased Pursuant to Incentive Stock
------------------------------------------------------------------
Options. Purchaser hereby acknowledges that he or she has been informed that,
- -------
with respect to the exercise of an incentive stock option for Unvested Shares,
that unless an election is filed by the Purchaser with
-4-
<PAGE>
the Internal Revenue Service within 30 days of the purchase of the Shares,
--------------
electing pursuant to Section 83(b) of the Code to be taxed currently on any
difference between the purchase price of the Shares and their fair market value
on the date of purchase, there will be a recognition of income to the Optionee,
for alternative minimum tax purposes, measured by the excess, if any, of the
fair market value of the Shares, at the time the Company's Repurchase Option
lapses over the purchase price for the Shares. Optionee represents that Optionee
has consulted any tax consultant(s) Optionee deems advisable in connection with
the purchase of the Shares or the filing of the Election under Section 83(b) and
similar tax provisions. A form of Election under Section 83(b) for alternative
minimum tax purposes is attached hereto as Exhibit C-5 for reference.
PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.
9. Representations. Purchaser has reviewed with his own tax advisors the
---------------
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. Purchaser is relying solely on
such advisors and not on any statements or representations of the Company or any
of its agents. Purchaser understands that he (and not the Company) shall be
responsible for his own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
10. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with California law.
Purchaser represents that he has read this Agreement and is familiar with
its terms and provisions. Purchaser hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set
forth above.
"COMPANY"
PointCast Incorporated
/s/ David Dorman
By:______________________________________
President & CEO
Title: ____________________________________
"PURCHASER"
/s/ Philip J. Koen
_________________________________________
Philip J. Koen
Address:
-6-
<PAGE>
EXHIBIT C-2
-----------
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign and
transfer unto
________________________________________________________________________________
________________ (__________) shares of the Common Stock of PointCast
Incorporated standing in my name of the books of said corporation represented by
Certificate No. _____ herewith and do hereby irrevocably constitute and appoint
_____________________________________________ to transfer the said stock on the
books of the within named corporation with full power of substitution in the
premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between________________________ and the undersigned
dated ______________, 199__.
Dated: _______________, 199__
/s/ Philip J. Koen
Signature:______________________________
Philip J. Koen
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE>
EXHIBIT C-3
-----------
JOINT ESCROW INSTRUCTIONS
-------------------------
_____________, 199__
PointCast Incorporated
Judith O'Brien
Asst. Corporate Secretary
c/o Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Dear Assistant Corporate Secretary:
As Escrow Agent for both PointCast Incorporated (the "Company"), and the
undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of that certain Restricted Stock Purchase Agreement ("Agreement") between
the Company and the undersigned, in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "Company") exercises the Company's
repurchase option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities.
<PAGE>
Subject to the provisions of this paragraph 3, Purchaser shall exercise all
rights and privileges of a shareholder of the Company while the stock is held by
you.
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 120 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court.
In case you obey or comply with any such order, judgment or decree, you shall
not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You 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 the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
<PAGE>
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: PointCast Incorporated
501 Macara Ave.
Sunnyvale, CA 94086
PURCHASER: Philip J. Koen
__________________________________________
__________________________________________
__________________________________________
ESCROW AGENT: PointCast Incorporated
Judith O'Brien
Corporate Secretary
c/o Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
-3-
<PAGE>
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of California.
PointCast Incorporated
/s/ David Dorman
By: ___________________________________
President
Title: __________________________________
/s/ Philip J. Koen
Purchaser: _____________________________
(Signature)
/s/ Jacklyn Karceski
_______________________________________
(Typed or Printed Name)
-4-
<PAGE>
EXHIBIT C-4
-----------
ELECTION UNDER SECTION 83(b)
----------------------------
OF THE INTERNAL REVENUE CODE OF 1986
------------------------------------
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with taxpayer's receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME: TAXPAYER: Phil Koen SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: ______________________________ shares (the "Shares") of the Common
Stock of PointCast Incorporated (the "Company").
3. The date on which the property was transferred is:
____________________________, 19 ____.
4. The property is subject to the following restrictions:
The Shares may not be transferred and are subject to forfeiture under the
terms of an agreement between the taxpayer and the Company. These
restrictions lapse upon the satisfaction of certain conditions contained in
such agreement.
5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never lapse,
of such property is:
$______________________.
6. The amount (if any) paid for such property is:
$______________________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
- --------------------------------------------------------------------------
except with the consent of the Commissioner.
- -------------------------------------------
Dated: ___________________, 199____
Phil Koen, Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 199____
Spouse of Taxpayer
<PAGE>
EXHIBIT C-5
-----------
ELECTION UNDER SECTION 83(b)
----------------------------
OF THE INTERNAL REVENUE CODE OF 1986
------------------------------------
The undersigned taxpayer hereby elects, pursuant to the provisions of Sections
55-56 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in
taxpayer's alternative minimum taxable income for the current taxable year, as
compensation for services, the excess, if any, of the fair market value of the
property described below at the time of transfer over the amount paid for such
property.
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME: TAXPAYER: Phil Koen
SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: ________________ shares (the "Shares") of the Common Stock of
PointCast Incorporated (the "Company").
3. The date on which the property was transferred is: ___________________.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, at its
original purchase price, on certain events. This right lapses with regard to
a portion of the Shares over time.
5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never
lapse, of such property is:
$_______________
6. The amount paid for such property is: $_______________
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
- --------------------------------------------------------------------------
except with the consent of the Commissioner.
- -------------------------------------------
Dated: ___________________, 199____
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 199____
<PAGE>
EXHIBIT C-6
-----------
PROMISSORY NOTE
$200,000
October 30, 1997
FOR VALUE RECEIVED, Philip J. Koen promises to pay to PointCast Incorporated
--------------
(the "Company"), or order, the principal sum of $200,000, together with interest
on the unpaid principal hereof from the date hereof at the rate of six and one-
one hundreth percent (6.01%) per annum, compounded semiannually.
Principal and interest shall be due and payable on October 30, 2001 or
ninety (90) days following the date upon which the Executive's employment with
the Company terminates. Should the undersigned fail to make full payment of
principal or interest for a period of 10 days or more after the due date
thereof, the whole unpaid balance on this Note of principal and interest shall
become immediately due at the option of the holder of this Note. Payments of
principal and interest shall be made in lawful money of the United States of
America.
The undersigned may at any time prepay all or any portion of the principal
or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of May 19, 1997.
This Note is secured in part by a pledge of the Company's Common Stock under the
terms of a Security Agreement of even date herewith and is subject to all the
provisions thereof.
The holder of this Note shall have full recourse against the undersigned,
and shall not be required to proceed against the collateral securing this Note
in the event of default.
In the event the undersigned shall cease to be an employee or consultant of
the Company for any reason, this Note shall, at the option of the Company, be
accelerated, and the whole unpaid balance on this Note of principal and accrued
interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
/s/ Philip J. Koen
Signature ____________________________________
Print Name: Philip J. Koen
<PAGE>
2
EXHIBIT C-7
-----------
SECURITY AGREEMENT
This Security Agreement is made as of October 30, 1997 between PointCast
Incorporated ("Pledgee"), and Phil Koen ("Pledgor").
Recitals
--------
Pursuant to Pledgor's election to purchase Shares under the Option Agreement
dated June 4, 1997 (the "Option"), between Pledgor and Pledgee under Pledgee's
1994 Stock Plan, and Pledgor's election under the terms of the Option to pay for
such shares with his promissory note (the "Note"), Pledgor has purchased 200,000
shares of Pledgee's Common Stock (the "Shares") at a price of $1.00 per share,
for a total purchase price of $200,000. The Note and the obligations thereunder
are as set forth in Exhibit C-6 to the Option.
NOW, THEREFORE, it is agreed as follows:
I. Creation and Description of Security Interest. In consideration of the
---------------------------------------------
transfer of the Shares to Pledgor under the Option Agreement, Pledgor, pursuant
to the California Commercial Code, hereby pledges all of such Shares (herein
sometimes referred to as the "Collateral") duly endorsed in blank or with
executed stock powers, and herewith delivers said certificate to the Secretary
of Pledgee ("Pledgeholder"), who shall hold said certificate subject to the
terms and conditions of this Security Agreement.
The pledged stock (together with an executed blank stock assignment for use
in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
II. Pledgor's Representations and Covenants. To induce Pledgee to enter
---------------------------------------
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
A. Payment of Indebtedness. Pledgor will pay the principal sum of the
-----------------------
Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
B. Encumbrances. The Shares are free of all other encumbrances,
------------
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
<PAGE>
3
1. Margin Regulations. In the event that Pledgee's Common Stock is
------------------
now or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees to
cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.
III. Voting Rights. During the term of this pledge and so long as all
-------------
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
IV. Stock Adjustments. In the event that during the term of the pledge any
-----------------
stock dividend, reclassification, readjustment or other changes are declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
V. Options and Rights. In the event that, during the term of this pledge,
------------------
subscription Options or other rights or options shall be issued in connection
with the pledged Shares, such rights, Options and options shall be the property
of Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the pledged Shares then held by
Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
VI. Default. Pledgor shall be deemed to be in default of the Note and of
-------
this Security Agreement in the event:
A. Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or
B. Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall have
the right to accelerate payment of the Note upon notice to Pledgor, and Pledgee
shall thereafter be entitled to pursue its remedies under the California
Commercial Code.
VII. Release of Collateral. Subject to any applicable contrary rules under
---------------------
Regulation G, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder here under upon payments of the principal of the
Note. The number of the pledged Shares which shall be
<PAGE>
4
released shall be that number of full Shares which bears the same proportion to
the initial number of Shares pledged hereunder as the payment of principal bears
to the initial full principal amount of the Note.
VIII. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
----------------------------------------
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
IX. Term. The within pledge of Shares shall continue until the payment of
----
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.
X. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
----------
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
XI. Pledgeholder Liability. In the absence of willful or gross
----------------------
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
XII. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
-----------------------------------
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
XIII. Successors or Assigns. Pledgor and Pledgee agree that all of the
---------------------
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
XIV. Governing Law. This Security Agreement shall be interpreted and
-------------
governed under the laws of the State of California.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"PLEDGOR" By: /s/ Philip J. Koen
___________________________________
Philip J. Koen
______________________________________
Print Name
22000 Dorsey Way
Address: ____________________________
Saratoga, CA 95070
____________________________
"PLEDGEE" PointCast Incorporated
By: /s/ David Dorman
___________________________________
Title: ______________________________
/s/ Jacklyn Karceski
"PLEDGEHOLDER" ______________________________________
Stock Option Administrator of
PointCast Incorporated
<PAGE>
POINTCAST INCORPORATED
1994 STOCK PLAN
AMENDMENT TO STOCK OPTION AGREEMENT
The Stock Option Agreement dated 1 by and between PointCast Incorporated
and 2 (the "Agreement") is hereby amended as follows, effective as of the date
set forth by the signatures below:
Unless otherwise defined herein, initially capitalized terms shall have the
same meanings as defined in the PointCast Incorporated 1994 Stock Plan (the
"Plan").
1. Vesting and Exercise Schedule. The Vesting Schedule set forth in the
-----------------------------
Agreement's Notice of Grant is amended in its entirety and replaced with a new
Exercise and Vesting Schedule as follows:
"Exercise and Vesting Schedule:
-----------------------------
This Option is exercisable immediately, in whole or in part, conditioned
upon Optionee entering into a Restricted Stock Purchase Agreement with respect
to any unvested Option Shares. The Shares subject to this Option shall vest and
be released from the Company's repurchase option, as set forth in the Restricted
Stock Purchase Agreement, according to the following schedule:
25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to your remaining in Continuous
Status as an Employee or Consultant as of such vesting dates."
2. Option Agreement. To the extent not expressly amended hereby, the
----------------
Agreement remains in full force and effect.
3. Entire Agreement. This Amendment, taken together with the Agreement
----------------
(to the extent not expressly amended hereby), represents the entire agreement of
the parties, supersedes any and all previous contracts, arrangements or
understandings between the parties with respect to the stock option grant
evidenced by the Agreement, and may be amended at any time only by mutual
written agreement of the parties hereto.
IN WITNESS WHEREOF, this instrument is executed as of 12/30, 1997.
POINTCAST INCORPORATED OPTIONEE
By: /s/ David Dorman By: /s/ Philip J. Koen
------------------------ --------------------------
APPROVED FOR SIGNATURE
POINTCAST LEGAL DEPARTMENT
GARY A. PARANZINO /s/ GAP
<PAGE>
EXHIBIT 10.5
POINTCAST INCORPORATED
1998 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 1998 Director Option Plan
--------------------
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" means the common stock of the Company.
(d) "COMPANY" means PointCast Incorporated, a Delaware corporation.
(e) "DIRECTOR" means a member of the Board.
(f) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(g) "EMPLOYEE" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(i) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
<PAGE>
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(j) "INSIDE DIRECTOR" means a Director who is an Employee.
(k) "OPTION" means a stock option granted pursuant to the Plan.
(l) "OPTIONED STOCK" means the Common Stock subject to an Option.
(m) "OPTIONEE" means a Director who holds an Option.
(n) "OUTSIDE DIRECTOR" means a Director who is not an Employee.
(o) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(p) "PLAN" means this 1998 Director Option Plan.
(q) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(r) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 200,000 Shares (the "POOL"), plus an annual increase to be
added on the first day of the Company's fiscal year (beginning in 1999) equal to
the lesser of (i) the number of Shares needed to restore the maximum aggregate
number of Shares available for sale under the Plan to 200,000 Shares, or (ii) a
lesser amount determined by the Board (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.
-2-
<PAGE>
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Administration and Grants of Options under the Plan. All grants of
---------------------------------------------------
Options to Outside Directors under this Plan shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following
provisions:
(a) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options.
(b) Each Outside Director shall be automatically granted an Option to
purchase 20,000 Shares (the "First Option") on the date on which the later of
the following events occurs: (i) the date the Company's shareholders approve
the Plan, or (ii) the date on which such person first becomes an Outside
Director, whether through election by the stockholders of the Company or
appointment by the Board to fill a vacancy; provided, however, that an Inside
Director who ceases to be an Inside Director but who remains a Director shall
not receive a First Option.
(c) Each Outside Director shall be automatically granted an Option to
purchase 5,000 Shares (a "Subsequent Option") on the date of the annual meeting
of the stockholders of each year provided he or she is then an Outside Director
and if as of such date, he or she shall have served on the Board for at least
the preceding six (6) months.
(d) Notwithstanding the provisions of subsections (b) and (c) hereof,
any exercise of an Option granted before the Company has obtained stockholder
approval of the Plan in accordance with Section 16 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan in accordance with Section
16 hereof.
(e) The terms of a First Option granted hereunder shall be as
follows:
(i) the term of the First Option shall be ten (10) years.
(ii) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(iii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option.
(iv) subject to Section 10 hereof, the First Option shall become
exercisable as to twenty-five percent (25%) of the Shares subject to the First
Option on the first anniversary of
-3-
<PAGE>
its date of grant, and 1/48 of the Shares subject to the First Option at the end
of each full month thereafter, provided that the Optionee continues to serve as
a Director on such dates.
(f) The terms of a Subsequent Option granted hereunder shall be as
follows:
(i) the term of the Subsequent Option shall be ten (10) years.
(ii) the Subsequent Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(iii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.
(iv) subject to Section 10 hereof, the Subsequent Option shall
become exercisable as to one hundred percent (100%) of the Shares subject to the
Subsequent Option on the fourth anniversary of its date of grant, provided that
the Optionee continues to serve as a Director on such date.
(g) In the event that any Option granted under the Plan would cause
the number of Shares subject to outstanding Options plus the number of Shares
previously purchased under Options to exceed the Pool, then the remaining Shares
available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the stockholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
-----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
6. Term of Plan. The Plan shall become effective upon the approval by
------------
the stockholders of the Company. It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 11 hereof.
7. Form of Consideration. The consideration to be paid for the Shares to
---------------------
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which
-4-
<PAGE>
said Option shall be exercised, (iv) consideration received by the Company under
a cashless exercise program implemented by the Company in connection with the
Plan, or (v) any combination of the foregoing methods of payment.
8. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
----------------------------------------------
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of such termination, and to the extent that the
Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
----------------------
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10)
-5-
<PAGE>
year term). To the extent that the Optionee was not entitled to exercise an
Option on the date of termination, or if he or she does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
-----------------
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. Unless provided otherwise by the
------------------------------
Administrator, the Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
------------------------------------------------------------------
Asset Sale.
- ----------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation or the sale of substantially all of the assets
of the Company, (i) outstanding Options shall have their vesting accelerated as
to an additional twenty-five percent (25%) of the
-6-
<PAGE>
Shares subject to such Option effective immediately prior to the consummation of
such merger or asset sale, and (ii) outstanding Options may be assumed or
equivalent options may be substituted by the successor corporation or a Parent
or Subsidiary thereof (the "Successor Corporation"). If an Option is assumed or
substituted for, the Option or equivalent option shall continue to be
exercisable as provided in Section 4 hereof for so long as the Optionee serves
as a Director or a director of the Successor Corporation. If the Successor
Corporation does not assume an outstanding Option or substitute for it an
equivalent option, the Option shall terminate as of the date of the closing of
the merger or asset sale.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
law, regulation or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon
-7-
<PAGE>
which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.
16. Stockholder Approval. The Plan shall be subject to approval by the
--------------------
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.
-8-
<PAGE>
POINTCAST INCORPORATED
1998 DIRECTOR OPTION PLAN
DIRECTOR OPTION AGREEMENT
[FIRST OPTION]
1. Grant of Option. Effective as of today, _______________, 19__,
---------------
PointCast Incorporated, a Delaware corporation (the "Company"), hereby grants to
_______________________ (the "Optionee"), a nonstatutory stock option to
purchase a total of twenty thousand (20,000) shares of the Company's Common
Stock ("Common Stock"), at the price determined as provided herein, and in all
respects subject to the terms, definitions and provisions of the Company's 1998
Director Option Plan (the "Plan") adopted by the Company which is incorporated
herein by reference. The terms defined in the Plan shall have the same defined
meanings herein.
2. Exercise Price. The exercise price is $_______ for each share of
--------------
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the provisions of Section 8 of the Plan as follows:
(a) Right to Exercise.
-----------------
(i) This Option shall become exercisable in installments
cumulatively with respect to twenty-five percent (25%) of the shares subject to
the Option on the first anniversary of the date of grant, and as to an
additional 1/48 of the shares subject to the Option at the end of each full
month thereafter, subject to Optionee continuing to provide services as a
Director, so that one hundred percent (100%) of the Optioned Stock shall be
exercisable four years after the date of grant; provided, however, that in no
event shall any Option be exercisable prior to the date the stockholders of the
Company approve the Plan.
(ii) This Option may not be exercised for a fraction of a share.
(iii) In the event of Optionee's death, Disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(b) Method of Exercise. This Option shall be exercisable by written
------------------
notice which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised. Such written notice,
in the form attached hereto as Exhibit A, shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price.
4. Method of Payment. Payment of the exercise price shall be by any of
-----------------
the following,
<PAGE>
or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check; or
(c) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised; or
(d) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
--------------
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
--------------------------------
exercise of this
<PAGE>
Option, he or she will recognize income for tax purposes in an amount equal to
the excess of the then Fair Market Value of the Shares purchased over the
exercise price paid for such Shares. Since the Optionee is subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, under certain limited
circumstances the measurement and timing of such income (and the commencement of
any capital gain holding period) may be deferred, and the Optionee is advised to
contact a tax advisor concerning the application of Section 83 in general and
the availability a Section 83(b) election in particular in connection with the
exercise of the Option. Upon a resale of such Shares by the Optionee, any
difference between the sale price and the Fair Market Value of the Shares on the
date of exercise of the Option, to the extent not included in income as
described above, will be treated as capital gain or loss.
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
OPTIONEE: POINTCAST INCORPORATED
___________________________________ ______________________________________
Signature By
___________________________________ ______________________________________
Print Name Title
____________________________________
Residence Address
____________________________________
-3-
<PAGE>
EXHIBIT A
---------
1998 DIRECTOR OPTION PLAN
DIRECTOR OPTION EXERCISE NOTICE
PointCast Incorporated
501 Macara Avenue
Sunnyvale, CA 94086
Attention: Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
------------------
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of PointCast Incorporated (the "Company") under and pursuant to the
Company's 1998 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Agreement.
3. Tax Consequences. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
4. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
5. Entire Agreement. The Agreement is incorporated herein by reference.
----------------
This Exercise Notice, the Plan and the Agreement constitute the entire agreement
of the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof. This Exercise Notice, the Plan and the Agreement are governed by
California law except for that body of law pertaining to conflict of laws.
<PAGE>
Submitted by: Accepted by:
PURCHASER: POINTCAST INCORPORATED
__________________________________ _____________________________________
Signature By
__________________________________ _____________________________________
Print Name Its
Address: Address:
- ------- -------
_________________________________ 501 Macara Avenue
_________________________________ Sunnyvale, CA 94086
_________________________________
Date Received
-2-
<PAGE>
POINTCAST INCORPORATED
1998 DIRECTOR OPTION PLAN
DIRECTOR OPTION AGREEMENT
[SUBSEQUENT OPTION]
1. Grant of Option. Effective as of today, _______________, 19__,
---------------
PointCast Incorporated, a Delaware corporation (the "Company"), hereby grants to
_______________________ (the "Optionee"), a nonstatutory stock option to
purchase a total of five thousand (5,000) shares of the Company's Common Stock
("Common Stock"), at the price deter mined as provided herein, and in all
respects subject to the terms, definitions and provisions of the Company's 1998
Director Option Plan (the "Plan") adopted by the Company which is incorporated
herein by reference. The terms defined in the Plan shall have the same defined
meanings herein.
2. Exercise Price. The exercise price is $_______ for each share of
--------------
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the provisions of Section 8 of the Plan as follows:
(a) Right to Exercise.
-----------------
(i) This Option shall become exercisable in installments
cumulatively with respect to one hundred percent (100%) of the shares subject to
the Option on the fourth anniversary of the date of grant, subject to Optionee
continuing to provide services as a Director, so that one hundred percent (100%)
of the Optioned Stock shall be exercisable four years after the date of grant;
provided, however, that in no event shall any Option be exercisable prior to the
date the stockholders of the Company approve the Plan.
(ii) This Option may not be exercised for a fraction of a share.
(iii) In the event of Optionee's death, Disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(b) Method of Exercise. This Option shall be exercisable by written
------------------
notice which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised. Such written notice,
in the form attached hereto as Exhibit A, shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price.
4. Method of Payment. Payment of the exercise price shall be by any of
-----------------
the following, or a combination thereof, at the election of the Optionee:
<PAGE>
(a) cash;
(b) check; or
(c) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised; or
(d) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
--------------
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
--------------------------------
exercise of this
<PAGE>
Option, he or she will recognize income for tax purposes in an amount equal to
the excess of the then Fair Market Value of the Shares purchased over the
exercise price paid for such Shares. Since the Optionee is subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, under certain limited
circumstances the measurement and timing of such income (and the commencement of
any capital gain holding period) may be deferred, and the Optionee is advised to
contact a tax advisor concerning the application of Section 83 in general and
the availability a Section 83(b) election in particular in connection with the
exercise of the Option. Upon a resale of such Shares by the Optionee, any
difference between the sale price and the Fair Market Value of the Shares on the
date of exercise of the Option, to the extent not included in income as
described above, will be treated as capital gain or loss.
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
OPTIONEE: POINTCAST INCORPORATED
___________________________________ ___________________________________
Signature By
___________________________________ ___________________________________
Print Name Title
___________________________________
Residence Address
____________________________________
-3-
<PAGE>
EXHIBIT A
---------
1998 DIRECTOR OPTION PLAN
DIRECTOR OPTION EXERCISE NOTICE
PointCast Incorporated
501 Macara Avenue
Sunnyvale, CA 94086
Attention: Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
------------------
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of PointCast Incorporated (the "Company") under and pursuant to the
Company's 1998 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Agreement.
3. Tax Consequences. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
4. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
5. Entire Agreement. The Agreement is incorporated herein by reference.
----------------
This Exercise Notice, the Plan and the Agreement constitute the entire agreement
of the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof. This Exercise Notice, the Plan and the Agreement are governed by
California law except for that body of law pertaining to conflict of laws.
<PAGE>
Submitted by: Accepted by:
PURCHASER: POINTCAST INCORPORATED
___________________________________ ___________________________________
Signature By
___________________________________ ___________________________________
Print Name Its
Address: Address:
- ------- -------
_________________________________ 501 Macara Avenue
_________________________________ Sunnyvale, CA 94086
_________________________________
Date Received
-2-
<PAGE>
EXHIBIT 10.6
POINTCAST JAPAN, L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT
-----------------------------------
This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of PointCast
Japan, L.L.C. ("LLC") is made and entered into as of May 30, 1997, by and among
PointCast Incorporated, a California corporation ("PCI"), TransCosmos,
Incorporated, a Japanese corporation ("TCI") and such other persons or entities
as may be admitted to LLC after the date hereof, whose names shall be set forth
in Schedule 1 hereto (collectively with PCI and TCI, the "Members").
----------
Capitalized terms not otherwise defined herein are defined in Section 1.9.
WHEREAS, the Members desire to form a Delaware limited liability company on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the Members hereby agree as follows:
ARTICLE I
FORMATION OF LLC
1.1 Formation. The Members hereby form LLC pursuant to the Delaware
---------
Limited Liability Company Act (6 Del. Code (S)(S)18-101 et seq.) (the "Act"),
-- ---
which Act shall govern the rights and liabilities of the Members except as
otherwise herein expressly stated.
1.2 Name of LLC. The name of LLC is PointCast Japan, L.L.C., a Delaware
-----------
limited liability company.
1.3 Filings, Other Actions. PCI has caused to be filed a Certificate of
----------------------
Formation (the "Certificate") with the office of the Secretary of State of
Delaware. The Board (as defined below) shall take all other actions which may
be necessary or appropriate from time to time to comply with all requirements of
law for the formation and operation of a limited liability company and to ensure
the limited liability of the Members in the State of Delaware and any
jurisdictions where LLC may conduct activities.
1.4 Place of Business. The principal place of business for LLC initially
-----------------
shall be at Sumitomoseimei Akasaka Bldg., 3-3-3, Akasaka, Minato-ku, Tokyo,
Japan 107; provided, however, that the Board may change the address of the
principal office by notice in writing to all the Members. In addition, LLC may
maintain such other offices and places of business as the Board may deem
advisable. Notwithstanding the foregoing, unless the Members unanimously agree
otherwise, LLC shall in no event maintain a place of business, own any assets or
have any employees in the United States.
1.5 Term. LLC shall continue in effect until May 30, 2096, subject in any
----
event to earlier termination in accordance with the provisions of this
Agreement.
-1-
<PAGE>
1.6 Purposes and Powers.
-------------------
(a) Subject to the provisions of this Agreement, the purposes of LLC
shall be to commercially exploit, through a wholly owned subsidiary to be formed
as a Japanese corporation ("NewCo"), the localized PointCast network technology
within the country of Japan, as well as any and all activities necessary or
incidental thereto.
(b) LLC shall have all powers necessary, suitable or convenient for
the accomplishment of its purposes.
(c) Nothing set forth herein shall be construed as authorizing LLC to
possess any purpose or power, or to do any act or thing, forbidden by law to a
limited liability company organized under the laws of the State of Delaware.
1.7 Delaware Office; Agent for Service of Process. LLC's agent for
---------------------------------------------
service of process in the State of Delaware shall be c/o Corporation Service
Company, Inc., 1013 Centre Road, Wilmington, County of New Castle, Delaware
19805. The name of the registered agent for service of process on LLC is
Corporation Service Company, Inc. The Board may designate a different agent for
service of process at any time, provided, however, that the Board shall give all
of the Members written notice promptly following such change.
1.8 Title to LLC Property. All property owned by LLC, whether real or
---------------------
personal, tangible or intangible, shall be owned by LLC as an entity, and no
Member individually nor any other person, partnership, corporation or other
entity shall have any ownership interest in such property.
1.9 Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings set forth respectively after each:
(a) "Act" shall mean the Delaware Limited Liability Company Act, 6
---
Del. Code Sections 18-101 et seq.
-- ---
(b) "Administrative Services and Management Agreement" shall mean the
------------------------------------------------
agreement by and between NewCo and TCI in the form attached to this Agreement as
Exhibit A.
- ---------
(c) "Affiliate" of any party shall mean any person or entity that
---------
controls, is controlled by or is under common control with such party.
(d) "Agreement" shall mean this Limited Liability Company Agreement,
---------
as the same may be amended from time to time (including by the addition of
Counterparts).
(e) "Approval" shall mean consent by the Members to an action of LLC
--------
by the affirmative vote of Members holding a majority of the Percentage
Interests in LLC entitled to vote with respect to such matter, or such other
Percentage Interests as may be expressly stated herein, which vote may be
obtained either at a meeting of Members duly noticed (to the address
-2-
<PAGE>
of each Member shown on LLC's records at least ten (10) days prior to the date
set forth in such notice) or by a written consent executed and delivered by such
Members.
(f) "Bankruptcy" shall mean with respect to any person, being the
----------
subject of an order for relief under Title 11 of the United States Code, or any
successor statute in any foreign jurisdiction having like import or effect, or
that such person shall have made an assignment for the benefit of its creditors
generally or a receiver shall have been appointed for substantially all of the
property and assets of such person.
(g) "Board" shall mean the Board of Managers of LLC, designated in
-----
accordance with Section 3.1.
(h) "Book Value" shall mean, as of any particular date, the value at
----------
which LLC's assets are properly reflected on the books of LLC as of such date in
accordance with the provisions of Treasury Regulations Section 1.704-1(b). The
Book Values of all LLC assets shall, if the Board in its sole discretion deems
it appropriate, be adjusted to equal their respective gross fair market values,
as determined by the Board, at the times specified in those regulations.
(i) "Capital Account" shall mean the individual capital account of a
---------------
Member maintained in accordance with Section 2.5 hereof.
(j) "Capital Contribution" shall have the meaning set forth in
--------------------
Section 2.2 hereof.
(k) "Commercial Exploitation Rights Agreement" shall mean the
----------------------------------------
agreement of this date between TCI and PCI in the form attached to this
Agreement as Exhibit B.
---------
(l) "Commercial Exploitation Rights Assignment" shall mean the
-----------------------------------------
assignment of the Commercial Exploitation Rights Agreement by TCI to LLC in the
form attached to this Agreement as Exhibit C.
---------
(m) "Distributable Cash" shall mean, with respect to each fiscal year
------------------
of LLC, LLC's cash flow from operations for such fiscal year, as reflected in
financial statements audited by LLC's independent public accountants, after
providing for reserves that are determined by the Board to be required to fund
ongoing development, marketing, operations and capital expenditures of LLC, and
after deducting any amounts determined by the Board to be subject to any
contingency.
(n) "Certificate" shall have the meaning set forth in Section 1.3.
-----------
(o) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(p) "LLC" shall have the meaning set forth in the preamble to this
---
Agreement.
(q) "Counterpart" shall mean an additional document executed and
-----------
delivered by (i) any new Member admitted to membership in LLC after the original
date of this Agreement, and (ii) such Members having the right under this
Agreement to approve the
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admission of such Member, which document shall set forth the new Member's
Percentage Interest, the resulting Percentage Interests of all other Members,
and any other terms and conditions as shall apply to such Members membership in
LLC. Each Counterpart shall be attached to, and shall become part of, this
Agreement.
(r) "Member" shall have the meaning set forth in the preamble to this
------
Agreement, each of whose name, Capital Contributions and Percentage Interests
are or will be set forth on Schedule 1 hereto and all Counterparts.
----------
(s) "Percentage Interest" shall have the meaning set forth in Section
-------------------
2.1 hereof.
(t) "Phase I" shall mean the period from the inception of NewCo until
-------
completion by NewCo of three consecutive quarters in which it has earned
profits, as determined in accordance with United States generally accepted
accounting principles.
(u) "Profit" or "Loss" shall mean for each taxable year, LLC's
----------------
taxable income or taxable loss for such taxable year, as determined under
Section 703(a) of the Code and Section 1.703-1 of the Treasury Regulations (for
this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or taxable loss), but with the following adjustments: (i) any
tax-exempt income or LLC expenditures described in Section 705(a)(2)(B) of the
Code shall be taken into account in computing such taxable income or taxable
loss; (ii) any item of income or gain required to be allocated specially to a
Member under Section 6.2 shall not be taken into account in computing such
taxable income or taxable loss; and (iii) in lieu of the depreciation,
amortization, gain or loss taken into account in computing such taxable income
or loss, LLC shall compute such items based on the Book Value of LLC property
rather than its tax basis, in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g)(3).
(v) "Tax Matters Partner" has the meaning set forth in Section 5.6.
-------------------
(w) "Technology and Trademark License Agreement" shall mean the
------------------------------------------
Technology and Trademark License Agreement of this date between PCI and LLC in
the form attached to this Agreement as Exhibit D.
---------
(x) "Treasury Regulations" shall mean the Income Tax Regulations
--------------------
issued by the United States Department of the Treasury.
ARTICLE II
CAPITAL CONTRIBUTIONS
2.1 Percentage Interests. Each Member shall have an initial undivided
--------------------
percentage economic interest in LLC, including, except as may otherwise be
provided in Article VI hereof, each item of income, gain, loss, deduction,
credit and distributions or dividends of LLC (a "Percentage Interest"), as
follows:
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(a) PCI -- 60%
(b) TCI -- 40%
The Percentage Interests of the Members as of any date shall be as set forth
next to such Member's name on Schedule 1 of this Agreement (or the most recently
----------
adopted Counterpart) and shall adjust appropriately upon admission of any new
Members and other events.
2.2 Capital Contributions.
---------------------
(a) Upon execution of this Agreement, PCI has contributed to the
capital of LLC (i) cash in the amount of $1 million, and (ii) certain rights to
PCI technology as specified in the Technology and Trademark License Agreement,
which rights have a fair market value as of the date hereof, as agreed by the
Members, of $2 million. PCI's initial Capital Account balance shall equal $3
million, subject to adjustment hereafter as provided in Section 2.5 of this
Agreement. The contributions made by PCI and TCI under this Section 2.2, and any
subsequent contributions of capital by Members to LLC under Sections 2.3 or 2.4,
are hereafter referred to as "Capital Contributions."
(b) Upon execution of this Agreement, TCI has contributed to the
capital of LLC (i) cash in the amount of $2 million, and (ii) the commercial
exploitation rights in respect of the localized PointCast network in Japan
acquired by TCI pursuant to the Commercial Exploitation Rights Agreement. TCI's
initial Capital Account balance shall equal $2 million, subject to adjustment
hereafter as provided in Section 2.5 of this Agreement.
(c) In the event that the Board from time to time hereafter
determines that LLC requires additional funding in excess of the amounts
contributed to LLC pursuant to this Section 2.2 (and Section 2.4, if applicable)
and any amounts advanced pursuant to Section 2.3, then the Members may (but
shall have no obligation to) make, and LLC shall accept, such additional Capital
Contributions on such terms as may be agreeable to the contributing Member and
LLC.
2.3 Member Advances. In addition to the Capital Contributions provided
---------------
for under Section 2.2, the Members may, if the Board in its discretion deems it
appropriate, make cash advances in such amounts and upon such repayment,
interest and other terms as the Board and the Member providing such advance
shall agree. Any such cash advances shall be treated as loans to LLC rather
than Capital Contributions and shall therefore not affect a Member's Capital
Account.
2.4 Additional Members. Subject to Section 3.3 hereof, the Board may
------------------
admit additional Members and accept additional Capital Contributions from such
additional Members from time to time and on such terms as the Board deems
appropriate in its sole discretion, and (other than such approval of the Board
and, if applicable under Section 3.3, TCI) no approval from the Members shall be
required for such actions. Notwithstanding the preceding sentence, no
additional Member shall be admitted (a) which is a direct competitor of PCI or
TCI unless such Member consents to such admission, or (b) upon terms which would
disproportionately
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reduce either PCI's or TCI's Percentage Interest relative to the interests of
other Member(s). Any additional Members who may hereafter be admitted to LLC
shall make such Capital Contributions for such interests in LLC as the Board and
such additional Member shall mutually agree. No Member shall be obligated or
permitted to make any other Capital Contributions except as otherwise provided
in this Article II.
2.5 Capital Accounts.
----------------
(a) A separate capital account (a "Capital Account") shall be
maintained for each Member strictly in accordance with the rules set forth in
Treasury Regulations Section 1.704-1(b)(2)(iv). Subject to the preceding
sentence, each Member's Capital Account shall be (i) increased by the amount of
Capital Contributions made by such Member to LLC and allocations to such Member
of Company Profits and other items of book income and gain; and (ii) decreased
by the amount of money and fair market value of property (net of liabilities
secured by such distributed property that such Member is considered to assume or
take subject to under Section 752 of the Code) distributed to it by LLC and
allocations to such Member of LLC Loss and other items of book loss and
deductions; and (iii) otherwise adjusted in accordance with the additional rules
set forth in Treasury Regulations Section 1.704-1(b)(2)(iv).
(b) In the event the Book Values of LLC assets are adjusted pursuant
to Treasury Regulations Section 1.704-1(b) and Section 1.9(u), the Capital
Accounts of all Members shall be adjusted simultaneously to reflect the
allocations of income, gain, loss or deduction that would be made to the Members
if there were a taxable disposition of LLC's property for its fair market value.
If any assets of LLC are to be distributed in kind, such assets shall be
distributed on the basis of their fair market values after the Members' Capital
Accounts have been adjusted to reflect the manner in which any unrealized income
gain, loss or deduction with respect to such assets (that have not been
reflected in the Capital Accounts previously) would be allocated between the
Members if there were a taxable disposition of the property for its fair market
value.
(c) If any interest in LLC is transferred in accordance with the
provisions of this Agreement, the transferee Member shall succeed to that
portion of the Capital Account of the transferring Member as relates to such
transferred interest.
(d) It is the intent of LLC that the Capital Accounts of all Members
be determined and maintained in accordance with the principles of Treasury
Regulations Section 1.704-1 at all times throughout the full term of LLC and the
foregoing provisions of this Section 2.5 shall be interpreted in accordance with
such intention.
2.6 Return of Capital; Partition. Except as otherwise provided herein, no
----------------------------
Member shall have any right to (a) withdraw from LLC, (b) demand the return of
all or any part of such Member's capital during the term of LLC or (c) receive a
return of such Member's capital from any specific assets of LLC. Each Member
irrevocably waives any right which such Member may have to cause a partition of
all or any part of LLC's assets. No Member shall be entitled to receive any
interest with respect to a Capital Contribution.
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2.7 Liability of Members. Notwithstanding anything to the contrary herein
--------------------
contained, no Member shall be liable for any debts, expenses, liabilities or
obligations of LLC in excess of such Member's Capital Contribution except as may
be provided in the Act. To the extent required by law, any capital distributed
to a Member shall be restored to LLC as necessary to meet such Member's share of
any liability or loss of LLC.
ARTICLE III
MANAGEMENT OF LLC
3.1 Board of Managers. The Board shall consist of five members, three of
-----------------
whom shall be appointed by PCI and two of whom shall be appointed by TCI.
Meetings of the Board shall be held upon such prior notice and in accordance
with such other procedures as the Board may adopt.
3.2 Control by Board. Subject to the provisions of Section 3.3, and
----------------
except as may be otherwise expressly stated in this Agreement, the Board shall
have full and exclusive responsibility and authority for the management,
supervision and conduct of the business and affairs of LLC, and the Board is
hereby granted the right, power and authority to do on behalf of LLC all things
determined thereby to be necessary or desirable to carry out such duties and
responsibilities, including (without limitation) the right, power and authority
from time to time to do the following:
(a) to borrow money in the name and on behalf of LLC, and to secure
any such loans by a mortgage, pledge or other encumbrance upon any assets of
LLC;
(b) to cause to be paid all amounts due and payable by LLC to any
person or entity;
(c) to employ such agents, employees, managers, accountants,
attorneys, consultants and other persons necessary or appropriate to carry out
the business and affairs of LLC, to delegate by express Board action any powers
of the Board enumerated herein, and to pay to such persons such fees, expenses,
salaries, wages and other compensation as it shall in its sole discretion
determine;
(d) to pay, extend, renew, modify, adjust, subject to arbitration,
prosecute, defend or compromise, upon such terms as it may determine and upon
such evidence as it may deem sufficient, any obligation, suit, liability, cause
of action or claim, including taxes, either in favor of or against LLC;
(e) to pay any and all fees and to make any and all expenditures
which it deems necessary or appropriate in connection with the organization of
LLC, the management of the affairs of LLC and the carrying out of its
obligations and responsibilities under this Agreement;
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(f) to the extent that funds of LLC are, in the Board's judgment, not
immediately required for the conduct of LLC's business, temporarily to deposit
the excess funds in such bank account or accounts, or invest such funds in such
interest-bearing taxable or nontaxable investments, as the Board shall deem
appropriate;
(g) to acquire, prosecute, maintain, protect and defend or cause to
be protected and defended all patents, patent rights, trade names, trademarks,
copyrights and service marks, all applications with respect thereto and all
proprietary information which may be held by LLC;
(h) to enter into, execute, acknowledge and deliver any and all
contracts, agreements or other instruments necessary or appropriate to carry on
the business of LLC as set forth herein, including without limitation the
Commercial Exploitation Rights Assignment, the Technology and Trademark License
Agreement, a license agreement with NewCo, and such other agreements and
documents as are entered into in connection with the formation of LLC;
(i) to form NewCo as a wholly owned subsidiary of LLC, to cause NewCo
to enter into the Administrative Services and Management Agreement, and to
acquire interests in such other entities as the Board may deem appropriate to
conduct the planned business activities of LLC on such terms as the Board deems
to be in LLC's interests;
(j) to cause to be paid any and all taxes, charges and assessments
that may be levied, assessed or imposed upon any of the assets of LLC, unless
the same are contested by LLC;
(k) to make all elections and decisions of a tax and accounting
nature required or permitted on behalf of LLC, including without limitation the
election provided for by Section 754 of the Code and tax elections and decisions
of the "Tax Matters Partner" in accordance with Section 5.6; and
(l) to exercise all other powers conferred by the Act or other
applicable law on, or not prohibited to, a "Manager" of LLC from time to time
(as such term is defined in the Act).
3.3 TCI Approval Rights. Notwithstanding anything to the contrary in
-------------------
Section 3.2, the following actions shall be subject to Approval by TCI during
Phase I:
(a) The removal from office of any Board member appointed by TCI or
the statutory auditor of NewCo;
(b) The amendment or repeal of any provisions of this Agreement or of
the charter documents of NewCo;
(c) The sale, sublicense, encumbrance or other transfer of any of the
intellectual property rights of LLC or NewCo in a manner inconsistent with the
provisions of this Agreement or the exhibits hereto;
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<PAGE>
(d) The filing of a petition for liquidation or dissolution of LLC or
NewCo in Bankruptcy;
(e) The declaration or payment of any distribution to the Members,
other than distributions in respect of taxes attributable to Profits of LLC in
accordance with Section 6.4(a) of this Agreement, and the declaration or payment
of any dividend or other distribution with respect to the equity interests of
NewCo;
(f) The issuance of any additional Percentage Interests (or options,
warrants or other rights to acquire Percentage Interests) to existing or
additional Members, excluding issuances to employees or other persons providing
services to LLC, and the issuance of any securities of NewCo (or options,
warrants or other rights to acquire such securities, or any securities
convertible into or exchangeable for such securities or such options, warrants
or other rights), excluding issuances to employees or other persons providing
services to NewCo;
(g) The sale, transfer or disposal of assets of LLC or NewCo in
excess of Y75 Million and any merger of LLC or NewCo with or into any other
entity;
(h) The organization, acquisition or disposition by LLC or NewCo of
any interest in another entity, other than the organization by LLC of NewCo;
(i) The borrowing of funds by LLC or NewCo in excess of Y75 Million;
(j) Hiring, firing and setting compensation of senior management of
LLC or NewCo; and
(k) Approval of the annual operating and capital budgets of LLC or
NewCo.
In addition, after Phase I, the actions set forth in subsections (a) - (d) of
this Section 3.3 shall continue to be subject to Approval by TCI.
3.4 Extent of Board Members' Obligations. Each Board member shall devote
------------------------------------
such time and attention to the activities of LLC as are reasonably necessary and
appropriate to carry out the Board member's duties hereunder. It is expressly
acknowledged and understood that the Board members may also devote time to the
affairs of other entities and to other business activities.
3.5 Standard of Care; Indemnification. No Board member shall be liable,
---------------------------------
in damages or otherwise, to LLC or to any of the Members for any act or omission
performed or omitted by such Board member pursuant to the authority granted by
this Agreement, except if such act or omission results from gross negligence,
willful misconduct or bad faith. LLC shall save, indemnify, defend and hold
harmless each Board member to the fullest extent permitted by the Act, including
without limitation, from and against any and all claims or liabilities of any
nature whatsoever, including, but not limited to, reasonable attorneys' fees,
arising out of or in connection with any action taken or omitted by such Board
member pursuant to the authority granted by this Agreement, except where
attributable to the gross negligence, willful misconduct
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or bad faith of such Board member or such Board member's agents. Each Board
member shall be entitled to rely on the advice of counsel, public accountants or
other independent experts experienced in the matter at issue, and any act or
omission of such Board member in reliance on such advice shall in no event
subject such Board member to liability to LLC or any Member. Each Member
expressly acknowledges and agrees that, except as otherwise expressly set forth
herein, other Members (and Board members who may be related to such Members) may
engage in activities competitive with those of LLC, and may pursue business
opportunities that may also be available to LLC; and except as otherwise
provided herein or in any other agreement among Members, and except for any
liability relating to the misuse or improper disclosure of LLC confidential or
proprietary information, no Member shall have any liability as a fiduciary or
otherwise in connection with the pursuit of such activities. During the term of
the LLC (as set forth in Section 1.5), TCI shall not engage directly or
indirectly in any business activities in Japan that would reasonably be deemed
to be competitive with the business activities of LLC or NewCo.
ARTICLE IV
RIGHTS OF MEMBERS
4.1 No Authority to Manage. Except as expressly set forth in any
----------------------
provision of this Agreement, it is expressly understood that no Member, in such
Member's capacity as such (as opposed to the capacity of its representatives as
members of the Board), shall take part in the management or control of the
business, transact any business for LLC, have the right to vote on any LLC
matter, or have the power to sign for or bind LLC to any agreement or document.
Notwithstanding the foregoing, Members (or their representatives) may
participate in the management of LLC if and to the extent so contemplated by the
terms of any employment relationship with LLC.
4.2 Records of LLC. LLC shall make available for inspection at its
--------------
principal place of business, upon reasonable request for purposes reasonably
related to the interest of a person as a Member, any of the following records of
LLC: (a) a current list of the full name, last known business or residence
address, Capital Contribution and Percentage Interests owned by each Member; and
(b) such other books and records as may be required to be provided to the
Members pursuant to the Act or other applicable law. The Members acknowledge
that the records of LLC constitute valuable trade secrets, and any information
or records so obtained or copied shall be kept and maintained in strictest
confidence and shall in no event be disclosed to any other parties without the
written consent of LLC.
ARTICLE V
ACCOUNTING, RECORDS, REPORTS AND MEETINGS
5.1 Books of Accounts and Records. LLC's books and records and the
-----------------------------
Certificate shall be maintained at the principal office of LLC and the Members
and their designated representatives shall each have access thereto at all
reasonable times to the extent set forth in Section 4.2. The books and records
shall be kept in accordance with sound accounting practices
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and principles applied in a consistent manner by LLC and shall reflect all
transactions and be appropriate and adequate for the business of LLC.
5.2 Financial Statements and Reports. LLC will provide to the Members
--------------------------------
financial statements of LLC annually, which shall be audited by independent
auditors of national standing (which may also be the independent auditors to any
Member). LLC also will provide within ninety (90) days after the end of each
fiscal year of LLC a copy of LLC's income tax or information returns for such
fiscal year and any other information reasonably necessary for the preparation
of the Members' income tax returns under each applicable taxing jurisdiction.
5.3 Bank Account. LLC moneys shall be deposited in the name of LLC in one
------------
or more financial institutions to be designated by the Board and may be
withdrawn on the signatures of such officers of LLC as the Board may designate
from time to time.
5.4 Fiscal Year. The fiscal year of LLC shall be from January 1 to
-----------
December 31, or such other period as may be required by law or determined by the
Board.
5.5 Tax Elections. The Board, in its sole discretion, shall determine
-------------
LLC's accounting methods and conventions under applicable tax laws of the United
States, Japan and other relevant jurisdictions as to the treatment of income,
gain, loss, deduction and credit of LLC or any other method or procedure related
to the preparation of such tax returns. The Board, in its sole discretion, may
cause LLC to make or refrain from making any and all elections permitted by such
tax laws (including, without limitation, an election under Section 754 of the
Code).
5.6 Tax Matters Partner. Pursuant to Section 6231(a)(7)(A) of the Code,
-------------------
the Members hereby designate PCI as LLC's "Tax Matters Partner." As such, for
any fiscal year in which LLC is subject to the provisions of Section 6221, et
seq. of the Code, PCI is authorized, at the expense of LLC, to represent LLC and
each Member in connection with any examinations of LLC's affairs by United
States tax authorities, including resulting administrative and judicial
proceedings, and to expend the funds of LLC for professional services and costs
in connection therewith. The other Members hereby agree to cooperate with the
Tax Matters Partner and to do or refrain from doing any and all acts reasonably
required by the Tax Matters Partner in connection with any such proceedings.
The Tax Matters Partner will at all times act in accordance with the direction
of the Board with respect to its decisions and actions.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations of LLC Profits and Losses. LLC Profits and Losses for
-------------------------------------
each fiscal year shall be allocated in proportion to the Members' Percentage
Interests, provided that, if the Members' Capital Accounts are not in proportion
to their Percentage Interests, then Profits or Losses shall first be allocated
to cause the Members' Capital Accounts to be in such proportion.
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6.2 Special Allocations for U.S. Tax Purposes.
-----------------------------------------
(a) If LLC ever has "partnership minimum gain" or "partner minimum
gain" (as defined by Treasury Regulations Section 1.704-2), then the rules of
such Regulations regarding allocation and chargebacks of such items shall apply.
(b) All deductions, losses, and Code Section 705(a)(2)(B) expenditures
of LLC, as the case may be, that are treated under Treasury Regulations Section
1.704-2(b) as attributable to "partner nonrecourse debt" of LLC shall be
allocated to the Members bearing the risk of loss with respect to such
liabilities in accordance with such Treasury Regulations.
(c) If any Member unexpectedly receives an adjustment, allocation, or
distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) which creates or increases a deficit in such Member's Capital Account
in excess of such Member's share of partnership minimum gain and partner minimum
gain (as determined under Treasury Regulations Section 1.704-2), if any, such
Member shall be allocated items of book income and gain in an amount and manner
sufficient to eliminate or to reduce, as quickly as possible, such deficit. For
purposes of this Section 6.2(c), Capital Accounts shall be adjusted
hypothetically as provided for in Treasury Regulations Section 1.704-
(b)(2)(ii)(d). The Members intend that the provision set forth in this Section
6.2(c) shall constitute a "qualified income offset" as described in such section
of the Treasury Regulations and this Section 6.2(c) shall be interpreted
consistent with such intention.
6.3 Time of Allocations. The Profit, Loss and other items of LLC for each
-------------------
fiscal year shall be allocated to the Members' Capital Accounts at the end of
such fiscal year in accordance with the provisions of Sections 6.1 and 6.2.
6.4 Distributions. Subject to Section 3.3, LLC shall distribute its
-------------
Distributable Cash for any fiscal year as follows:
(a) First, to the Members in amounts equal to (i) the higher of the
combined effective federal and California maximum corporate income tax rates
(taking into account the deductibility of state taxes against federal income,
currently 41%) or the effective Japanese tax corporate income tax rate in effect
for such fiscal year, multiplied by (ii) the amount by which LLC's Profit
allocated to such Member for such fiscal year, if any, exceeds the cumulative
net Loss, if any, allocated to such Member since the inception of LLC, with any
such distribution made no later than 90 days after the end of each fiscal year
of LLC.
(b) Thereafter, if the Board deems it appropriate in its sole
discretion, any remaining Distributable Cash shall be distributed to the Members
in proportion to their respective Percentage Interests, as determined by the
Board, in its discretion, within ninety (90) days following the end of such
fiscal year. Any distributions made to the Members under subsection (a) shall
be credited against and reduce by a corresponding amount the distributions to
which such Members are entitled under this subsection (b).
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(c) LLC shall withhold all such amounts as may be required by
applicable law and any amounts so withheld shall be deemed to have been
distributed under this Section 6.4 to the Member with respect to whom such
withholding obligation arose and, to the extent such amounts exceed the amount
such Member would have otherwise received, shall be counted towards and reduce
by a corresponding amount future distributions to such Member.
(d) Notwithstanding any other provision herein, no distribution shall
be made to the Members which would render LLC insolvent.
6.5 Tax Return. LLC shall, within 90 days after the end of each calendar
----------
year, file a federal income tax information return and transmit to each Member a
copy of such return and a schedule (Schedule K-1 or successor schedule) showing
such Member's distributive share of LLC's income, deductions and credits.
6.6 Allocation of Certain Tax Items for U.S. Income Tax Purposes. If any
------------------------------------------------------------
property of LLC is reflected in the Capital Accounts of the Members and on the
books of LLC at a Book Value that differs from the adjusted tax basis of such
property, then the tax items with respect to that property shall, in accordance
with Treasury Regulations Section 1.704-1(b)(4)(i), be shared among the Members
in a manner that takes account of the variation between the adjusted tax basis
of the applicable property and its Book Value in the same manner as variations
between the adjusted tax basis and fair market value of property contributed to
LLC are taken into account in determining the Members' share of tax items under
Code Section 704(c).
6.7 Allocation Between Transferor and Transferee. The proportion of the
--------------------------------------------
income, gain, loss, deductions and credits of LLC for any fiscal year of LLC
during which any Percentage Interest in LLC is transferred by a Member to
another party pursuant to the terms hereof that is allocable in respect of such
Percentage Interest shall be apportioned between the transferor and the
transferee of the Percentage Interest on the basis of the number of days during
such fiscal year that each is the owner thereof, without regard to (a) the
results of LLC's operations before or after the effective date of the transfer,
or (b) any distributions made to the Members before or after the date of the
transfer.
6.8 Tax Allocations Binding. The Members are aware of the income tax
-----------------------
consequences of the allocations made by this Article VI and hereby agree to be
bound by the provisions of this Article VI in reporting their shares of LLC
allocations for income tax purposes.
ARTICLE VII
TRANSFER OF INTERESTS
7.1 Limitations on Transfers. No Percentage Interest shall be assigned or
------------------------
transferred by any Member, directly or indirectly, without the approval of
Members holding a majority of the Percentage Interests of LLC then outstanding.
7.2 Rights of First Refusal. Without limiting the provisions of Section
-----------------------
7.1, in the event of any proposed assignment or transfer permitted under this
Agreement, the party
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proposing such transfer (the "transferring Member") shall provide the other
Members (the "non-transferring Members") with notice of such proposed transfer,
which notice shall include a description of all terms of such transfer
(including the amount to be transferred, the price to be paid and the date of
the proposed transfer), and the name, address and telephone number of the
proposed transferee. Each non-transferring Member shall have the right,
exercisable by notice to the transferring Member within 30 days following
receipt of such notice, to purchase all or any part of the Percentage Interest
to be transferred upon the terms and conditions set forth in the transferring
Member's notice, up to that portion of such Percentage Interest as equals the
ratio of such non-transferring Member's Percentage Interest to the aggregate
Percentage Interests of all of the non-transferring Members. In the event that
any non-transferring Member elects not to exercise all or any part of its
purchase right as set forth in the preceding sentence, the transferring Member
shall be entitled to complete such transaction (on terms no more favorable to
the transferee in any respect) with respect to the unpurchased remainder of such
Percentage Interest within 15 days following the end of such 30-day period (and
any transfer proposed thereafter shall again comply with the foregoing notice
and right of first refusal provisions).
7.3 Special Buy-Out Rights Upon Irreconcilable Dispute. If the Board
--------------------------------------------------
approves any action subject to the special approval rights of TCI as set forth
in Section 3.3 and TCI refuses to grant its Approval to such action, then PCI
and TCI shall negotiate in good faith the purchase by either of them of the
Percentage Interest of the other or shall, subject to the provisions of this
Agreement, attempt to negotiate a sale of either of their Percentage Interests
to a third party. If such negotiations fail to result in a mutually acceptable
resolution within a reasonable period of time (as mutually agreed by PCI and
TCI), then LLC shall be dissolved in accordance with the provisions of Article X
of this Agreement.
ARTICLE VIII
DEATH, INCOMPETENCE OR DISSOLUTION OF A MEMBER
8.1 Effect on LLC. The death, incompetence, dissolution or Bankruptcy of
-------------
a Member shall not entitle any Member to a return of capital other than to the
extent such Member normally would be entitled to a distribution under the
provisions of this Agreement. Such event shall not cause a dissolution of LLC
except as otherwise provided in Section 10.1.
8.2 Rights of Personal Representative. On the death, incompetence,
---------------------------------
dissolution or Bankruptcy of a Member, his or her personal representative,
executor, administrator, guardian or conservator shall have all the rights of a
Member for the purpose of settling such Member's estate, or administering such
Member's property, including the power of assignment.
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ARTICLE IX
WITHDRAWAL
9.1 Withdrawal of Members.
---------------------
(a) No Member may withdraw from LLC and receive a distribution with
respect to such Member's Capital Account unless such withdrawal has received the
Approval of Members holding a majority of all Percentage Interests (disregarding
for such purpose the Percentage Interest of the withdrawing Member).
(b) In the event of a withdrawal permitted hereunder, the Percentage
Interest in LLC of such Member shall terminate as of such date and, subject to
the provisions hereof, the former Member's Capital Account (together with such
Member's allocable share of LLC Profits or less such Member's allocable share of
LLC Losses through the date of effectiveness of such withdrawal) shall be paid,
subject to the provisions of this Agreement, in cash or in kind, to such former
Member within thirty (30) days after the effective date of withdrawal.
ARTICLE X
DISSOLUTION, MERGER AND LIQUIDATION
10.1 Events of Dissolution. Upon the determination of the Board (without
---------------------
any requirement of approval by the other Members, except as otherwise expressly
provided herein), or the expiration of the term of LLC as provided in Section
1.5, LLC will be dissolved and the assets shall either be liquidated forthwith
or the property shall be distributed in kind to the Members after payment of the
debts of LLC as determined by agreement of the Members. LLC shall also dissolve
(a) upon the death, insanity, Bankruptcy, retirement, resignation or expulsion
of any Member unless Approval is provided by the remaining Members within ninety
(90) days after such event to continue LLC, or (b) under the circumstances set
forth in Section 7.3.
10.2 Merger. LLC shall be merged with another entity under applicable
------
provisions of the Act if (and on such terms as) the Board in its sole discretion
deems appropriate.
10.3 Liquidation Proceeds. In settling accounts after liquidation, the
--------------------
moneys of LLC shall be applied in the following manner:
(a) The liabilities of LLC to creditors, including Members who are
creditors to the extent permitted by law, shall be paid or otherwise adequately
provided for except for liabilities of LLC for distributions to Members; and
(b) The remaining assets shall be distributed to the Members in
accordance with their positive Capital Account balances. If any assets are to
be distributed in kind, each Member's Capital Account shall first be adjusted to
reflect the Profits or Losses that would have been allocated to such Member if
such assets had been sold for cash at their fair market value at the time of the
distribution.
-15-
<PAGE>
(c) In the event that any Member withdraws from LLC in accordance
with the provisions of this Agreement, such Member shall be distributed an
amount equal to such Member's Capital Account balance as of the date of such
withdrawal (taking into account all adjustments to such Capital Account through
the date of such withdrawal).
ARTICLE XI
CERTAIN SECURITIES RELATED MATTERS
11.1 Investment Intent. Each Member hereby represents and warrants to LLC
-----------------
and to the other Members that such Member's Percentage Interest will be acquired
for such Member's own account, for investment, and not with a view to or for
sale in connection with any distribution thereof, nor with any present intention
of reselling or distributing such Percentage Interest. Each Member fully
understands that LLC is relying upon the truth and accuracy of the foregoing
representations, and the representations that follow, to establish exemptions
from registration under the Securities Act of 1933 (the "1933 Act"), and from
registration or qualification under the California Corporate Securities Law of
1968 and other applicable securities laws.
11.2 Absence of Registration. Each Member also hereby represents that
-----------------------
such Member understands that such Member must bear the economic risk of such
Member's investment in such LLC for an indefinite period of time because such
Percentage Interest has not been registered under the 1933 Act or
registered/qualified under applicable laws and therefore cannot be sold unless
they are subsequently so registered and qualified or exemptions from such
registration and qualification are available, and LLC is under no obligation to
so register or qualify any Percentage Interest or to comply with any exemption
and has no current intention of so doing.
11.3 Restricted Securities; Absence of Trading Market. Each Member
------------------------------------------------
further hereby represents that such member understands that (a) such member's
Percentage Interest constitute "restricted securities" under the 1933 Act and
that Rule 144 promulgated under the 1933 Act is not now available with respect
to the transfer of such Member's Percentage Interest and that there is no
present likelihood that it will be available in the future, (b) that there is no
public market for such Percentage Interest and there is no present likelihood
that any such market will develop, and (c) LLC is newly formed and has no
earnings or operating history.
11.4 Preexisting Relationship; Investment Experience. Each Member
-----------------------------------------------
represents and warrants (a) that such Member has a preexisting personal or
business relationship with the other, such that such Member is aware of the
character, business acumen and general business and financial circumstances of
such party, or (b) that either alone or with a purchaser representative, such
Member can bear the economic risk of the investment in LLC and has such
knowledge and experience in financial or business matters that such Member is
capable of evaluating the merits and risks of an investment in LLC.
11.5 Accredited Investor. Each Member represents that such Member is an
-------------------
"accredited investor" for purposes of Rule 501(a) promulgated under the 1933
Act.
-16-
<PAGE>
11.6 Economic Risk. Each Member hereby represents that such Member has
-------------
adequate net worth and means for providing for such Member's current needs and
personal contingencies to sustain a complete loss of such Member's investment,
is able to bear such a loss, and that such Member has no need of liquidity of
such Member's investment.
11.7 Resale. Each Member hereby represents such Member's awareness that
-------
such Member's rights to transfer such Member's Percentage Interest will be
restricted by the 1933 Act, the applicable laws, and this Agreement; that any
certificates or other documents evidencing such Member's Percentage Interest may
bear the legends relating to those restrictions which are set forth below; and
that corresponding notations will be made by LLC in its appropriate records.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. Any notice, payment, demand or communication required or
-------
permitted to be given by any provisions of this Agreement shall be deemed to
have been sufficiently given or served for all purposes if delivered personally
to the party or to an officer of the party to whom the same is directed or if
sent by registered or certified mail, postage and charges prepaid addressed as
set forth on Schedule 1.
----------
12.2 Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts with the same effect as if all parties hereto had all
signed the same document. All counterparts shall be construed together and
shall constitute one agreement.
12.3 Assignability. Without limiting the restrictions upon assignment and
-------------
transfer set forth herein, each and all of the covenants, terms, provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the successors and assigns of the respective parties hereto.
12.4 Gender and Number. Whenever required by the context hereof, the
-----------------
singular shall include the plural and the plural shall include the singular.
The masculine gender shall include the feminine and neuter genders, and the
neuter shall include the masculine and feminine.
12.5 Captions. Sections, titles or captions in no way define, limit,
--------
extend or describe the scope of this Agreement nor the intent of any of its
provisions.
12.6 Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
-17-
<PAGE>
12.7 Integration. This Agreement, together with the exhibits hereto and
-----------
all Counterparts, contains the entire agreement of the parties with respect to
the subject matter hereof, and supersedes all other agreements or understandings
of any kind.
12.8 Amendments.
----------
(a) Except as otherwise provided in Section 3.3 or elsewhere in this
Agreement, this Agreement may be amended by the Board without the consent of any
Member for the purpose of adding provisions hereto or changing in any manner or
eliminating any of the provisions hereof or of modifying in any manner the
rights and obligations of the Members hereunder, in each case without the
consent of any other Member.
(b) Each of the Members does hereby constitute and appoint the
Secretary of LLC (as directed by the Board) as such Member's true and lawful
representative and attorney-in-fact, in his name, place and stead to make,
execute, sign and file, the Certificate and any amendments thereto in the office
of the Secretary of State of the State of Delaware which may be required because
of this Agreement or the making of any amendments or supplements thereto as
provided in this Section 12.8 and to make, execute, sign and file this Agreement
and all amendments thereto and all such other instruments, documents and
Certificate which, from time to time, in the opinion of LLC's legal counsel, may
be required, by the laws of any applicable jurisdiction, or by this Agreement,
or which such legal counsel may deem necessary or appropriate to effectuate,
implement and continue the valid and subsisting existence and business of LLC.
12.9 Confidential Information. Each Member acknowledges that as a result
------------------------
of its status as a Member, it may have access to information concerning the
LLC's or another Member's business, products, proposed new products, customers
and related information (collectively, "Confidential Information"). Each Member
agrees to treat such Confidential Information with at least the degree of care
and protection with which it treats its own confidential information, but in any
event with no less than reasonable care and protection. Each Member agrees not
to use or disclose such Confidential Information except as explicitly authorized
in writing by the LLC or such other Member, as applicable.
12.10 Governing Law. This Agreement shall in all respects be governed by
-------------
the laws of the State of Delaware without reference to its principles of
conflicts of laws. Each Member and LLC hereby agrees that all disputes arising
out of this Agreement shall be subject to the exclusive jurisdiction of and
venue in the federal and state courts within Santa Clara County, California.
Each Member and LLC hereby consents to the personal and exclusive jurisdiction
and venue of these courts.
[SIGNATURE PAGE FOLLOWS]
-18-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the date first written above.
POINTCAST INCORPORATED, A CALIFORNIA CORPORATION
By: /s/ Jim Wickett
--------------------------------------------
Title: Sr. V.P.
-----------------------------------------
TRANSCOSMOS, INCORPORATED, A JAPANESE CORPORATION
By: /s/ Koki Okuda
--------------------------------------------
Title: President
-----------------------------------------
-19-
<PAGE>
Schedule 1
----------
<TABLE>
<CAPTION>
Member Initial Capital Percentage
- ------ Contribution Interest
------------ --------
<S> <C> <C>
PointCast Incorporated $3 million 60.0%
501 Macara Avenue
Sunnyvale, CA 94086
Attention: Jim Wickett, SVP
TransCosmos, Incorporated $2 million 40.0%
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
--------------- ---------------
$5,000,000 100%
=============== ===============
</TABLE>
-20-
<PAGE>
EXHIBIT 10.7
ASSIGNMENT OF COMMERCIAL EXPLOITATION RIGHTS AGREEMENT
This is an irrevocable Assignment (the "Assignment"), effective
as of May 30, 1997, of the rights and obligations of TransCosmos,
Incorporated, a Japanese corporation (the "Assignor"), arising
under the Commercial Exploitation Rights Agreement, dated May 30,
1997 (the "Agreement") between PointCast Incorporated, a
California corporation ("PCI") and Assignor, to PointCast Japan,
L.L.C., a Delaware limited liability company (the "Assignee").
Recitals
WHEREAS, PCI granted certain rights and licenses to the Assignor
under the Agreement; and
WHEREAS, the Assignor wishes to assign its rights and licenses
under the Agreement together with its obligations under the
Agreement to the Assignee in accordance with the terms set forth
herein.
NOW THEREFORE, the parties hereby agree as follows:
1. Assignment.
a. Assignment of the Rights and Obligations under the
Agreement. The Assignor hereby irrevocably assigns and transfers
unto Assignee and unto Assignee's successors and assigns for good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the Assignor, forever, all right,
title and interest in and to the Agreement and to all rights and
licenses thereunder (the "Assigned Rights") and all obligations
under the Agreement effective from May 30, 1997.
b. Assumption of Obligations under the Agreement. The
Assignee hereby irrevocably assumes all obligations of Assignor
under the Agreement. Assignor and Assignee shall be jointly and
severally liable for any obligation or liability of the Assignor
under the Agreement arising before the date hereof.
c. Consent. PCI hereby irrevocably consents to this
Assignment and agrees to continue to comply with the terms and
conditions of the Agreement.
2. Representations and Warranties.
a. Representations and Warranties of the Assignor. The
Assignor represents and warrants to the Assignee and to PCI as
follows:
(i) The Assignor is a company duly organized and validly
existing under the laws of Japan and has full power, authority
and legal right to execute and deliver this Assignment, and to
perform and observe the terms and conditions hereof;
(ii) The execution and delivery of this Assignment and the
<PAGE>
consummation of the transaction contemplated herein does not and
will not result in any breach of any applicable law, regulation,
order, writ, injunction or decree of any court or governmental
authority (domestic or foreign) or of any of the terms,
conditions or provisions of, or constitute a default under, or,
with notice or lapse of time, or both, constitute a default
under, or result in the creation of any lien upon any property or
assets of the Assignor pursuant to (a) the charter documents of
the Assignor, (b) any laws, regulations or instruments governing
the operations or activities of the Assignor or (c) any
indenture, agreement or other instrument to which the Assignor is
a party or by which it or its assets are bound;
(iii) No authorization, approval, filing or consent, other than
that provided for in Section 1(c) hereof, and no license,
exemption, order, notice, registration or other action of any
governmental agency or commission or public or quasi-public body
or authority is necessary for the due execution and delivery by
the Assignor of this Assignment;
(iv) The Agreement and this Assignment have been duly
authorized, executed and delivered by the Assignor and constitute
legal, valid and binding obligations of the Assignor, enforceable
against it in accordance with their respective terms;
(v) The Assigned Rights are free from all security interests,
liens, pledges, encumbrances and claims;
(vi) Since May 30, 1997, the Assignor has not terminated,
replaced, amended or waived any provision of the Agreement;
(vii) The Assignor has not assigned the Agreement or any of the
Assigned Rights to any third party;
(viii) No judicial or administrative proceedings are pending to
the knowledge of the Assignor which would adversely affect its
rights, obligations or licenses under this Assignment or under
the Agreement; and
(ix) The Assignor has paid all amounts due under Section 3 of
the Agreement.
b. Representations and Warranties of the Assignee. Assignee
represents and warrants to the Assignor and to PCI as follows:
(i) The Assignee is a limited liability company duly
organized and validly existing under the laws of the State of
Delaware and has full power, authority and legal right to execute
and deliver this Assignment, and to perform and observe the terms
and conditions hereof;
(ii) The execution and delivery of this Assignment and the
consummation of the transaction contemplated herein does not and
will not result in any breach of any applicable law, regulation,
order, writ, injunction or decree of any court or governmental
<PAGE>
authority (domestic or foreign) or of any of the terms,
conditions or provisions of, or constitute a default under, or,
with notice or lapse of time, or both, constitute a default
under, or, result in the creation of any lien upon any property
or assets of the Assignee pursuant to (a) the charter documents
of the Assignee, (b) any laws, regulations or instruments
governing the operations or activities of the Assignee or (c) any
indenture, agreement or other instrument to which the Assignee is
a party or by which it or its assets are bound;
(iii) No authorization, approval, filing or consent, and no
license, exemption, order, notice, registration or other action
of any governmental agency or commission or public or
quasi-public body or authority is necessary for the due execution
and delivery by the Assignee of this Assignment; and
(iv) This Assignment has been duly authorized, executed and
delivered by the Assignee and this Assignment and the Agreement
(including the obligations thereunder assumed by the Assignee
hereby) constitute legal, valid and binding obligations of the
Assignee, enforceable against it in accordance with their
respective terms.
3. Miscellaneous.
a. Counterparts. This Assignment may be executed in any
number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
b. Notices. Any and all notices, requests, demands
and other communications required or otherwise contemplated to be
made under this Assignment shall be in writing and in English and
shall be deemed to have been duly given (a) if delivered
personally, when received, (b) if transmitted by facsimile, upon
receipt of a transmittal confirmation, (c) if sent by registered
airmail, return receipt requested, postage prepaid, on the sixth
business day following the date of deposit in the mail or (d) if
by international courier service, on the second business day
following the date of deposit with such courier service, or such
earlier delivery date as may be confirmed to the sender by such
courier service. All such notices, requests, demands and other
communications shall be addressed as follows:
(i) If to the Assignor:
TransCosmos, Incorporated
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Hiroshi Kaizuka
Telephone:
Facsimile: 011 81 3 3584 6079
(ii) If to the Assignee:
<PAGE>
PointCast Japan, L.L.C.
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Douglas W.C. Boake
Telephone:
Facsimile: 011 81 3 3584 6079
(iii) If to PCI:
PointCast Incorporated
2475 Augustine Drive, Suite 101
Santa Clara, California 95054
Attention: Jim Wickett, SVP
Telephone: (408) 253-0894
Facsimile: (408) 253-8590
or in each case to such other address or facsimile number as the
party may have furnished to the other party in writing.
c. Governing Law. This Assignment shall in all respects be
governed by the laws of the State of California without reference
to its principles of conflicts of laws. The parties hereby
agree that all disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction of and venue in the federal
and state courts within Santa Clara County, California. The
Assignor and the Assignee hereby consent to the personal and
exclusive jurisdiction and venue of these courts.
IN WITNESS WHEREOF, the parties have executed this
Assignment effective as of the date first set forth above.
ASSIGNOR:
TransCosmos, Incorporated
By: /s/ Koki Okuda
Name: Koki Okuda
Title: President and C.E.O
ASSIGNEE:
PointCast Japan, L.L.C.
By: /s/ Douglas W.C. Boake
Name: Douglas W.C. Boake
Title: Douglas W.C. Boake
Manager
<PAGE>
PCI
PointCast Incorporated
By: /s/ Jim Wickett
Name: Jim Wickett
Title: Senior Vice President
<PAGE>
EXHIBIT 10.8
ASSIGNMENT OF COMMERCIAL EXPLOITATION RIGHTS
This is an assignment (the "Assignment"), effective as of July
25, 1997, of the rights and obligations of PointCast Japan,
L.L.C. (the "Assignor"), a Delaware limited liability
corporation, arising under the Commercial Exploitation Rights
Agreement, dated May 30, 1997 (the "Agreement") between PointCast
Incorporated, a California corporation ("PCI") and TransCosmos,
Incorporated ("TCI"), a Japanese corporation, as assigned to
Assignor by TCI in the assignment dated May 30, 1997 (the
"Original Assignment"), to PointCast K.K. (the "Assignee"), a
Japanese corporation.
Recitals
WHEREAS, PCI granted certain rights and licenses to TCI under the
Agreement; and
WHEREAS, TCI has assigned such rights and licenses to LLC in the
Original Assignment; and
WHEREAS, LLC wishes to assign its rights and licenses under the
Agreement and the Original Assignment together with its
obligations under the Agreement and the Original Assignment to KK
in accordance with the terms set forth herein.
NOW THEREFORE, the parties hereby agree as follows:
1. Assignment.
a. Assignment of the Rights and Obligations under the
Agreement. The Assignor hereby assigns and transfers unto
Assignee and unto Assignee's successors and assigns for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Assignor, all right, title and
interest in and to the Agreement and to all rights and licenses
thereunder (the "Assigned Rights") and all obligations under the
Agreement effective from July 25, 1997.
b. Assumption of Obligations under the Agreement. The
Assignee hereby assumes all obligations of Assignor under the
Agreement. Assignor and Assignee shall be jointly and severally
liable for any obligation or liability of the Assignor under the
Agreement arising before the date hereof.
2. Representations and Warranties.
a. Representations and Warranties of the Assignor. The
Assignor represents and warrants to the Assignee as follows:
(i) The Assignor is a limited liability company duly
organized and validly existing under the laws of the State of
Delaware and has full power, authority and legal right to execute
<PAGE>
and deliver this Assignment, and to perform and observe the terms
and conditions hereof;
(ii) The execution and delivery of this Assignment and the
consummation of the transaction contemplated herein does not and
will not result in any breach of any applicable law, regulation,
order, writ, injunction or decree of any court or governmental
authority (domestic or foreign) or of any of the terms,
conditions or provisions of, or constitute a default under, or,
with notice or lapse of time, or both, constitute a default
under, or result in the creation of any lien upon any property or
assets of the Assignor pursuant to (a) the charter documents of
the Assignor, (b) any laws, regulations or instruments governing
the operations or activities of the Assignor or (c) any
indenture, agreement or other instrument to which the Assignor is
a party or by which it or its assets are bound;
(iii) No authorization, approval, filing or consent, other than
that provided for in Section 1(c) hereof, and no license,
exemption, order, notice, registration or other action of any
governmental agency or commission or public or quasi-public body
or authority is necessary for the due execution and delivery by
the Assignor of this Assignment;
(iv) The Agreement and this Assignment have been duly
authorized, executed and delivered by the Assignor and constitute
legal, valid and binding obligations of the Assignor, enforceable
against it in accordance with their respective terms;
(v) The Assigned Rights are free from all security interests,
liens, pledges, encumbrances and claims;
(vi) Since May 30, 1997, the Assignor has not terminated,
replaced, amended or waived any provision of the Agreement;
(vii) The Assignor has not assigned the Agreement or any of the
Assigned Rights to any third party;
(viii) No judicial or administrative proceedings are pending to
the knowledge of the Assignor which would adversely affect its
rights, obligations or licenses under this Assignment or under
the Agreement; and
(ix) The Assignor has paid all amounts due under Section 3 of
the Agreement.
b. Representations and Warranties of the Assignee. Assignee
represents and warrants to the Assignor as follows:
(i) The Assignee is a company duly organized and validly
existing under the laws of Japan and has full power, authority
and legal right to execute and deliver this Assignment, and to
perform and observe the terms and conditions hereof;
(ii) The execution and delivery of this Assignment and the
<PAGE>
consummation of the transaction contemplated herein does not and
will not result in any breach of any applicable law, regulation,
order, writ, injunction or decree of any court or governmental
authority (domestic or foreign) or of any of the terms,
conditions or provisions of, or constitute a default under, or,
with notice or lapse of time, or both, constitute a default
under, or, result in the creation of any lien upon any property
or assets of the Assignee pursuant to (a) the charter documents
of the Assignee, (b) any laws, regulations or instruments
governing the operations or activities of the Assignee or (c) any
indenture, agreement or other instrument to which the Assignee is
a party or by which it or its assets are bound;
(iii) No authorization, approval, filing or consent, and no
license, exemption, order, notice, registration or other action
of any governmental agency or commission or public or
quasi-public body or authority is necessary for the due execution
and delivery by the Assignee of this Assignment; and
(iv) This Assignment has been duly authorized, executed and
delivered by the Assignee and this Assignment (including the
obligations thereunder assumed by the Assignee hereby)
constitutes legal, valid and binding obligations of the Assignee,
enforceable against it in accordance with its terms.
3. Miscellaneous.
a. Counterparts. This Assignment may be executed in any
number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
b. Notices. Any and all notices, requests, demands
and other communications required or otherwise contemplated to be
made under this Assignment shall be in writing and in English and
shall be deemed to have been duly given (a) if delivered
personally, when received, (b) if transmitted by facsimile, upon
receipt of a transmittal confirmation, (c) if sent by registered
airmail, return receipt requested, postage prepaid, on the sixth
business day following the date of deposit in the mail or (d) if
by international courier service, on the second business day
following the date of deposit with such courier service, or such
earlier delivery date as may be confirmed to the sender by such
courier service. All such notices, requests, demands and other
communications shall be addressed as follows:
(i) If to the Assignor:
PointCast Japan, L.L.C.
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Hiroshi Kaizuka
Telephone: 011 81 3 3586 2880
Facsimile: 011 81 3 3584 6079
<PAGE>
(ii) If to the Assignee:
PointCast K.K.
Toshin Aoyama Building
3F, Shibuya 2-10-13, Shibuya-ku
Tokyo 150, Japan
Attention: Douglas W.C. Boake
Telephone: 011 81 3 5468 1260
Facsimile: 011 81 3 5468 1275
or in each case to such other address or facsimile number as the
party may have furnished to the other party in writing.
c. Governing Law. This Assignment shall in all respects be
governed by the laws of the State of California without reference
to its principles of conflicts of laws. The parties hereby
agree that all disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction of and venue in the federal
and state courts within Santa Clara County, California. The
Assignor and the Assignee hereby consent to the personal and
exclusive jurisdiction and venue of these courts.
IN WITNESS WHEREOF, the parties have executed this
Assignment effective as of the date first set forth above.
ASSIGNOR:
PointCast Japan, L.L.C.
By: /s/ Douglas Boake
Name: Douglas Boake
Title: Manager
ASSIGNEE:
PointCast K.K.
By: /s/ Douglas Boake
Name: Douglas Boake
Title: President
<PAGE>
EXHIBIT 10.9
COMMERCIAL EXPLOITATION RIGHTS AGREEMENT
This Commercial Exploitation Rights Agreement ("Agreement") by and between
PointCast Incorporated ("PCI"), a California corporation with its principal
place of business at 501 Macara Avenue, Sunnyvale, CA 94086 and TransCosmos,
Incorporated ("TCI"), a Japanese corporation with its principal place of
business at Sumitomoseimei Akasaka Bldg., 3-3-3, Akasaka, Minato-ku, Tokyo,
Japan 107, shall be effective as of May 30, 1997 (the "Effective Date").
1. Definitions.
-----------
a. "Commercial Exploitation Rights" shall mean the rights granted under
Section 2 (a-b) below.
b. "Localized PointCast Network" shall mean a localized version of the
PointCast Network, in the Japanese language, whose operations are located in the
Territory, utilizing PCI's technology to broadcast news, information and
advertising content via the Internet or corporate intranets, targeted primarily
to viewers and corporations in the Territory utilizing PCI's client software.
c. "Territory" shall mean Japan.
2. Obligations.
-----------
PointCast
---------
a. Commercial Exploitation Rights. PCI grants TCI the exclusive right
------------------------------
during the term of this Agreement to commercially exploit a Localized PCI
Network in the Territory, subject to the terms and conditions of this Agreement.
b. Trademarks. PCI will provide TCI with artwork for the "PointCast" and
----------
"PointCast Network" trademarks, trade names and related logos (the "Marks") as
set forth in Exhibit A. Subject to the terms and conditions of this Agreement,
PCI grants TCI the nonexclusive right to utilize the Marks in the Territory in
connection with the commercial exploitation rights granted in Section 2(a);
provided, however, that: (i) no names or descriptive words or phrases shall be
- -------- -------
co-joined with the Marks without the prior written consent of PCI; (ii) TCI will
comply with any instruction or requirement issued by PCI with respect to the
appearance and use of the Marks; (iii) TCI shall use the Marks only in a manner
so as to preserve and protect all rights of PCI therein; (iv) TCI shall not
challenge PCI's ownership of the Marks or use or adopt any trademarks which
might be confusingly similar to the Marks; (v) TCI shall take all necessary
steps and pay all related expenses in connection with protecting the Marks as
PCI intellectual property under all applicable trademark, unfair competition or
other laws in the Territory, making all applications in PCI's name, if possible,
or otherwise assigning to PCI the
<PAGE>
rights to the resulting marks as soon as possible; and (vi) TCI shall
additionally take all necessary steps and pay all related expenses in connection
with so protecting any new or modified marks created with the approval of PCI
under clause (i) of this Section. All rights in the Marks shall at all times
during the term of this Agreement and thereafter, be and remain the sole
property of PCI. TCI shall have no right to alter or in any way transfer the
Marks, and TCI shall provide PCI with reasonable assistance in any efforts to
prevent or terminate any infringement, unauthorized use or imitation thereof.
c. Commercial Exploitation Rights Support. During the first two (2) years
--------------------------------------
of this Agreement, PCI shall use commercially reasonable efforts to assist and
train TCI in the development and implementation of the rights granted under this
Agreement, focusing upon the establishment of an advertising sales force,
content acquisition and development initiatives, software distribution and
circulation-building programs, demographic research and market identification
efforts, establishment of end-user technical support services and other
assistance in establishing effective operational methods within the Territory,
periodically throughout such periods as mutually agreed.
d. Restrictions on TCI. The Commercial Exploitation Rights granted in
-------------------
this Agreement may not be sublicensed or transferred to a third party. Such
Commercial Exploitation Rights may be assigned by TCI only in connection with
the assignment of this Agreement in accordance with Section 9(a).
e. Advertising Inventory. PCI shall provide TCI with US $2 million in
---------------------
advertising inventory on the U.S. PointCast Network at PCI's prevailing rate
card.
f. Intranet Tools. PCI grants TCI a non-exclusive, non-transferable
--------------
license, for the term of this Agreement, to redistribute at no charge to end
users the PointCast Intranet Tools ("Tools"), as updated and modified from time
to time by PCI in its discretion. TCI shall redistribute the Tools with all
built-in end-user licensing terms intact, and shall not alter such terms.
g. Tools Support. Pursuant to Section 2(c), for the period commencing
-------------
January 1, 1998 through December 31, 1998, PCI shall provide TCI with technical
support and training regarding the Tools on an exclusive basis in the Territory
to facilitate the distribution of the Tools and other PCI products.
TCI
---
h. TCI shall make a non-refundable payment to PCI, upon execution of this
Agreement, of US $2 million.
-2-
<PAGE>
3. Taxes.
-----
TCI shall pay any and all sales, use, value added or other taxes, federal,
state or otherwise, however designated, which are levied or imposed by reason of
the transactions contemplated by this Agreement, excluding only taxes based on
PCI's net income. TCI shall hold PCI harmless from all claims and liability
arising from TCI's failure to report or pay any such taxes, duties and
assessments.
4. Ownership.
---------
Except for the express licenses set forth in Section 2(b), nothing in this
Agreement shall be construed as granting TCI any rights in the patents,
copyrights, trademarks, trade secrets or other intellectual property rights of
PCI.
5. Disclaimer of Warranties.
------------------------
ALL RIGHTS, LICENSES AND SERVICES PROVIDED BY PCI UNDER THIS AGREEMENT ARE
PROVIDED "AS IS." PCI PROVIDES NO WARRANTIES, EITHER EXPRESS, IMPLIED,
STATUTORY, OR OTHERWISE, WITH RESPECT TO ANY SUCH RIGHTS, LICENSES OR SERVICES
AND SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.
6. Indemnity.
---------
TCI agrees to indemnify and hold PCI harmless against any cost, loss,
liability or expense (including attorneys' fees) arising out of third-party
claims against PCI that result from TCI's commercial exploitation of Localized
PCI Networks under this Agreement.
7. Limitation of Liability.
-----------------------
EACH PARTY AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH ANY
INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER PARTY'S LIABILITY
FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN NO EVENT EXCEED ONE MILLION
DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES THAT, EXCEPT UNDER SECTION 6
OR IN CONNECTION WITH ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS,
THE OTHER WILL NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT,
OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY
THEORY OF LIABILITY (INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED
OF THE
-3-
<PAGE>
POSSIBILITY OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE AMOUNTS PAYABLE
HEREUNDER ARE BASED IN PART ON THESE LIMITATIONS, AND FURTHER AGREES THAT THESE
LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.
8. Term and Termination.
--------------------
a. Effective Date and Term. This Agreement and the licenses granted
-----------------------
hereunder shall be effective as of the Effective Date and shall continue in
perpetuity unless terminated as set forth in this Section 8.
b. Termination. Either party shall have the right to terminate this
-----------
Agreement and the licenses granted herein effective upon written notice to the
other party upon the occurrence the following events: (i) in the event the
other party fails to comply with any of the terms and conditions of this
Agreement and such default has not been cured within thirty (30) days after
written notice to the other party; (ii) in the event PointCast Japan, L.L.C. is
dissolved; (iii) in the event the Technology and Trademark License Agreement
between PCI and PointCast Japan, L.L.C. is terminated; or (iv) in the event the
other party (A) terminates or suspends its business, (B) becomes subject to any
bankruptcy or insolvency proceeding under any U.S., state or other national or
governmental statute, (C) becomes insolvent or subject to direct control by a
trustee, receiver or similar authority, or (D) has wound up or liquidated,
voluntarily or otherwise.
c. Effect of Termination. The obligations of PCI and TCI in Sections
---------------------
2(b)(iv), 3(b), 4, 5, 6, 7, 8 and 9 shall survive termination of this Agreement.
Termination of this Agreement shall not relieve either party for any liability
that accrued prior to such termination.
9. Miscellaneous.
-------------
a. Assignment. All the terms and provisions of this Agreement shall be
----------
binding upon and inure to the benefit of the parties to this Agreement and to
their respective heirs, successors, assigns and legal representatives, except
that TCI shall not assign its rights under this Agreement without PCI's prior
written consent. Notwithstanding the foregoing, TCI shall be entitled to assign
its rights under this Agreement to PointCast Japan, L.L.C., provided that
PointCast Japan, L.L.C. expressly assumes all of TCI's obligations under this
Agreement. PCI shall be entitled to assign this Agreement to a successor of all
or substantially all of its relevant assets without restriction.
b. Entire Agreement. This Agreement, together with the Exhibits hereto,
----------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and shall supersede all prior understandings and agreements
between the parties with respect to such subject matter. This Agreement may be
executed in any number of counterparts, each of which
-4-
<PAGE>
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
c. Amendment. This Agreement may be amended only by a written instrument
---------
signed by both parties.
d. Notices. Any and all notices, requests, demands and other
-------
communications required or otherwise contemplated to be made under this
Agreement shall be in writing and in English and shall be deemed to have been
duly given (a) if delivered personally, when received, (b) if transmitted by
facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered
airmail, return receipt requested, postage prepaid, on the sixth business day
following the date of deposit in the mail or (d) if by international courier
service, on the second business day following the date of deposit with such
courier service, or such earlier delivery date as may be confirmed to the sender
by such courier service. All such notices, requests, demands and other
communications shall be addressed as follows:
(i) If to TCI:
TransCosmos, Incorporated
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Hiroshi Kaizuka
Telephone: 011 81 3 3586 2880
Facsimile: 011 81 3 3584 6079
(ii) If to PCI:
PointCast Incorporated
501 Macara Avenue
Sunnyvale, California 94086
Attention: Jim Wickett
Telephone: (408) 990-7000
Facsimile: (408) 990-7251
or in each case to such other address or facsimile number as the party may have
furnished to the other party in writing.
e. Severability. In the event of the invalidity of any part or
------------
provision of this Agreement, such invalidity shall not affect the enforceability
of any other part or provision of this Agreement.
-5-
<PAGE>
f. Waiver. No waiver by any party of any default in the performance of or
------
compliance with any provision herein shall be deemed to be a waiver of the
performance and compliance as to any other provision, or as to such provision in
the future; nor shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter. No remedy expressly granted herein to any party shall be deemed to
exclude any other remedy which would otherwise be available.
g. Governing Law. This Agreement shall in all respects be governed by the
-------------
laws of the State of California without reference to its principles of conflicts
of laws. The parties hereby agree that all disputes arising out of this
Agreement shall be subject to the exclusive jurisdiction of and venue in the
federal and state courts within Santa Clara County, California. TCI hereby
consents to the personal and exclusive jurisdiction and venue of these courts.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
POINTCAST INCORPORATED TRANSCOSMOS, INCORPORATED
By: /s/ Jim Wickett By: /s/ Koki Akuda
-------------------------------- -------------------------
Name: Jim Wickett Name: Koki Akuda
------------------------------ -----------------------
Title: Sr. V.P. Title: President
----------------------------- ----------------------
-6-
<PAGE>
EXHIBIT A TO COMMERCIAL EXPLOITATION RIGHTS AGREEMENT
The following is a listing of marks and logos licensed under Section 2(b) of the
Commercial Exploitation Rights Agreement:
PointCast(TM)
PointCast Network(TM)
The PointCast logo icon is comprised of a purple square containing a white
broadcast tower with a yellow dot in the center. The icon is a square and should
account for one quarter the length of the logo (not including the TM symbol).
For example, if the PointCast logo word is represented as 4 inches long, the
tower icon should be a one inch square.
The PointCast Corporate Signature can appear in either a centered (primary) or
horizontal configuration. The centered configuration is the primary orientation
and should be used whenever possible. The horizontal configuration can be used
when there are size or space limitations. In the centered configuration, the
logotype PointCast (black) should lie centered beneath the tower icon
(purple/yellow). In the horizontal configuration, the logotype should lie to the
right of the purple tower icon. The logo word PointCast may reside without the
icon however, the tower icon may not reside without the logo word PointCast. The
logo word "PointCast" must always be black unless approved by PointCast
Marketing. The tower icon must always appear in the Pantone colors indicated in
the corporate palette unless approved by PointCast Marketing. The clear-space
area should measure at least 1/2x on all sides of the PointCast Corporate
Signature, where x equals the height of the logo icon. Placement of the
trademark symbol (TM) should also appear after the word PointCast.
[EXAMPLE OF POINTCAST LOGO, WITH TOWER ICON ABOVE NAME]
[EXAMPLE OF POINTCAST LOGO, WITH TOWER ICON TO LEFT OF NAME]
The corporate palette is comprised of two colors: Purple is the primary color,
Yellow is the secondary color and Black. The PMS, RGB and CMYK formulas are
listed below. When necessary PointCast Signature can also appear in Black and
White, please make sure the logo icon and the logotype is in black. The dot
above the tower should be white.
<PAGE>
PMS RGB CMYK
Purple: 527C 102,0,153 65,85,0,0
Yellow: 116C 255,204,0 0,20,90,0
<PAGE>
EXHIBIT 10.10
ADMINISTRATIVE SERVICES AND MANAGEMENT AGREEMENT
THIS ADMINISTRATIVE SERVICES AND MANAGEMENT AGREEMENT ("Agreement") is made
and entered into as of July 25, 1997, by and between PointCast K.K., a Japanese
corporation ("PointCast Japan"), and TransCosmos, Incorporated, a Japanese
corporation ("TCI").
RECITALS
--------
1. PointCast Incorporated, a California corporation ("PCI"), has
established an English language network (the "Network") to provide current news,
information services and advertising via the Internet and corporate intranets
using PCI's proprietary software and interface technology.
2. PCI and TCI have formed PointCast Japan, L.L.C. (the "LLC") as a
limited liability company under the laws of the State of Delaware. The LLC has
formed a Japanese corporation, PointCast Japan, to operate the business of the
joint venture between PCI and TCI, specifically to operate a localized, Japanese
version of the Network (the "Localized Network") in Japan (the "Territory").
3. TCI has agreed to manage certain operations of the business of
PointCast Japan on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
Appointment Of Manager
----------------------
1.1 Appointment. PointCast Japan hereby appoints TCI to manage those
-----------
areas of the business operations of PointCast Japan (other than "Miscellaneous")
specified on Exhibit A (the "Business Areas"), and TCI hereby accepts such
appointment by PointCast Japan, to manage and direct the Business Areas in the
Territory as specified in Article II below and subject to the general
supervision and control of the Board of Managers of the LLC and the officers of
PointCast Japan.
1.2 Term. The term of this Agreement shall begin as of the date
----
hereof and continue for a period of two years from the date of the launch of the
"open beta" period of the Localized Network ("Launch"), subject to the
provisions of Section 1.3 below.
1.3 Termination for Breach. If either party materially breaches any
----------------------
provision of this Agreement and fails to cure such breach within thirty (30)
days following written notice of such breach from the other party, then the
other party may, at its sole discretion, terminate this Agreement upon written
notice to the defaulting party.
<PAGE>
ARTICLE II
Powers and Duties of TCI
------------------------
2.1 Powers of TCI. Subject to such limitations as may be imposed by
-------------
law or this Agreement, TCI is hereby authorized and empowered, in the name of
and on behalf of PointCast Japan, to manage the Business Areas in accordance
with, and subject to the provisions of, this Agreement.
2.2 Duties of TCI. TCI shall perform its duties hereunder in the
-------------
manner in which TCI reasonably deems necessary or appropriate, subject to the
other provisions of this Agreement. Without limiting the generality of the
foregoing, the duties of TCI in the Territory shall include the following:
(a) to provide, from time to time, consultants or employees who
will assist PointCast Japan in activities concerning the items specified in
Section 1.1 above;
(b) to control and determine the day-to-day conduct of the
business activities of PointCast Japan relating to matters concerning banking,
payroll, credit policies, billing procedures, collection matters and cash
management policies;
(c) to provide marketing and sales activities for PointCast
Japan; and
(d) to conduct the services in compliance with all applicable
laws, rules and regulations and in accordance with the terms of this Agreement,
and any other applicable agreement, indenture or other instrument to which
PointCast Japan is bound or may be subject.
2.3 Limitation on Powers. Notwithstanding the provisions of Sections
--------------------
2.1 and 2.2 above, all day-to-day decisions regarding the operations of
PointCast Japan shall be made at the discretion of the President of PointCast
Japan and, as appropriate or necessary, the Board of Managers of the LLC.
Except as expressly set forth in Sections 2.1 and 2.2 above, without the prior
written authority of the Board of Managers of the LLC, TCI shall not have
authority or take any other action on behalf of PointCast Japan.
2.4 Additional Duties of TCI. TCI shall advance such funds during
------------------------
the term of this Agreement, on a quarterly basis, as required to permit
PointCast Japan to operate in accordance with the budget attached hereto as
Exhibit A, with any deviation from the budget subject to approval by the
representatives on the Board of Managers of the LLC appointed by PCI. In no
event will TCI be required to expend an amount in excess of the sum of the
management fees paid to TCI under this Agreement plus [*] Yen ((Yen) [*]).
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
-2-
<PAGE>
ARTICLE III
Management Fees
---------------
Compensation. In consideration of the performance of the duties set
------------
forth herein, PointCast Japan shall pay to TCI a management fee equal to 46% of
the gross revenues of PointCast Japan, determined in accordance with generally
accepted accounting principles consistently applied, paid at the conclusion of
each fiscal quarter, until TCI recovers its expenses incurred in accordance with
Section 2.4 above. Thereafter, TCI will be paid management fees at the
conclusion of each fiscal quarter at a rate equal to 46.5% of the gross revenues
of PointCast Japan with respect to revenues in each such succeeding quarter.
ARTICLE IV
Miscellaneous
-------------
4.1 Distribution. During the term of this Agreement PointCast Japan
------------
shall permit TCI to distribute localized versions of PCI software that are
distributed by third parties under agreement with PointCast Japan under terms to
TCI that are no less favorable than those granted to such third parties.
4.2 Technical Support. Prior to the termination of this Agreement,
-----------------
the parties shall use their best efforts to enter a separate agreement for the
provision of technical support services by TCI to PointCast Japan upon
commercially reasonable terms to extend beyond the term of this Agreement.
4.3 Independent Contractor. Nothing herein shall be construed or
----------------------
deemed to create a joint venture, contract of employment or partnership.
4.4 Notices. Any notice, request, consent or communication
-------
(collectively a "Notice") under this Agreement shall be effective only if it is
in writing and (a) personally delivered, (b) sent by certified or registered
mail, return receipt requested, postage prepaid, (c) sent by delivery service,
with delivery confirmed, or (d) telexed or telecopied, with receipt confirmed,
addressed as follows:
TransCosmos, Incorporated
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Hiroshi Kaizuka
Telephone: 011 81 3 3586 2880
Facsimile: 011 81 3 3584 6079
-3-
<PAGE>
PointCast, K.K.
Toshin Aoyama Building
3F, Shibuya 2-10-13, Shibuya-ku
Tokyo 150, Japan
Attention: Douglas W.C. Boake
Telephone: 011 81 3 5468 1260
Facsimile: 011 81 3 5468 1275
With copies to:
PointCast Japan, L.L.C.
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Hiroshi Kaizuka
Telephone: 011 81 3 3586 2880
Facsimile: 011 81 3 3584 6079
PointCast Incorporated
501 Macara Avenue
Sunnyvale, California 94086
Attention: Jim Wickett
Telephone: (408) 990-7000
Facsimile: (408) 990-7251
or to such other address or addresses as shall be furnished in writing by any
party to the other party. A Notice shall be deemed to have been given as of the
date when (i) personally delivered, (ii) seven (7) business days after being
deposited with postal authorities, properly addressed, (iii) the next day when
delivered during business hours to said overnight delivery service, properly
addressed and prior to such delivery service's cutoff time for next day
delivery, or (iv) when receipt of the telex or telecopy is confirmed, as the
case may be, unless the sending party has actual knowledge that a Notice was not
received by the intended recipient.
4.5 Assignment. TCI will not assign this Agreement to any other
----------
party or parties, without the prior written consent of PointCast Japan (which
will not be unreasonably withheld).
4.6 Headings. Section headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
4.7 Entire Agreement; Modification. This Agreement contains the
------------------------------
complete expression of the agreement between the parties with respect to the
matters addressed herein and there are no promises, representations, or
inducements except as herein provided. The terms and provisions of this
Agreement may not be modified, supplemented or amended except in writing signed
by both parties hereto. All terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and permitted assigns of the parties hereto.
-4-
<PAGE>
4.8 No Waiver. Failure by either party hereto to enforce at any time
---------
or for any period of time any provision or right hereunder shall not constitute
a waiver of such provision or of the right of such party thereafter to enforce
each and every such provision.
4.9 Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of California. The prevailing
party in any litigation concerning this Agreement shall be entitled to
reimbursement of its reasonable costs, including legal and accounting fees,
incurred in connection with any such matter.
4.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
4.11 Third Party Beneficiaries. PCI and the LLC shall be deemed to
-------------------------
be third party beneficiaries for purposes of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
TRANSCOSMOS, INCORPORATED
By: /s/ Koki Okuda
-------------------------------------
Title: President
----------------------------------
POINTCAST K.K.
By: /s/ Douglas Boake
-------------------------------------
Title: President
----------------------------------
-5-
<PAGE>
EXHIBIT A
---------
TCI MANAGEMENT AREAS AND BUDGET
-------------------------------
(all figures in Japanese Yen)
<TABLE>
<CAPTION>
BUSINESS AREAS TCI "MANAGEMENT FEE" EXPENSES
- ------------------------------------ ---------------------------------------------------------
PRE-LAUNCH YR 1 YR 2
----------------- ----------------- -----------------
<S> <C> <C> <C>
Payroll [*] [*]
Network Operations [*] [*]
Marketing [*] [*]
Equipment [*] [*]
Recruiting [*] [*]
Translation [*] [*]
Travel and Entertainment [*] [*]
Rent and Utilities [*] [*]
Telephone [*] [*]
Legal [*] [*]
Finance/Acctg [*] [*]
Supplies [*] [*]
Miscellaneous [*] [*]
----------------- ----------------- -----------------
[*] [*] [*]
================= ================= =================
</TABLE>
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
EXHIBIT 10.11
SUB-LICENSE OF TECHNOLOGY AND TRADEMARK RIGHTS
This is a sub-license (the "Sub-license"), effective as of July 25, 1997,
of the rights and obligations of PointCast Japan, L.L.C. (the "Sub-licensor"), a
Delaware limited liability corporation, arising under the Technology and
Trademark License Agreement, dated May 30, 1997 (the "Master License") between
PointCast Incorporated, a California corporation ("PCI") and Sub-licensor, to
PointCast K.K. (the "Sub-licensee"), a Japanese corporation.
Recitals
--------
WHEREAS, PCI granted certain rights and licenses to Sub-licensor under the
Master License (attached as Exhibit A hereto); and
WHEREAS, Sub-licensor wishes to license its rights and licenses under the
Master License to Sub-licensee in accordance with the terms set forth herein;
NOW THEREFORE, the parties hereby agree as follows:
1. Sub-license.
-----------
a. Server-Side Technology Rights. Subject to the terms and conditions of
-----------------------------
this Sub-license and the Master License, Sub-licensor grants to Sub-licensee the
exclusive right to use the Server-Side Technology licensed from PCI by Sub-
Licensor, for the limited purpose of establishing and maintaining a Localized
PointCast Network in the Territory.
b. Client-Side Software Rights. Subject to the terms and conditions of
---------------------------
this Sub-license and the Master License, Sub-licensor grants to Sub-licensee the
right to use, reproduce, market and distribute the object code for the Client-
Side Software in the Territory, as licensed from PCI by Sub-licensor.
c. Trademark Rights. Subject to the terms and conditions of this Sub-
----------------
license and the Master License, Sub-licensor grants to Sub-licensee a non-
exclusive right to utilize the Marks utilized by PCI in connection with the
Client-Side Software, solely in connection with the marketing, manufacture,
distribution and promotion of the Client-Side Software, as licensed from PCI by
Sub-licensor.
d. Restrictions. The foregoing sub-licensed rights may not be sub-
------------
licensed or transferred to a third-party without the advance, written consent of
PCI and Sub-licensor.
e. Reservation of Rights. Sub-licensor reserves all rights granted to it
---------------------
in the Master License not expressly granted to Sub-licensee in this Sub-license.
f. Source Code; Reverse Engineering. Sub-licensee shall have no rights to
--------------------------------
any source code for the Client-Side Software or Server-Side Software. Sub-
licensee shall not decompile, reverse engineer or otherwise attempt to derive,
obtain or modify the source code for such software.
<PAGE>
g. No Modification. Sub-licensee shall not modify, translate or create
---------------
derivative works of all or any part of the technology sub-licensed herein.
h. Proprietary Notices. Sub-licensee agrees to reproduce and include any
-------------------
copyright or other proprietary rights notices of PCI in all copies, in whole or
in part, of the Client-Side Software or Server-Side Technology or any other
physical embodiment of the sub-licensed technology. Sub-licensee shall not
remove any PCI copyright or other proprietary rights notices from any materials
provided by Sub-licensor to Sub-licensee under this Agreement.
i. Homogeneous Network. Sub-licensee shall not use the Client-Side
-------------------
Software as part of a network that does not also use the Server-Side Technology,
nor use the Server-Side Technology as part of a network that does not also use
the Client-Side Software, nor use the same server(s) in a Localized PointCast
Network and in any other broadcast network, without the express written consent
of PCI and Sub-licensor.
j. U.S. Government Restricted Rights. Sub-licensee acknowledges, shall
---------------------------------
state in every license agreement under which an end user that is an agency,
department or entity of the United States Government ("Government") obtains
rights to use the Client-Side Software or Server-Side Technology, and shall
ensure that each such end user understands and agrees, that (i) use,
reproduction, release, modification or disclosure of the Client-Side Software
and Server-Side Technology, or any part thereof, including technical data, is
restricted in accordance with Federal Acquisition Regulation ("FAR") 12.212 for
civilian agencies and Defense Federal Acquisition Regulation Supplement
("DFARS") 227.7202 for military agencies, (ii) the Client-Side Software and
Server-Side Technology are commercial products, which were developed at private
expense, and (iii) use of the Client-Side Software and Server-Side Technology by
any Government agency, department or other agency of the Government is further
restricted as set forth in this Agreement.
2. Representations and Warranties.
------------------------------
a. Representations and Warranties of the Sub-licensor. The Sub-licensor
--------------------------------------------------
represents and warrants to the Sub-licensee as follows:
(i) The Sub-licensor is a limited liability company duly organized
and validly existing under the laws of the State of Delaware and has full power,
authority and legal right to execute and deliver this Sub-license, and to
perform and observe the terms and conditions hereof;
(ii) The execution and delivery of this Sub-license and the
consummation of the transaction contemplated herein does not and will not result
in any breach of any applicable law, regulation, order, writ, injunction or
decree of any court or governmental authority (domestic or foreign) or of any of
the terms, conditions or provisions of, or constitute a default under, or, with
notice or lapse of time, or both, constitute a default under, or result in the
creation of any lien upon any property or assets of the Sub-licensor pursuant to
(a) the charter documents of the Sub-licensor, (b) any laws, regulations or
instruments governing the operations or activities of the Sub-licensor or (c)
any indenture, agreement or other instrument to which the Sub-licensor is a
party or by which it or its assets are bound;
-2-
<PAGE>
(iii) No authorization, approval, filing or consent, other than that
provided for in Section 1(c) hereof, and no license, exemption, order, notice,
registration or other action of any governmental agency or commission or public
or quasi-public body or authority is necessary for the due execution and
delivery by the Sub-licensor of this Sub-license;
(iv) The Master License and this Sub-license have been duly
authorized, executed and delivered by the Sub-licensor and constitute legal,
valid and binding obligations of the Sub-licensor, enforceable against it in
accordance with their respective terms;
(v) The sub-licensed rights are free from all security interests,
liens, pledges, encumbrances and claims;
(vi) Since May 30, 1997, the Sub-licensor has not terminated,
replaced, amended or waived any provision of the Master License;
(vii) The Sub-licensor has not sub-licensed its rights under the
Master License to any third party; and
(viii) No judicial or administrative proceedings are pending to the
knowledge of the Sub-licensor which would adversely affect its rights,
obligations or licenses under this Sub-license or under the Master License.
b. Representations and Warranties of the Sub-licensee. Sub-licensee
--------------------------------------------------
represents and warrants to the Sub-licensor as follows:
(i) The Sub-licensee is a company duly organized and validly
existing under the laws of Japan and has full power, authority and legal right
to execute and deliver this Sub-license, and to perform and observe the terms
and conditions hereof;
(ii) The execution and delivery of this Sub-license and the
consummation of the transaction contemplated herein does not and will not result
in any breach of any applicable law, regulation, order, writ, injunction or
decree of any court or governmental authority (domestic or foreign) or of any of
the terms, conditions or provisions of, or constitute a default under, or, with
notice or lapse of time, or both, constitute a default under, or, result in the
creation of any lien upon any property or assets of the Sub-licensee pursuant to
(a) the charter documents of the Sub-licensee, (b) any laws, regulations or
instruments governing the operations or activities of the Sub-licensee or (c)
any indenture, agreement or other instrument to which the Sub-licensee is a
party or by which it or its assets are bound;
(iii) No authorization, approval, filing or consent, and no license,
exemption, order, notice, registration or other action of any governmental
agency or commission or public or quasi-public body or authority is necessary
for the due execution and delivery by the Sub-licensee of this Sub-license; and
(iv) This Sub-license has been duly authorized, executed and
delivered by the Sub-licensee and this Sub-license (including the obligations
thereunder assumed by the Sub-licensee hereby) constitutes legal, valid and
binding obligations of the Sub-licensee, enforceable against it in accordance
with its terms.
-3-
<PAGE>
3. Payment; Taxes.
--------------
a. Fees. At the end of each of Sub-licensee's fiscal quarters Sub-licensee
----
shall pay to Sub-licensor a licensing fee ("Royalty") of [*] percent ([*]) of
Sub-licensee's gross revenues for such quarter. Upon Sub-licensee's operations
becoming profitable, the parties agree that Sub-licensor shall be entitled to
[*] for subsequent fiscal quarters, such [*] to be mutually agreed upon,
which shall reflect a fair return to Sub-licensor and permit recoupment of the
measure of Royalties previously foregone by Sub-licensor under the prior [*]
percent rate. Within ten (10) days of the end of each such fiscal quarter, Sub-
licensee shall report such revenue data to Sub-licensor as mutually agreed by
the parties as necessary for determining the Royalty to be paid to Sub-licensor
under this section.
b. Taxes. Sub-licensee shall, in addition to any other amounts payable
-----
under this Agreement, pay all sales, use, value added or other taxes, federal,
state or otherwise, however designated, which are levied or imposed by reason of
the transactions contemplated by this Sub-license, excluding only taxes based on
Sub-licensor's net income. Sub-licensee shall hold Sub-licensor harmless from
all claims and liability arising from sub-licensee's failure to report or pay
any such taxes, duties and assessments.
4. Proprietary Rights and Confidential Information.
-----------------------------------------------
a. Ownership. Except for the express licenses set forth in Section 2,
---------
nothing in this Agreement shall be construed as granting Sub-licensee any rights
in the sub-licensed technology. PCI shall own all rights to the sub-licensed
technology, including all patent rights, copyrights, trade secret rights and
other intellectual property rights and rights to applications therefor
(collectively, "Intellectual Property Rights") as well as all rights, including
all Intellectual Property Rights, to any inventions, enhancements, improvements
or derivative works of or relating to the sub-licensed technology, whether made
by PCI, Sub-licensor or Sub-licensee. Sub-licensee shall take all actions and
execute any documents necessary or appropriate to secure in PCI ownership of
such rights.
b. Confidentiality. Sub-licensee acknowledges that the sub-licensed
---------------
technology constitutes PCI's confidential and proprietary information
("Confidential Information"). Sub-licensee agrees to treat the Confidential
Information with at least the degree of care and protection with which it treats
its own proprietary and confidential information, but in any event with no less
than reasonable care and protection, and to use the Confidential Information
only as expressly set forth herein.
c. Return of Confidential Information. Sub-licensee shall promptly
----------------------------------
return all Confidential Information (i) after termination of this Sub-license,
or (ii) upon receipt by Sub-licensee of written notice requesting return of such
Confidential Information.
5. Disclaimer of Warranties.
------------------------
ALL LICENSED TECHNOLOGY (INCLUDING SOFTWARE) PROVIDED BY SUB-LICENSOR UNDER
THIS AGREEMENT IS PROVIDED "AS IS." SUB-LICENSOR PROVIDES NO WARRANTIES, EITHER
EXPRESS, IMPLIED, STATUTORY, OR
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
-4-
<PAGE>
OTHERWISE, WITH RESPECT TO ANY SUCH TECHNOLOGY AND SPECIFICALLY DISCLAIMS ALL
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NONINFRINGEMENT.
6. Indemnity.
---------
Sub-licensor agrees to indemnify Sub-licensee and PCI and hold each
harmless against any cost, loss, liability or expense (including attorneys'
fees) arising out of claims against either which result from Sub-licensee's use
or distribution of the sub-licensed technology.
7. Limitation of Liability.
-----------------------
EACH PARTY AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A
BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS,
THE OTHER PARTY'S LIABILITY FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN
NO EVENT EXCEED ONE MILLION DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES
THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY
INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER WILL NOT BE LIABLE
FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING
OUT OF THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY
(INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE AMOUNTS PAYABLE HEREUNDER ARE
BASED IN PART ON THESE LIMITATIONS, AND FURTHER AGREES THAT THESE LIMITATIONS
SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
8. Term and Termination.
--------------------
a. Effective Date and Term. This Sub-license shall be effective as of the
-----------------------
Effective Date and shall continue in perpetuity unless terminated as set forth
in this Section 8.
b. Termination. Either party shall have the right to terminate this Sub-
-----------
license effective upon written notice to the other party upon the occurrence the
following events: (i) in the event the other party fails to comply with any of
the terms and conditions of this Sub-license and such default has not been cured
within sixty (60) days after written notice to the other party; (ii) in the
event the Master License between PCI and Sub-licensor is terminated; (iii) in
the event Sub-licensee dissolves; or (iv) in the event the other party (A)
terminates or suspends its business, (B) becomes subject to any bankruptcy or
insolvency proceeding under any U.S., state or other national or governmental
statute or law, (C) becomes insolvent or subject to direct control by a trustee,
receiver or similar authority, or (D) has wound up or liquidated, voluntarily or
otherwise.
c. Effect of Termination. The obligations of Sub-licensor and Sub-
---------------------
licensee in Sections 2, 3, 4, 5, 6, 7, 8 and 9 shall survive termination of this
Sub-license. Termination of this Sub-license shall not relieve either party for
any liability that accrued prior to such termination.
-5-
<PAGE>
9. Miscellaneous.
-------------
a. Assignment. All the terms and provisions of this Sub-license shall be
----------
binding upon and inure to the benefit of the parties to this Sub-license and to
their respective heirs, successors, assigns and legal representatives, except
that Sub-licensee shall not assign its rights under this Sub-license to anyone
without the prior written consent of PCI and Sub-licensor. Sub-licensee shall
be entitled to assign this Sub-license to a successor of all or substantially
all of its relevant assets without restriction.
b. Entire Agreement. This Sub-license, together with the Exhibits hereto,
----------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and shall supersede all prior understandings and agreements
between the parties with respect to such subject matter. This Sub-license may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
c. Amendment. This Sub-license may be amended only by a written instrument
---------
signed by both parties.
d. Notices. Any and all notices, requests, demands and other
-------
communications required or otherwise contemplated to be made under this Sub-
license shall be in writing and in English and shall be deemed to have been duly
given (a) if delivered personally, when received, (b) if transmitted by
facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered
airmail, return receipt requested, postage prepaid, on the sixth business day
following the date of deposit in the mail or (d) if by international courier
service, on the second business day following the date of deposit with such
courier service, or such earlier delivery date as may be confirmed to the sender
by such courier service. All such notices, requests, demands and other
communications shall be addressed as follows:
(i) If to the Sub-licensor:
PointCast Japan, L.L.C.
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Hiroshi Kaizuka
Telephone: 011 81 3 3586 2880
Facsimile: 011 81 3 3584 6079
(ii) If to the Sub-licensee:
PointCast K.K.
Toshin Aoyama Building
3F, Shibuya 2-10-13, Shibuya-ku
Tokyo 150, Japan
Attention: Douglas W.C. Boake
-6-
<PAGE>
Telephone: 011 81 3 5468 1260
Facsimile: 011 81 3 5468 1275
or in each case to such other address or facsimile number as the party may have
furnished to the other party in writing.
e. Governing Law. This Sub-license shall in all The parties hereby agree
-------------
that all disputes respects be governed by the laws of the State of arising out
of this Sub-license shall be subject California without reference to its
principles of to the exclusive jurisdiction of and venue in conflicts of laws.
the federal and state courts within Santa Clara Sub-licensee hereby consent to
the personal and exclusive jurisdiction and venue of these courts.
f. Import and Export Controls. Sub-licensee understands that Sub-licensor
--------------------------
may be subject to regulation by agencies of the U.S. government, including the
U.S. Department of Commerce, which prohibit export or diversion of certain
products and technology to certain countries. Any and all obligations of Sub-
licensor to provide the sub-licensed technology, as well as any technical
assistance, shall be subject in all respects to such United States laws and
regulations and shall from time to time govern the license and delivery of
technology and products abroad by persons subject to the jurisdiction of the
United States, including the Export Administration Act of 1979, as amended, any
successor legislation, and the Export Administration Regulations issued by the
Department of Commerce, International Trade Administration, or Office of Export
Licensing. Sub-licensee warrants that it shall comply in all respects with the
export and reexport restrictions set forth in the export license (if necessary)
for the sub-licensed technology.
IN WITNESS WHEREOF, the parties have executed this Sub-license as of the
Effective Date set forth above.
SUB-LICENSOR: SUB-LICENSEE:
POINTCAST JAPAN, L.L.C. PointCast K.K.
BY: /s/ Douglas Boake BY: /s/ Douglas Boake
----------------------------- -------------------------
NAME: Douglas Boake NAME: Douglas Boake
--------------------------- -----------------------
TITLE: Manager TITLE: President
-------------------------- ----------------------
-7-
<PAGE>
EXHIBIT 10.12
MAINTENANCE AND SUPPORT AGREEMENT
Maintenance and Support Agreement ("Agreement") dated as of July 25, 1997
(the "Effective Date") by and between PointCast Incorporated ("PCI"), a
California corporation with its principal place of business at 501 Macara
Avenue, Sunnyvale, CA 94086 and PointCast K.K. ("NewCo"), with its principal
place of business at Toshin Aoyama Building, 3F, Shibuya 2-10-13, Shibuya-ku,
Tokyo 150, Japan. This Agreement sets forth the terms and conditions under which
PCI will localize and maintain the software (the "Software") licensed to NewCo
pursuant to the License Agreement dated May 30, 1997 between PointCast Japan,
L.L.C. and NewCo (the "License Agreement"). All terms shall have the meanings
set forth in the License Agreement, unless otherwise defined in this Agreement.
1. Support Services.
----------------
a. Localization. PCI shall use commercially reasonable efforts to develop
------------
Localized Versions of its Client and Developer's Tools software and its Server-
Side Software, as necessary, to allow NewCo to establish the Localized PointCast
Network. As such Localized Versions are developed, PCI shall deliver them to
NewCo in beta and final forms.
b. Training. After PCI has delivered the Localized Versions of its
--------
software pursuant to Section 1(a), PCI shall conduct a training session in
California for employees of NewCo. NewCo shall be responsible for the travel
and lodging expenses of those employees attending the training.
c. Error Corrections. PCI shall use commercially reasonable efforts to
-----------------
fix any reproducible programming error identified by NewCo in the Localized
Versions of the Client-Side Software or the Server-Side Software.
d. Updates and Upgrades. PCI shall use commercially reasonable efforts to
--------------------
provide updates and upgrades to the Localized Versions of the Client-Side
Software and the Server-Side Software, as PCI in its sole discretion shall
determine, for the purpose of (i) adding channels to such Localized Versions as
requested by NewCo and agreed to by PCI, and (ii) adding functionality developed
by PCI for implementation in the PointCast Network that PCI deems appropriate
for the Localized PointCast Network.
e. Limitations. NewCo acknowledges that PCI shall not be obligated under
-----------
this Agreement to support any software other than that developed by PCI.
2. Fees.
----
a. Support Fees. In consideration for PCI's maintenance, support and
------------
training obligations under this Agreement, NewCo shall pay PCI a yearly fee (the
"Support Fee"), payable in advance. The Support Fee for the first year of this
Agreement shall be US$[*], and shall be paid on the Effective Date.
Following the first year of this Agreement, the Support Fee will be raised to
reflect the higher cost of support by PCI in later years, as mutually agreed by
PCI and the NewCo Board of Directors. It is currently estimated that the Support
Fee for the second year of this Agreement will be US$[*]. NewCo shall pay the
Support Fee for such years following the first year on the appropriate
anniversary of the Effective Date.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
b. Taxes. NewCo shall, in addition to the other amounts payable under
-----
this Agreement, pay all applicable sales, use, value added or other taxes,
federal, state or otherwise, however designated, which are levied or imposed by
reason of the transactions contemplated by this Agreement, excluding only taxes
based on PCI's net income. NewCo shall hold PCI harmless from all claims and
liability arising from NewCo's failure to report or pay any such taxes, duties
and assessments.
3. Term and Termination.
--------------------
a. Term. The term of this Agreement shall begin on the Effective Date and
----
shall continue in perpetuity unless earlier terminated as set forth in this
Section 3.
b. Termination. Either party shall have the right to terminate this
-----------
Agreement effective upon written notice to the other party upon the occurrence
of any of the following events: (i) in the event the other party fails to
comply with any of the terms and conditions of this Agreement and such default
has not been cured within sixty (60) days after written notice to the other
party; (ii) in the event the License Agreement is terminated; (iii) in the event
PointCast Japan, L.L.C. dissolves; or (iv) in the event the other party (A)
terminates or suspends its business, (B) becomes subject to any bankruptcy or
insolvency proceeding under any U.S., state or other national or governmental
statute or law, (C) becomes insolvent or subject to direct control by a trustee,
receiver or similar authority, or (D) has wound up or liquidated, voluntarily or
otherwise.
c. Effect of Termination. The obligations of PCI and NewCo in Sections
---------------------
2(b), 3(c), 4, 5, 6 and 7 shall survive termination of this Agreement.
Termination of this Agreement shall not relieve either party for any liability
that accrued prior to such termination.
4. Proprietary Rights and Confidential Information.
-----------------------------------------------
a. Software Under the License Agreement. Any error corrections, updates,
------------------------------------
upgrades, derivative works, additions, improvements, enhancements or
modifications to the Software or to documentation for the Software effected or
delivered under this Agreement shall be the property of PCI and shall be deemed
part of the Licensed Technology, and subject to all of the provisions of the
License Agreement.
b. Confidentiality. Any Confidential Information disclosed by either
---------------
party to the other in the performance of this Agreement shall be subject to the
protections and restrictions set forth in Section 4 of the License Agreement.
5. Disclaimer.
----------
PCI PROVIDES NO WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR
OTHERWISE, WITH RESPECT TO ANY SERVICES OR SOFTWARE, INCLUDING ANY ERROR
CORRECTIONS OR UPDATES, PROVIDED UNDER THIS AGREEMENT, AND PCI SPECIFICALLY
DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
-2-
<PAGE>
6. Limitation of Liability.
-----------------------
EACH PARTY AGREES THAT, EXCEPT IN CONNECTION WITH A BREACH OF SECTION 4 OR
ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER PARTY'S
LIABILITY FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN NO EVENT EXCEED ONE
MILLION DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES THAT, EXCEPT IN
CONNECTION WITH A BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL
PROPERTY RIGHTS, THE OTHER WILL NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER
CAUSED AND UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY
ACKNOWLEDGES THAT THE AMOUNTS PAYABLE HEREUNDER ARE BASED IN PART ON THESE
LIMITATIONS, AND FURTHER AGREES THAT THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
7. Miscellaneous.
-------------
a. Assignment. All the terms and provisions of this Agreement shall be
----------
binding upon and inure to the benefit of the parties to this Agreement and to
their respective heirs, successors, assigns and legal representatives, except
that NewCo shall not assign its rights under this Agreement to anyone without
PCI's prior written consent. PCI shall be entitled to assign this Agreement to
a successor of all or substantially all of its relevant assets without
restriction.
b. Entire Agreement. This Agreement, together with the Exhibits hereto,
----------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and shall supersede all prior understandings and agreements
between the parties with respect to such subject matter. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
c. Amendment. This Agreement may be amended only by a written instrument
---------
signed by both parties.
d. Notices. Any and all notices, requests, demands and other
-------
communications required or otherwise contemplated to be made under this
Agreement shall be in writing and in English and shall be deemed to have been
duly given (a) if delivered personally, when received, (b) if transmitted by
facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered
airmail, return receipt requested, postage prepaid, on the sixth business day
following the date of deposit in the mail or (d) if by international courier
service, on the second business day following the date of deposit with such
courier service, or such earlier delivery date as may be confirmed to the sender
by such courier service. All such notices, requests, demands and other
communications shall be addressed as follows:
-3-
<PAGE>
(i) If to NewCo:
PointCast K.K.
Toshin Aoyama Building
3F, Shibuya 2-10-13, Shibuya-ku
Tokyo 150, Japan
Attention: Douglas W.C. Boake
Telephone: 011 81 3 5468-1260
Facsimile: 011 81 3 5468-1275
(ii) If to PCI:
PointCast Incorporated
501 Macara Avenue
Sunnyvale, California 94086
Attention: Jim Wickett, SVP
Telephone: (408) 990-7000
Facsimile: (408) 990-7251
or in each case to such other address or facsimile number as the party may have
furnished to the other party in writing.
e. Severability. In the event of the invalidity of any part or provision
------------
of this Agreement, such invalidity shall not affect the enforceability of any
other part or provision of this Agreement.
f. Waiver. No waiver by any party of any default in the performance of or
------
compliance with any provision herein shall be deemed to be a waiver of the
performance and compliance as to any other provision, or as to such provision in
the future; nor shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter. No remedy expressly granted herein to any party shall be deemed to
exclude any other remedy which would otherwise be available.
g. Governing Law. This Agreement shall in all respects be governed by the
-------------
laws of the State of California without reference to its principles of conflicts
of laws. The parties hereby agree that all disputes arising out of this
Agreement shall be subject to the exclusive jurisdiction of and venue in the
federal and state courts within Santa Clara County, California. NewCo hereby
consents to the personal and exclusive jurisdiction and venue of these courts.
h. Import and Export Controls. NewCo understands that PCI is subject to
--------------------------
regulation by agencies of the U.S. government, including the U.S. Department of
Commerce, which prohibit export or diversion of certain products and technology
to certain countries. Any and all obligations of PCI to provide the Software,
as well as any technical assistance, shall be subject in all respects to such
United States laws and regulations and shall from time to time govern the
license and delivery of technology and products abroad by persons subject to the
jurisdiction of
-4-
<PAGE>
the United States, including the Export Administration Act of 1979, as amended,
any successor legislation, and the Export Administration Regulations issued by
the Department of Commerce, International Trade Administration, or Office of
Export Licensing. NewCo warrants that it shall comply in all respects with the
export and re-export restrictions set forth in the export license (if necessary)
for the Software.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date set forth above.
POINTCAST INCORPORATED (PCI) POINTCAST K.K. (NEWCO)
By: /s/ Jim Wickett By: /s/ Douglas Boake
-------------------------------- ----------------------------
Name: Jim Wickett Name: Douglas Boake
------------------------------ --------------------------
Title: Sr. V.P. Title: President
----------------------------- -------------------------
-5-
<PAGE>
EXHIBIT 10.13
TECHNOLOGY AND TRADEMARK LICENSE AGREEMENT
This Technology and Trademark License Agreement ("Agreement") by and between
PointCast Incorporated ("PCI"), a California corporation with its principal
place of business at 501 Macara Avenue, Sunnyvale, CA 94086 and PointCast Japan,
L.L.C. ("LLC"), a Delaware limited liability company with its principal place of
business at Sumitomoseimei Akasaka Bldg., 3-3-3, Akasaka, Minato-ku, Tokyo,
Japan 107, shall be effective as of May 30, 1997 (the "Effective Date").
1. Definitions.
-----------
a. "Client" shall mean PCI's software that presents information from the
PointCast Network to Viewers via channels, presented on Viewers' computer
monitors through SmartScreen screen savers and the interactive channel viewer
module.
b. "Client-Side Software" shall mean any Localized Versions developed by
PCI of the Client and Developers' Tools software.
c. "Developers' Tools" shall mean PCI's software tools and utilities
distributed by PCI to developers of content and/or advertising for distribution
on the PointCast Network.
d. "Licensed Technology" shall mean the Client-Side Software and the
Server-Side Technology.
e. "Localized PointCast Network" shall mean a localized version of the
PointCast Network, in the Japanese language, whose operations are located in the
Territory, utilizing PCI's Server-Side Technology to broadcast news, information
and advertising content via the Internet or corporate intranets, targeted
primarily to viewers and corporations in the Territory utilizing the Client-Side
Software.
f. "Localized Version" shall mean a version of software that was created
by PCI, if any, by modifying software used in the PointCast Network to create
software for use in connection with a Localized PointCast Network.
g. "PointCast Network" shall mean the public broadcast network of servers,
located in the United States and operated by PCI, that delivers news,
information and advertising content via the Internet or corporate intranets to
the computer screens of Viewers using Client software.
h. "Server-Side Technology" shall mean Localized Versions of PCI's
broadcast server, content formatting, feed handling, back-end statistic tracking
and other software required for and used by PCI in the operation of a PointCast
Network broadcast data center (the "Server-Side Software"), and trade secrets
relating to the installation and integration of broadcast data center hardware,
software and staffing (the "Trade Secrets").
<PAGE>
i. "Territory" shall mean Japan.
j. "Viewer" shall mean a user who accesses the PointCast Network, or any
Localized Version thereof, using Client software.
2. Licenses.
--------
a. Server-Side Technology. Subject to the terms and conditions of this
----------------------
Agreement, PCI grants to LLC an exclusive license to use the Server-Side
Technology for the sole purpose of establishing and maintaining a Localized
PointCast Network in the Territory.
b. Client-Side Software. Subject to the terms and conditions of this
--------------------
Agreement, PCI grants to LLC a license to use, reproduce, market and distribute
the object code for the Client-Side Software solely in the Territory.
c. Restrictions. The rights granted in Sections 2(a) and 2(b) may not be
------------
sublicensed or transferred to a third party by LLC without the express written
consent of PCI. PCI may condition such consent upon the sublicensee entering
into a sublicense agreement acceptable to PCI. Notwithstanding the foregoing,
LLC may sublicense such rights, as well as the rights granted in Section 2(d),
to its wholly owned subsidiary to be formed as a Japanese corporation ("NewCo")
pursuant to an agreement that is reasonably acceptable in form and substance to
PCI. LLC may not sublicense or transfer any rights to the Server-Side
Technology in any event, except as described above to NewCo. In no event may a
sublicense granted under this Section to any sublicensee extend rights beyond
those granted to LLC under this Agreement.
d. Trademarks. PCI will provide LLC with artwork for PCI's trademarks,
----------
tradenames and logos (the "Marks") utilized by PCI in connection with the
Client-Side Software. Subject to the terms and conditions of this Agreement, PCI
grants LLC the nonexclusive right to use the Marks in the Territory solely in
connect ion with the marketing, manufacture, distribution and promotion of the
Client-Side Software; provided, however, that: (i) no names or descriptive words
-------- -------
or phrases shall be co-joined with the Marks without the prior written consent
of PCI; (ii) LLC will comply with any instruction or requirement issued by PCI
with respect to the appearance and use of the Marks; (iii) LLC shall use the
Marks only in a manner so as to preserve and protect all rights of PCI therein;
(iv) LLC shall not challenge PCI's ownership of the Marks or use or adopt any
trademarks which might be confusingly similar to the Marks; (v) LLC shall take
all necessary steps and pay all related expenses in connection with protecting
the Marks as PCI intellectual property under all applicable trademark, unfair
competition or other laws in the Territory, making all applications in PCI's
name, if possible, or otherwise assigning to PCI the rights to the resulting
marks as soon as possible; and (vi) LLC shall additionally take all necessary
steps and pay all related expenses in connection with so protecting any new or
modified marks created with the approval of PCI under clause (i) of this
Section. All rights in the Marks shall at all times during the term of this
Agreement and thereafter be and remain the sole property of PCI. LLC shall have
no right to alter or in any way transfer the Marks, and LLC shall provide PCI
with reasonable assistance in any efforts to prevent or terminate any
infringement, unauthorized use or imitation thereof.
-2-
<PAGE>
e. Reservation of Rights. PCI reserves all rights in the Licensed
---------------------
Technology which are not expressly granted to LLC in this Agreement.
f. Source Code; Reverse Engineering. LLC shall have no rights to any
--------------------------------
source code for the Client-Side Software or Server-Side Software. LLC shall not
decompile, reverse engineer or otherwise attempt to derive, obtain or modify the
source code for such software.
g. No Modification. LLC shall not modify, translate or create derivative
---------------
works of all or any part of the Licensed Technology.
h. Proprietary Notices. LLC agrees to reproduce and include any
-------------------
copyright or other proprietary rights notices of PCI in all copies, in whole or
in part, of the Client-Side Software or Server-Side Software any other physical
embodiment of the Licensed Technology. LLC shall not remove any PCI copyright or
other proprietary rights notices from any materials provided by PCI to LLC under
this Agreement.
i. Homogeneous Network. LLC shall not use the Client-Side Software as
-------------------
part of a network that does not also use the Server-Side Technology, nor use the
Server-Side Technology as part of a network that does not also use the Client-
Side Software, nor use the same server(s) in a Localized PointCast Network and
in any other broadcast network, without the express written consent of PCI.
j. U.S. Government Restricted Rights. LLC acknowledges, shall state in
---------------------------------
every license agreement under which an end user that is an agency, department or
entity of the United States Government ("Government") obtains rights to use the
Client-Side Software or Server-Side Software, and shall ensure that each such
end user understands and agrees, that (i) use, reproduction, release,
modification or disclosure of the Client-Side Software and Server-Side Software,
or any part thereof, including technical data, is restricted in accordance with
Federal Acquisition Regulation ("FAR") 12.212 for civilian agencies and Defense
Federal Acquisition Regulation Supplement ("DFARS") 227.7202 for military
agencies, (ii) the Client-Side Software and Server-Side Software is a commercial
product, which was developed at private expense, and (iii) use of the Client-
Side Software and Server-Side Software by any Government agency, department or
other agency of the Government is further restricted as set forth in this
Agreement.
3. Payment; Taxes.
--------------
a. License Fees. The license granted by PCI to LLC under this Agreement
------------
is a capital contribution by PCI to LLC having a value of US$2,000,000.00 (two
million dollars).
b. Taxes. LLC shall, in addition to any other amounts payable under this
-----
Agreement, pay all sales, use, value added or other taxes, federal, state or
otherwise, however designated, which are levied or imposed by reason of the
transactions contemplated by this Agreement, excluding only taxes based on PCI's
net income. LLC shall hold PCI harmless from
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<PAGE>
all claims and liability arising from LLC's failure to report or pay any such
taxes, duties and assessments.
4. Proprietary Rights and Confidential Information.
-----------------------------------------------
a. Ownership. Except for the express licenses set forth in Section 2,
---------
nothing in this Agreement shall be construed as granting LLC any rights in the
Licensed Technology. PCI shall own all rights to the Licensed Technology,
including all patent rights, copyrights, trade secret rights and other
intellectual property rights and rights to applications therefor (collectively,
"Intellectual Property Rights") as well as all rights, including all
Intellectual Property Rights, to any inventions, enhancements, improvements or
derivative works of or relating to the Licensed Technology, whether made by PCI
or LLC. LLC shall take all actions and execute any documents necessary or
appropriate to secure in PCI ownership of such rights.
b. Confidentiality. LLC acknowledges that the Licensed Technology, as
---------------
well as other information disclosed by PCI to LLC during the term of this
Agreement concerning PCI's business, products, proposed new products, licensees
and related information, constitutes PCI's confidential and proprietary
information ("Confidential Information"). LLC agrees to treat the Confidential
Information with at least the degree of care and protection with which it treats
its own proprietary and confidential information, but in any event with no less
than reasonable care and protection, and to use the Confidential Information
only as expressly set forth herein.
c. Exceptions. LLC agrees not to disclose or otherwise make such
----------
Confidential Information available to third parties without PCI's prior written
consent except to the extent that the Confidential Information (i) was in the
public domain at the time it was disclosed or has entered the public domain
through no fault of LLC; (ii) was known to LLC, without restriction, at the time
of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of PCI; (iv) became known to
LLC, without restriction, from a source other than PCI without breach of this
Agreement by LLC and otherwise not in violation of PCI's rights; or (v) is
disclosed pursuant to the order or requirement of a court, administrative
agency, or other governmental body; provided, however, that LLC shall use all
reasonable efforts to provide prompt, written, and sufficient advance notice
thereof to PCI to enable PCI to seek a protective order or otherwise prevent or
restrict such disclosure. LLC agrees that LLC will take appropriate action by
instruction, agreement, or otherwise with LLC's employees to satisfy LLC's
obligations under this Agreement with respect to use, copying, modification,
protection and security of Confidential Information.
d. Return of Confidential Information. LLC shall promptly return all
----------------------------------
Confidential Information to PCI (i) after termination of this Agreement, or (ii)
upon receipt by LLC of written notice from PCI requesting return of such
Confidential Information.
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5. Disclaimer of Warranties.
------------------------
ALL LICENSED TECHNOLOGY (INCLUDING SOFTWARE) PROVIDED BY PCI UNDER THIS
AGREEMENT IS PROVIDED "AS IS." PCI PROVIDES NO WARRANTIES, EITHER EXPRESS,
IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO ANY SUCH TECHNOLOGY AND
SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR NONINFRINGEMENT.
6. Indemnity.
---------
LLC agrees to indemnify PCI and hold it harmless against any cost, loss,
liability or expense (including attorneys' fees) arising out of claims against
PCI which result from LLC's use of the Licensed Technology, distribution of the
Client-Side Software or operation of the Localized PointCast Networks.
7. Limitation of Liability.
-----------------------
EACH PARTY AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A
BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS,
THE OTHER PARTY'S LIABILITY FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN
NO EVENT EXCEED ONE MILLION DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES
THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY
INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER WILL NOT BE LIABLE
FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING
OUT OF THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY
(INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE AMOUNTS PAYABLE HEREUNDER ARE
BASED IN PART ON THESE LIMITATIONS, AND FURTHER AGREES THAT THESE LIMITATIONS
SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
8. Term and Termination.
--------------------
a. Effective Date and Term. This Agreement and the licenses granted
-----------------------
hereunder shall be effective as of the Effective Date and shall continue in
perpetuity unless terminated as set forth in this Section 8.
b. Termination. Either party shall have the right to terminate this
-----------
Agreement and the licenses granted herein effective upon written notice to the
other party upon the occurrence the following events: (i) in the event the
other party fails to comply with any of the terms and conditions of this
Agreement and such default has not been cured within sixty (60) days after
written notice to the other party; (ii) in the event the Maintenance and Support
Agreement
-5-
<PAGE>
between PCI and NewCo is terminated; (iii) in the event LLC dissolves; or (iv)
in the event the other party (A) terminates or suspends its business, (B)
becomes subject to any bankruptcy or insolvency proceeding under any U.S., state
or other national or governmental statute or law, (C) becomes insolvent or
subject to direct control by a trustee, receiver or similar authority, or (D)
has wound up or liquidated, voluntarily or otherwise.
c. Effect of Termination. The obligations of PCI and LLC in Sections
---------------------
2(d)(iv), 3(b), 4, 5, 6, 7, 8 and 9 shall survive termination of this Agreement.
Termination of this Agreement shall not relieve either party for any liability
that accrued prior to such termination.
9. Miscellaneous.
-------------
a. Assignment. All the terms and provisions of this Agreement shall be
----------
binding upon and inure to the benefit of the parties to this Agreement and to
their respective heirs, successors, assigns and legal representatives, except
that LLC shall not assign its rights under this Agreement to anyone without
PCI's prior written consent. PCI shall be entitled to assign this Agreement to
a successor of all or substantially all of its relevant assets without
restriction.
b. Entire Agreement. This Agreement, together with the Exhibits hereto,
----------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and shall supersede all prior understandings and agreements
between the parties with respect to such subject matter. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
c. Amendment. This Agreement may be amended only by a written instrument
---------
signed by both parties.
d. Notices. Any and all notices, requests, demands and other
-------
communications required or otherwise contemplated to be made under this
Agreement shall be in writing and in English and shall be deemed to have been
duly given (a) if delivered personally, when received, (b) if transmitted by
facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered
airmail, return receipt requested, postage prepaid, on the sixth business day
following the date of deposit in the mail or (d) if by international courier
service, on the second business day following the date of deposit with such
courier service, or such earlier delivery date as may be confirmed to the sender
by such courier service. All such notices, requests, demands and other
communications shall be addressed as follows:
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<PAGE>
(i) If to LLC:
PointCast Japan, L.L.C.
Sumitomoseimei Akasaka Bldg.
3-3-3, Akasaka, Minato-ku
Tokyo, Japan 107
Attention: Hiroshi Kaizuka
Telephone: 011 81 3 3586 2880
Facsimile: 011 81 3 3584 6079
(ii) If to PCI:
PointCast Incorporated
501 Macara Avenue
Sunnyvale, California 94086
Attention: Jim Wickett, SVP
Telephone: (408) 990-7000
Facsimile: (408) 990-7251
or in each case to such other address or facsimile number as the party may have
furnished to the other party in writing.
e. Severability. In the event of the invalidity of any part or provision
------------
of this Agreement, such invalidity shall not affect the enforceability of any
other part or provision of this Agreement.
f. Waiver. No waiver by any party of any default in the performance of or
------
compliance with any provision herein shall be deemed to be a waiver of the
performance and compliance as to any other provision, or as to such provision in
the future; nor shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter. No remedy expressly granted herein to any party shall be deemed to
exclude any other remedy which would otherwise be available.
g. Governing Law. This Agreement shall in all respects be governed by the
-------------
laws of the State of California without reference to its principles of conflicts
of laws. The parties hereby agree that all disputes arising out of this
Agreement shall be subject to the exclusive jurisdiction of and venue in the
federal and state courts within Santa Clara County, California. LLC hereby
consents to the personal and exclusive jurisdiction and venue of these courts.
h. Import and Export Controls. LLC understands that PCI is subject to
--------------------------
regulation by agencies of the U.S. government, including the U.S. Department of
Commerce, which prohibit export or diversion of certain products and technology
to certain countries. Any and all obligations of PCI to provide the Licensed
Technology, as well as any technical assistance, shall be subject in all
respects to such United States laws and regulations and shall from time to time
-7-
<PAGE>
govern the license and delivery of technology and products abroad by persons
subject to the jurisdiction of the United States, including the Export
Administration Act of 1979, as amended, any successor legislation, and the
Export Administration Regulations issued by the Department of Commerce,
International Trade Administration, or Office of Export Licensing. LLC warrants
that it shall comply in all respects with the export and reexport restrictions
set forth in the export license (if necessary) for the Technology.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date set forth above.
POINTCAST INCORPORATED POINTCAST JAPAN, L.L.C.
By: /s/ Jim Wickett By: /s/ Douglas Boake
------------------------------- -------------------------
Name: Jim Wickett Name: Douglas Boake
----------------------------- -----------------------
Title: Sr. V.P. Title: Manager
---------------------------- ----------------------
-8-
<PAGE>
EXHIBIT 10.18
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement"), dated as of December 19, 1996
(the "Effective Date"), is between Electronic Data Systems Corporation, a
Delaware corporation ("EDS"), and PointCast Incorporated, a California
corporation ("PointCast").
BACKGROUND
- ----------
WHEREAS, the Internet & New Media Business Unit of the Communications
Industry Group of EDS has resources and experience to support the delivery of
Internet, Intranet and New Media services, such as consulting, systems design,
integration, development, administration and project management;
WHEREAS, PointCast is a company that desires to have electronic presence on the
Internet by establishing and having EDS operate for it an additional data center
in Plano, Texas ("the "PointCast Texas Data Center") to host PointCast's
Internet servers and PointCast NetworkTM;
WHEREAS, PointCast may desire for EDS to provide to it during the term of this
Agreement, for the benefit of PointCast and its viewers and customers of the
PointCast Network, certain other Internet-related, information technology
services on the terms and conditions set forth in this Agreement; and
WHEREAS, EDS is willing to provide such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, EDS and PointCast hereby agree to the following:
1. DEFINITIONS.
-----------
(a) "EDS Services" means the services to be performed by EDS under any Work
Order.
(b) "PCN" means the PointCast NetworkTM, a network of servers that delivers
news and information content over the Internet to Viewers via PCN Clients
on the Viewers' desktop computers.
(c) "PCN Client" means the portion of the PointCast software for PCN which
resides on the hard disk of the Viewer's desktop computer and functions as
an Internet-aware screen saver, customized content transmitter, WWW browser
and animated advertisement player capable of delivering information via
PCN.
(d) "Technology" means deliverables specifically required by a Work Order
to be created by EDS for PointCast and delivered to PointCast, including,
without limitation, the assignment of copyrights in all such deliverables
to PointCast.
(e) "Viewer" means a user who accesses PCN using a PCN Client.
(f) "Work Order" means a supplement to this Agreement in the form of an
Amendment executed by the parties from time to time and attached to a copy
of this Agreement which describes services to be provided by EDS,
PointCast's obligations relating thereto and the payment terms for such
services, all as more particularly described in Section 2 below.
2. WORK ORDERS.
-----------
From time to time during the Term of this Agreement, EDS and PointCast may
execute a Work Order for agreed upon services to be provided by EDS, the
applicable acceptance criteria and performance standards for such work, the
support obligations of PointCast, and the payment obligations of PointCast
under this Agreement. Each such Work Order shall consist of a Schedule A
describing the services to be delivered by and other obligations of EDS,
a Schedule B describing the obligations of PointCast, and a Schedule C
describing the payment obligations of PointCast. Each such Work Order
shall be signed by authorized representatives of both parties and shall
be attached to this Agreement and, when so executed and attached, shall
be subject to the terms and conditions of this Agreement. Work Orders
shall be numbered
1
<PAGE>
consecutively beginning with number 1, attached hereto. If there is a conflict
between the terms of this Agreement and the terms of any Work Order, the terms
of the Work Order shall take precedence.
3. EDS SERVICES.
------------
(a) EDS will provide the EDS Services to PointCast pursuant to the terms
and conditions of this Agreement, including the applicable Work
Order. Each Work Order when attached to this Agreement shall be
incorporated herein by reference.
(b) The EDS Services will be undertaken at various PointCast or EDS
sites to be identified and mutually agreed upon by the parties and
identified in the applicable Work Order (the "Facilities").
4. TERM. The term of this Agreement will begin on the Effective Date and
----
will end on the third anniversary of the Effective Date, unless sooner
terminated as provided in this Agreement, and shall automatically renew
for successive one year periods for so long as there are outstanding
obligations of the parties under any Work Order attached hereto. The term
of this Agreement may be extended by the mutual written agreement of the
parties. If the term is extended because of outstanding obligations of
the parties under and Work Order, the Agreement will terminate as soon as
such obligations have been performed.
5. ACCOUNT MANAGERS. Within 24 hours of signing this Agreement, EDS and
----------------
PointCast shall each designate and maintain, respectively, a
representative who will be the primary point of contact of such party in
dealing with the other with respect to the EDS Services (each, the
respective party's "Account Manager"). If called for in an applicable
Work Order, each party shall provide the other party's Account Manager at
no charge to such other party with furnished office space, administrative
support, and voice and data networking services in the host party's
facility. The Account Manager of each party will have the authority and
power to make decisions with respect to actions to be taken by such party
in connection with the EDS Services within the scope of this Agreement
and the attached Work Orders. EDS and PointCast shall mutually consult
regarding the nomination of and shall have the right to request
replacement of the other party's Account Manager and other key team
members described in the applicable Work Order, and the party to which
the request has been made will consult with the requesting party on the
selection of a replacement and will use reasonable efforts to accommodate
the request as promptly as is practicable.
6. COMPENSATION; BOOKS AND RECORDS. EDS shall not be entitled to
-------------------------------
compensation for any services which are not authorized in an applicable
Work Order unless such services have been authorized in advance in
writing by the PointCast Account Manager in the form of an executed
modification to such Work order. If EDS is to be reimbursed for costs and
expenses incurred in connection with the EDS Services or for any EDS
Services performed on other than a fixed-price basis, EDS shall maintain
comprehensive books and records to substantiate both the services and
expenses. Such books and records will be retained by EDS for a period of
at least two (2) years from and after the completion of the services to
which they apply. PointCast or its designated agent shall have the right
to audit such records at all reasonable times upon five (5) business
days' prior written notice to EDS. In no event will PointCast have the
right to review any records related to other customers of EDS.
7. PAYMENTS; REIMBURSEMENT. PointCast will pay EDS the aggregate of the
-----------------------
amounts described in Schedule C of the applicable Work Order in
accordance with the payment provisions set forth in such Schedule C. If
any Work Order calls for reimbursements of EDS by PointCast for travel
and other expenses, the following terms and conditions shall apply: EDS
agrees to use its best efforts to keep travel and living expenses as
economical as possible and within a moderate range. Absent PointCast's
prior written approval, PointCast will not be liable to reimburse EDS for
airfare in excess of coach class. Reimbursable expenses shall include
travel and related lodging and meals, long-distance telephone charges,
postage and other shipping charges. Expenses for facsimile, duplication,
supplies, word-processing and local telephone charges will be borne by
EDS and will not be chargeable to PointCast. EDS shall secure PointCast's
written approval prior to incurring any individual reimbursable
expenditure exceeding five hundred dollars ($500) in connection with the
EDS Services. EDS will bill PointCast monthly at EDS' cost for all such
routine reimbursable charges, and payment will be due within thirty (30)
days of receipt of EDS' properly submitted invoice. All invoices
submitted to PointCast by EDS for any expenses for which EDS claims
reimbursement shall include a detailed listing of all out-of-pocket
disbursements together with supporting documentation, including, without
limitation, copies of hotel bills and airline tickets.
2
<PAGE>
8. POINTCAST OBLIGATIONS.
---------------------
During the term of this Agreement and in addition to its other obligations
set forth in this Agreement, PointCast, at its cost and expense, will have
the responsibilities assigned to it in Schedule B to each of the Work
Orders attached hereto from time to time.
9. EMPLOYEE BENEFITS. The EDS personnel performing the EDS Services will be
-----------------
and remain the employees of EDS, and EDS will provide for and pay the
compensation and other benefits of such employees including salary, health,
accident and workers' compensation benefits and all taxes and contributions
which an employer is required to pay relating to the employment of
employees.
10. HIRING OF EMPLOYEES. The parties agree that, during the term of this
-------------------
Agreement and for a period of 12 months thereafter, neither party will,
except with the prior written consent of the other, offer employment to or
employ any person who is employed by the other party (or any person who is
a subcontractor to the other party or an employee thereof) and who has been
introduced to the other party in connection with this Agreement.
11. PROPRIETARY RIGHTS.
------------------
(a) POINTCAST INFORMATION. As between PointCast and EDS, information relating
to PointCast, PCN, PointCast's affiliates, Viewers and customers of PCN and
the PCN Client and other PointCast software will remain the sole and
exclusive property of PointCast. EDS is hereby authorized during the term
of this Agreement to have access to and to make use of such information
only to the extent necessary for the performance of its obligations
hereunder. EDS' access and use of such information shall be governed by
the terms of Section 12.
(b) TECHNOLOGY. Unless otherwise agreed by the parties in writing in the
applicable Work Order, PointCast shall own the copyright in and to the
Technology (and all renewals and extensions thereof). EDS hereby makes a
full, irrevocable assignment, in perpetuity, to PointCast, of the
Technology and such copyrights.
(c) FURTHER ASSURANCES. EDS shall, and shall cause any parties acting under it
in relation to this Agreement, to execute any and all documents and do such
other acts requested at any time by PointCast as may be required to
evidence, confirm and/or further effect the rights granted PointCast under
this Agreement, including without limitation the rights under this Section
11. EDS shall establish and maintain written agreements with its employees
and such parties sufficient to enable EDS to comply with the provisions of
the foregoing sentence.
(d) ACCESS; RETURN OF MATERIALS. PointCast shall have continuous access to the
Facilities and to all data, documents, computer software, Content (as
defined in Section 14), Technology and other materials provided to EDS by
PointCast. EDS will return the original and any copies of all Technology
and all data, documentation, software, Content and other materials promptly
upon PointCast's request. Upon the expiration or earlier termination of
this Agreement for any reason whatsoever, EDS shall promptly return the
original and any copies of all Technology and all data, documents, computer
software, Content and other materials provided by PointCast, in whatever
stage of completion, to PointCast, or PointCast's designated agent.
12. CONFIDENTIALITY Except as otherwise expressly provided in this Agreement,
---------------
EDS and PointCast each agree that all information communicated to it by or
on behalf of the other, whether before or after the Effective Date, which
is marked or identified or otherwise deemed confidential as described
below, will be and will be deemed to have been received in strict
confidence and will be used only as required to carry out the recipient
party's obligations or exercise the recipient party's rights under this
Agreement. EDS and PointCast each agree that it will use the same means as
it uses to protect its own confidential information, but in any event not
less than reasonable means including written agreements, to prevent the
disclosure and to protect the confidentiality of the other party's
confidential information. No such information, including the terms of this
Agreement, will be disclosed by the recipient party, its agents,
representatives or employees without the prior written consent of the other
party; provided, however, that each party may
3
<PAGE>
disclose such information to those of its third party consultants identified to,
and approved by, the other party and employees, in each case having a need for
access to such information for purposes of this Agreement and with respect to
each of whom such party has taken steps, no less rigorous than what it would do
to protect its own proprietary information, but in any event at least reasonable
steps including written agreements, to prevent any such employees or consultants
from acting in any manner inconsistent with this Section 12. Recipient's
obligations of non-disclosure under this Section 12 shall not apply to
Information which; (a) is already known to the recipient party and is not
governed by the term of another separate nondisclosure agreement with the
disclosing party, (b) is publicly known or becomes publicly known through no
unauthorized act of the recipient party, (c) is rightfully received from a third
party, authorized to disclose such information (d) is independently developed
without use of the other party's confidential information or (e) is disclosed
without similar restrictions to third parties generally by the party owning the
confidential information. If confidential information is required to be
disclosed pursuant to a requirement of a governmental authority, such
confidential information may be disclosed pursuant to such requirement so long
as the party required to disclose the information provides the other party with
timely prior notice of such requirement and coordinates with such other party in
an effort to limit the nature and scope of such required disclosure. All
confidential information that is subject to this Section 12 must be, if in
written form when received from the other party, marked or identified as
confidential and, if in oral or visual form when received from the other party,
identified in advance as confidential. Notwithstanding the foregoing, the
following information will be deemed the confidential information of PointCast
without the necessity of marking or identifying it as such: (i) information
developed by PointCast or PCN, (ii) information on performance and utilization
of PCN, and (iii) information in whatever form relating to (A) the design,
functionality, operational methods, or coding of any PointCast software,
including, without limitation, any complete or partial object or source code
versions of such software, (B) the design elements and tradeoffs, system
components and configurations, and operating and performance characteristic of
the current operating environment of PCN (as it may change over a period of
time) and/or the PointCast Texas Data Center, and (C) the collection,
transmission, and analysis of statistical information from the PCN Client or
PointCast server software.
13. TERMINATION. In the event that either party materially or repeatedly
-----------
defaults in the performance of any of its duties or obligations hereunder, (a)
which default, if of a non-monetary nature, is not substantially cured within
thirty (30) days after written notice is given to the defaulting party
specifying the default, or with respect to those defaults that cannot reasonably
be cured within thirty (30) days, should the defaulting party fail to proceed
within thirty (30) days to commence curing the default and thereafter to proceed
with all reasonable diligence to substantially cure the default, or (b) which
default, if of a monetary nature, is not cured within thirty (30) days after
written notice is given to the defaulting party specifying the default, the
party not in default may, by giving written notice thereof to the defaulting
party, terminate this Agreement as of a date specified in such notice of
termination. Notwithstanding the foregoing, any Work Order hereunder may be
terminated in accordance with the terms of a Work Order. Upon expiration or
termination of this Agreement or any Work Order for any reason, EDS will cease
to perform the EDS Services for PointCast, or the EDS Services under such Work
Order (as appropriate), and PointCast will pay to EDS all sums due to EDS as a
result of EDS Services performed prior to such termination (prorated as
appropriate). Upon expiration or any other termination of this Agreement, EDS
will return to PointCast or destroy, at PointCast's option, all copies of all
materials, including software, and all equipment provided to EDS hereunder by
PointCast and shall erase from computer memory any copies of such materials,
including software, residing thereon. If PointCast directs that any materials
are to be destroyed, EDS shall certify in writing that such materials have been
destroyed. The provisions of Sections 1, 6, 10, 11, 12, 14, 15, 16, 20, 23, and
24 as well as any payment obligations for payments due and payable as of the
date of termination shall survive the expiration or other termination of this
Agreement.
14. INDEMNITIES.
-----------
(a) Subject to Section 14(d) , EDS and PointCast (each, as an indemnifying
party, the "Indemnitor") each agree to indemnify and defend the other party
(each, as an indemnified party, the "Indemnitee") and hold the Indemnitee
harmless from any and all claims, actions, damages, liabilities, costs and
expenses, including but not limited to reasonable attorneys' fees and
expenses (collectively, "Costs"), arising out of, under or in connection
with (i) any claim for rent or utilities at any location where the
Indemnitor is financially responsible under this Agreement for such rent or
utilities, (ii) any claim for taxes, wages, benefits or third party fees
for which the Indemnitor is
4
<PAGE>
financially responsible under this Agreement or (iii) the death or personal
injury, or loss or damage to the property, of the Indemnitee or its
employees or representatives caused by the negligent act or omission or
willful misconduct of the Indemnitor; and, (iv) in addition EDS agrees to
indemnify and defend and hold harmless PointCast from any costs of EDS or
its officers, directors, employees, agents, or representatives arising out
of or relating to the termination of this Agreement in accordance with its
terms or the termination of any other agreements or employment
relationships as may be entered into by EDS which results from such
termination of this Agreement.
(b) Subject to Section 14(d), EDS and PointCast each agree to defend the
Indemnitee against any action to the extent that such action is based upon
a claim that the software (other than third party software), Technology or
confidential information provided by the Indemnitor, or any part thereof,
(i) infringes a copyright perfected under United States statute, (ii)
infringes a patent granted under United States law or (iii) constitutes an
unlawful disclosure, use or misappropriation of another party's trade
secret or confidential information. The Indemnitor will bear the expense
of such defense and pay any Costs that are attributable to such claim
finally awarded by a court of competent jurisdiction. Neither EDS nor
PointCast will be liable to the other for claims of indirect or
contributory infringement.
(c) Subject to Section 14(d), PointCast will defend EDS from any action by
third parties to the extent that such action is based on a claim of
infringement of the literary property of another, libel, indecency, false
light, misrepresentation, invasion of privacy or misappropriations of image
or personality rights, arising out of, under or in connection with any
claims relating to (Ii) the provision, use or distribution of the content
via PCN over the Internet from the PointCast Texas Data Center where
transmission of such content was authorized by PointCast, whether such
content is of an editorial, advertising or other nature, (ii) (iii)
statements or other materials made or made available on PCN by Viewers, by
PointCast's customers or by others to whom such content is linked at the
request of PointCast. PointCast will bear the expense of such defense and
pay any Costs that are attributable to such claim finally awarded by a
court of competent jurisdiction.
(d) Each of the above indemnities is conditioned upon the Indemnitor having
received full and prompt notice in writing of the claim and the Indemnitee
allowing the Indemnitor to fully direct the defense or settlement of such
claim. The Indemnitor will not be responsible for any settlement or
compromise made without its consent.
15. LIABILITY. In the event that either party is liable to the other for any
---------
matter relating to or arising in connection with this Agreement except for
PointCast's obligations of payment pursuant to Section 7 hereof, whether
based upon an action or claim in contract, equity, negligence, intended
conduct or otherwise, the amount of damages recoverable against a party for
all events, acts or omissions will not exceed, in the aggregate, [*] to be
paid by PointCast under this Agreement in the [*] preceding such claim, or
if the claim occurs during the first year of the Agreement, then [*] to be
paid by PointCast in the [*] of this Agreement. In no event will the
measure of damages include, nor will either party be liable for, any
amounts for loss of profits, income or savings or indirect, consequential,
incidental or punitive damages of any party, including third parties.
Further, no cause of action may be asserted against either parties later
than [*] following the date after the date on which the cause of action
will have accrued. EDS and PointCast expressly acknowledge that the
limitations contained in this Section 15 have been the subject of active
and extensive negotiation between the parties and represent the parties'
agreement based upon the level of risk to EDS associated with the
performance of the EDS Services and the payments provided hereunder to EDS
for such performance. Nothing in this Section 15 shall apply to any
liability for breach of confidentiality obligations or to any indemnity
obligations under this Agreement.
16. REPRESENTATIONS, WARRANTIES AND DISCLAIMER.
------------------------------------------
(a) Representations and Warranties of the parties The parties hereby
---------------------------------------------
represent and warrant to each other on a continuing basis that (i)
such party has the right, experience and skill to enter into and fully
perform its obligations under this Agreement and to grant the rights
granted or agreed to be
5
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
granted hereunder; (ii) such party shall comply with all applicable
federal, state, and local laws in effect at the time services are
performed; (iii) such party shall perform said services in a
workmanlike manner and in accordance with generally accepted
professional standards, as applicable; (iv) there is no outstanding
contract, commitment or agreement to which such party is a party or
legal impediment of any kind known to such party which conflicts with
this Agreement or which might limit, restrict, or impair the rights
granted to the other party hereunder; and (vi) the media on which any
computer programs, documentation and other deliverables delivered to
or used on behalf of a party are contained will contain no willfully
introduced computer instructions whose purpose is (A) to disrupt,
damage or interfere with a party's or a Viewers' use of their computer
or telecommunications facilities; or (B) to perform functions which
are not an appropriate part of the functionality of such computer
programs, documentation or other deliverables and whose result is to
disrupt the use or operation of such computer programs, documentation
or other deliverables.
(b) Disclaimer. While EDS is primarily providing services to PointCast
----------
under this Agreement, EDS may from time to time provide certain
hardware, software and other items as an incidental part of its
services. With the exception of any manufacturers' or licensors'
warranties which EDS is able to obtain, such hardware, software and
other items will be provided on an "AS IS" basis without warranty. In
all cases where EDS has not committed to a specific performance
standard, EDS will use reasonable care in providing the EDS Services.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN OR IN WORK ORDERS
HERETO, EDS MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
REGARDING ANY MATTER, INCLUDING THE MERCHANTABILITY, SUITABILITY,
ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE OR RESULTS TO BE
DERIVED FROM THE USE OF ANY SERVICES, HARDWARE, SOFTWARE OR OTHER
ITEMS PROVIDED UNDER THIS AGREEMENT.
17. NOTICE. Wherever under this Agreement one party is required or permitted
------
to give notice to the other, such notice will be in writing and will be
deemed given the third day after its mailing, postage prepaid to the
recipient party addressed as follows:
In the case of EDS:
Electronic Data Systems Corporation
5400 Legacy Drive
Mailstop C3-3D-50
Plano, Texas 75024
Attention: William Winters
with a copy to:
Electronic Data Systems Corporation
5400 Legacy Drive
Mailstop H3-3A-05
Plano, Texas 75024
Attention: General Counsel
6
<PAGE>
In the case of PointCast:
PointCast Incorporated
2475 Augustine Drive, Suite 101
Santa Clara, California 95054
Attention: President
with a copy to:
PointCast Incorporated
2475 Augustine Drive, Suite 101
Santa Clara, California 95054
Attention: General Counsel
Notices may also be delivered by hand or transmitted by facsimile. Hand
delivered notices (e.g., notices delivered by courier) will be effective
upon receipt. Either party may change its address for notices upon giving
at least ten (1O) days prior written notice of the change to the other
party.
18. INSURANCE. Each party shall under each Work Order, unless otherwise agreed
---------
in writing, maintain worker's compensation and employer's liability
insurance with minimum limits of ONE MILLION DOLLARS ($1,000,000) and
Commercial General Liability insurance (which shall include broad form
contractual and automobile liability coverage), with minimum limits of
TWO MILLION DOLLARS ($2,000,000) combined single limit per occurrence,
with the providing party's insurance as primary and not contributory,
protecting both parties from claims for personal injury (including bodily
injury and death) and property damage which may arise from or in
connection with (i) the activities of the insured party's employees or
contractors on the other party's premises or (ii) any negligent act or
omission of the insured party's officers, directors, agents, or
employees. All such insurance policies shall be written by a responsible
insurance company possessing an AV-VII rating or better as listed in the
Best Guide, shall name the other party as an additional insured for
commercial and automobile liability only, shall contain a waiver of
subrogation with respect to the additional insured, shall be written on
an occurrence basis and shall provide that the coverage thereunder may
not be reduced or canceled unless thirty (30) days' prior written notice
thereof is furnished to the other party.
19. ASSIGNMENT: APPROVALS; HEADINGS. Neither party may assign this Agreement
-------------------------------
or subcontract any portion of its obligations under this Agreement to a
third party without obtaining the prior written consent other party;
provided, however, that EDS may subcontract any portion of its obligations
under this Agreement to a third party so long as EDS notifies PointCast in
writing of such subcontract in advance, receives such prior written consent
and remains responsible for the performance of such obligations, and
provided further that either party may, without consent of the other party,
assign this Agreement to a successor to its business covered by this
Agreement, whether by merger, acquisition of stock or assets,
reorganization, reincorporation, or otherwise, so long as the assignor
gives thirty (30) days prior written notice of such transaction before the
transaction closes and the assignee agree in writing to be bound by all the
terms and conditions of this Agreement. EDS shall remain responsible for
the performance of any obligations it subcontracts under this Agreement.
Where agreement, approval, acceptance or consent of either party is
required by any provision of this Agreement, such action will not be
unreasonably delayed or withheld. The headings used herein are for
reference-and convenience only and will not enter into the interpretation
hereof.
20. RELATIONSHIP OF PARTIES. EDS in furnishing services to PointCast under
-----------------------
this Agreement is acting only as an independent contractor. EDS does not
undertake by this Agreement or otherwise to perform any obligation of
PointCast whether regulatory or contractual or to assume any responsibility
to third parties for PointCast's business or operations. Each party has the
sole right and obligation to supervise, manage, contract procure, perform
or cause to be performed all obligations to be performed by that party
pursuant to this Agreement.
21. MEDIA RELEASES. All media releases, public announcements and public
--------------
disclosures by either party relating to this Agreement or the subject
matter of this Agreement, including promotional or marketing material but
not including any announcement intended solely for internal distribution or
any disclosure required by legal, accounting or regulatory requirements
beyond the reasonable control of the party, will be coordinated with and
subject to final written approval by both parties prior to release.
7
<PAGE>
22. EXCUSABLE DELAYS. Each party will be excused from performance under this
----------------
Agreement, and the time of any performance will be extended, to the extent
reasonably necessary under the circumstances, if such party is prevented
from or delayed in performing, in whole or in part, its obligations under
this Agreement (other than payment obligations) as a result of acts or
omissions by the other party or by an act of God or any governmental
authority or any outbreak or escalation of hostilities, war, civil
disturbance, court order, labor dispute, third party nonperformance (other
than a subcontractor or assignee of EDS) or other cause beyond its
reasonable control. Such nonperformance on the part of either party will
not be considered a default under this Agreement or a ground for
termination of this Agreement, provided that the party relying on this
Section 22 shall (i) have given the other party written notice thereof
promptly, and in any event, within five (5) days of discovery of the force
majeure circumstance, (ii) take all steps reasonably necessary under the
circumstances to mitigate the force majeure upon which such notice is based
and (iii) perform such obligations as soon as is reasonably practicable
after the termination or cessation of such event or circumstance. If
performance is delayed for sixty (60) days by a force majeure circumstance,
either party shall have the right to terminate the applicable Work Order by
written notice to the other party.
23. DISPUTE RESOLUTION. In the event that either party believes that the other
------------------
has defaulted in the performance of any of its obligations hereunder, the
complaining party's Account Manager shall notify the other party's Account
Manager of such belief and the parties agree to make commercially
reasonable efforts acting in good faith to resolve the matter without
resort to the procedures set forth in Section 13 for a period of not less
than five (5) working days after such notice is given, following which
period the parties shall be free to proceed in accordance with the
provisions of Section 13.
24. ENTIRE AGREEMENT; GENERAL PROVISIONS. This Agreement, including all
------------------------------------
attached and signed Work Orders and their exhibits, which are hereby
incorporated by reference, constitutes the entire agreement between the
parties with respect to the subject matter thereof. There are no
representations, understandings or agreements which are not fully expressed
in this Agreement. No change, waiver or discharge will be valid unless in
writing and signed by an authorized representative of the party against
whom such change, waiver or discharge is sought to be enforced. This
Agreement will be governed by and construed in accordance with the
substantive laws of the State of New York, without giving effect to any
choice-of-law rules that may require the application of the laws of another
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
Electronic Data Systems corporation PointCast Incorporated
BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett
NAME: William R. Winters NAME: Christopher R. Hassett
TITLE: President, INM TITLE: President & CEO
DATE: 1/2/97 DATE: 12/20/96
8
<PAGE>
WORK ORDER 1
SCHEDULE A EDS SERVICES
- -----------------------
EDS has agreed to create a data center for the purpose of hosting the PCN
in Plano, Texas (the "PointCast Texas Data Center"). PointCast has informed EDS
that the data center is configured to be capable of handling approximately two
hundred and Fifty thousand (250,000) PCN Clients each receiving one or more
updates of customized news or information from PCN per 24 hour day when
configured as PCN's current environment. The PCN is an integrated client/server
system that provides updated current information on a variety of topics to users
of the system via the Internet. The system allows each user to customize,
within limits, the frequency of those operations.
Obligations of EDS and Pointcast under this Work Order will expire three
years from the date of acceptance under this Work Order.
1. PCN CURRENT ENVIRONMENT.
-----------------------
The attached system block diagram shows the major components in the PCN:
The PointCast Network - Block Diagram
[IMAGE NOT SHOWN]
Figure 1: The PCN Network
2. EDS OBLIGATIONS
---------------
The PointCast Texas Data Center will provide secure hosting for the
PointCast application and data servers in a high security environment as is
standard for all EDS Information Processing Centers. It will also provide a
high-bandwidth communications link to the public Internet that is monitored at
all times with sophisticated wide area network management tools. The network is
supported and managed by EDS network specialists, and an operations and systems
administration staff will maintain the PointCast servers and provide all
technical and support resources required to resolve any technical issues or
failures of equipment. EDS is to provide constant operation of the PointCast
servers, all in accordance with the description of services to be performed by
EDS, which is attached to this Work Order as Attachment 1, Schedule A and is
incorporated herein by reference. EDS shall perform the tasks in this Schedule
A and in Attachment 1, Schedule A, attached to this Work Order, as part of
normal operations for the monthly fee under this Work Order. Such tasks shall
not be subject to any additional charges.
1
<PAGE>
WORK ORDER 1
EDS will, at EDS' sole cost and expense, purchase, maintain and support the
hardware, software and communications resources described in Attachment 2,
Schedule A B attached to this Work Order. With the exception of any equipment
provided by PointCast or a third party, which shall be the sole property of
PointCast or such third party, EDS will own all equipment of the PointCast Texas
Data Center.
EDS will, at EDS' sole cost and expense, provide such office space,
equipment and furnishings to PointCast's personnel as is reasonable required
under this Work Order. EDS will derive from PCN and deliver to PointCast
certain advertising statistics to be described more fully in the implementation
plan under this Work Order. In accordance with EDS' standard practice, the
PointCast Texas Data Center will be provided with multilayered uninterrupted
power.
3. CHANGE ORDER PROCEDURES.
-----------------------
PointCast may request changes in the operation or services provided under
this Work Order in order to meet the changing needs of PCN. Such requests shall
be made in writing. EDS and PointCast will evaluate the needs and proposed
changes to determine the best course of action.
EDS will maintain change records implemented by the EDS support team
according to EDS Standard Change Management policies. System Changes requested
by PCN or implemented by the EDS system administration team will be documented
according to EDS standard Change Management practices.
Changes that go beyond the scope of the original implementation plan, what
is normal Microsoft NT system administration activities, and that involve work
beyond that described in this Schedule A will be subject to additional fees and
will require a new Work Order.
4. ACCEPTANCE TESTING.
------------------
Prior to the time PCN is ready to go live in Plano, Texas, the parties will
develop and mutually agree on acceptance criteria and tests for the PointCast
Texas Data Center, which will then be applied and conducted as described in this
paragraph. Contingent upon the receipt of hardware from suppliers by dams
agreed upon at time of execution of this Work Order, EDS will use best efforts
to make the PointCast Texas Data Center ready for acceptance testing within
fourteen (14) business days after such execution date. Once the required
equipment is in place and the PointCast software is installed, PointCast will
conduct acceptance tests during the following two-week period to verify that the
PointCast Texas Data Center meets the agreed upon acceptance criteria. If at
the end of such two-week period, the PointCast Texas Data Center has failed the
acceptance tests, the parties will work together to determine the reasons for
such failure. The party whose action or inaction is determined to be the cause
of such failure, will, with the cooperation and assistance of the other party,
work to remedy such fault. If the PointCast Texas Data Center has not passed
the acceptance tests within thirty (30) days after the end of such two-week
period, and if the cause has been attributed to PointCast, PointCast will
immediately begin making the monthly payment to EDS called for by this Work
Order. If the cause has been attributed to EDS, PointCast shall have the right,
upon written notice to EDS, to terminate this Work Order or this Agreement at
the end of such thirty day period. Once PointCast has accepted the PointCast
Texas Data Center in accordance with the agreed upon acceptance tests, EDS will
immediately staff its operations team and begin operating the PointCast Texas
Data Center.
5. PERFORMANCE MONITORING.
----------------------
EDS and PointCast will work together during the implementation of the Data
Center in Plano to mutually agree upon the reports that EDS will prepare and
deliver as part of normal operations to document performance once the PointCast
Texas Data Center has passed the above acceptance tests and gone into operation.
EDS will permit PointCast to track performance and derive statistics via remote
access to the PointCast Texas Data Center.
6. EDS IMPLEMENTATION AND OPERATIONS TEAMS.
---------------------------------------
In addition to the EDS Account Manager, the EDS implementation team to set
up the PointCast Texas Data Center will be comprised of a dedicated Project
Manager, System Integrator, Communications Specialist and
2
<PAGE>
WORK ORDER 1
Systems Analyst in Plano, Texas. This team will draw upon the following
resources as needed; Data Center Operations Manager, System Administrator,
Communications Specialist, Database Administrator, Hardware Specialist,
Facilities Specialist, Integration Specialists and Security Specialist. EDS
retains the right to dictate the composition of the EDS implementation team.
EDS and PointCast implementation personnel will agree to a Project Plan
after such time as this Work Order I is signed. The Project Plan will consist
of a Project Schedule, Roles and Responsibilities, and Acceptance Testing
Procedures (see Schedule A 4, Acceptance Testing ).
The EDS ongoing operations team will consist of the EDS Account Manager and
a Project Manager and the following full and shared resources as needed: Data
Center Operations Manager, System Administrators, Database Administrators,
Communications Specialists, Hardware Specialists, Systems Analysts, and Security
Specialists to meet the agreed upon performance levels on a 24 hour 365 days per
year basis. EDS retains the right to dictate the composition of the ongoing EDS
operations team.
7. SPECIAL TERMS AND CONDITIONS
----------------------------
a) Advertising. EDS will purchase $[*] of advertising on PCN
-----------
during the first twelve months of this Work Order 1 at
PointCast's [*] rates. For succeeding second and third twelve
month periods during the term of this Work Order 1, EDS will
purchase $[*] of advertising at a rate published on the [*]. For
1998 purchases, the rate will be [*] and for 1999 purchases, the
rate will be [*], provided however, that if EDS in the second and
third twelve month periods either, (i) agrees to purchase in
excess of $[*] of advertising, (ii) actually purchases in excess
of $[*], then EDS and PointCast will negotiate rates to be
applicable for the remainder of such twelve month period.
b) I-Server Users - EDS will through its efforts provide PointCast
with a total of 10,000 incremental I-Server Viewers utilizing PCN
via PointCast I-Servers not later than June 30, 1997. The
methods utilized by EDS to secure such Viewers shall be those
chosen by EDS.
c) Public Reference Account. During the term of Work Order 1, each
------------------------
party will act as a public reference account for each other in
promoting their products and services, including, but not limited
to PointCast's I-Server and EDS' Internet services. In such
capacity each shall, inter alia, respond to inquiries from third-
parties sent to each other by the other party directly or
referred to it by the other party and issue periodic public
releases in such a way as to stress and promote the benefits of
such products and services and communicate the other parties
endorsement of them.
d) Trademarks. Each party agrees not to use the other's names,
----------
trademarks or other corporate identification without the express
written approval of the other, excepting only that without prior
approval either party may make a single reference for
identification purposes without elaboration.
3
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 1
SCHEDULE B POINTCAST-OBLIGATIONS
- --------------------------------
POINTCAST OBLIGATIONS.
- ---------------------
PointCast will provide EDS with all custom developed and PCN server related
software and documentation including, but not limited to [*]. PointCast hereby
grants to EDS for the term of this Work Order a non-exclusive, nontransferable
(except to a permitted assignee under this Agreement) right and license to
reproduce and use the such PointCast software delivered by PointCast in
Cupertino, California when EDS personnel are at the latter site. Such
reproduction and use shall be limited to authorized EDS employees and
contractors and to such copying and use as is required to carry out the EDS
Services for PointCast under this Work Order. EDS shall not use such software in
the performance of any other services for any other person or entity and may not
sublicense the rights granted hereunder. EDS shall not and shall not permit any
other person or entity to, decompile, disassemble, reverse engineer, or
otherwise attempt to derive source code from or modify such software.
EDS and PointCast implementation personnel will agree to a Project Plan
after such time as this contract is signed. The Project Plan will consist of a
Project Schedule, Roles and Responsibilities, and Acceptance Testing Procedures
(see Schedule A 4, Acceptance Testing ).
PointCast will make available the timely support of the appropriate
PointCast personnel to install, configure and test the PCN and to otherwise meet
PointCast's obligations to provide the software, content, testing and approvals
necessary to maintain the project schedule.
PointCast will provide the encrypted data feed and network connection,
including any required hardware, software, communications etc., from the
PointCast Content Processing servers in Cupertino, California for news feeds
delivered to the PointCast Texas Data Center in Plano, Texas via [*].
PointCast will provide EDS employees with a reasonable work environment to
perform work when visiting a PointCast facility. EDS employees using PointCast
facilities will need an adequate office environment, access to a telephone for
voice and data, and will require access to appropriate PointCast personnel.
PointCast will provide EDS with the Content to be broadcast over the
Internet from the PointCast Texas Data Center
PointCast will provide the EDS operations team with such training as is
reasonably required to operate PCN.
4
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 1
SCHEDULE C
- ----------
1. FEES. PointCast will pay EDS the following fees:
----
* a monthly fee of [*] ($[*])
* a monthly fee of [*] ($[*]) for the T-1 Communications line
* the above fees are payable for thirty-six (36) months, beginning on
the date of acceptance (in accordance with the acceptance tests to be
developed hereunder). The monthly fee will be prorated on a 30-day-
month basis for any partial month during the term covered by this Work
Order.
2. TRAVEL AND RELATED EXPENSES. PointCast will reimburse EDS, in accordance
---------------------------
with the requirements set forth in Section 7 of the Agreement, for all
reasonable travel and travel-related, living and other out-of-pocket
expenses (without any markup) incurred by EDS for travel authorized by
PointCast in connection with the EDS Services provided under this Work
Order.
3. INVOICES. EDS will send to PointCast each month an invoice for charges for
--------
EDS Services for the previous month. EDS will invoice PointCast separately
for all travel, travel related and other expenses, which invoices will be
sent by EDS to PointCast after EDS incurs such expenses. Any sum or charge
due under this Agreement will be due and payable within thirty (30) days
following receipt of the invoice therefor. Any sum not paid by its due date
will bear interest until paid at a rate of interest equal to the lesser of
(i) the prime rate established from time to time by Citibank N.A., New
York, plus two percent, or (ii) the maximum rate of interest allowed by
applicable law.
IN WITNESS WHEREOF, the parties have executed this Work Order I as of the date
of the signature of the last party to sign, as set forth below.
Electronic Data Systems corporation PointCast Incorporated
BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett
NAME: William R. Winters NAME: Christopher R. Hassett
TITLE: President, INM TITLE: President & CEO
DATE: 1/2/97 DATE: 12/20/96
5
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 1
ATTACHMENT 1 - SCHEDULE A.
- -------------------------
1. DESCRIPTION OF SERVICES.
-----------------------
<TABLE>
<CAPTION>
FREQUENCY/ CYCLE TIME or PROJECTED
MANAGEMENT SERVICES COVERAGE AVAILABILITY OCCURRENCES
<S> <C> <C> <C>
SYSTEMS ADMINISTRATION -- Perform routine
system level tasks to provide user access.
* Scheduled down time -- Once a week there Sat, Sun x 8 Scheduled 1/week
will be a scheduled one hour down time for 1 hour/equipment
each [*].
* User Administration - Creating, changing 5 x 8 6-hr response 2/week
and deleting user id's and passwords. 15 min /
occurrence
* System Administrator Assistance -- Perform 5 x 8 4-hr response 10/week
minor [*] PointCast network 30 min/
changes. occurrence
* High Priority Assistance -- Perform 5 x 8 a.m. 15 min response 1/week
immediate changes to the PointCast Eastern - 5 30 min/
Network p.m. Pacific
SYSTEMS MANAGEMENT - Assures systems
availability and performance levels meet
expectations.
* Software Revision Control Process -- Sat, Sun x 8 1 week notice 1/month
Upgrades applications software or patches 8 hrs/occurrence
(or major releases) the operating systems
used by PCN systems.
* Security Management Process Sat, Sun x 8 1 week notice 1/qtr
8 hrs/occurrence review
* Fault Management Process -- The fault
management process enables INM to
actively monitor the network for error
conditions and notify the appropriate parties
to initiate resolution.
* Maintain system availability - Through the 7 x 24 notify 7/day
use of proactive monitoring. responsible party
w/in 15 min
* Resolve level 1 faults -Minor faults that the 7 x 24 1 hr response 7/day
PointCast clients may not notice and cause 8 hr/repair
little disruption of service. Examples
include reboot a PointCast Server or router,
restart feed program, looping processes on
servers, memory short-runs, excessive
paging or swapping. Also includes
restarting aborted processes.
* Resolve level 2 faults --Moderately severe 7 x 24 1 hr response 1/month
faults that the PointCast clients may notice 4 hrs/repair
a degraded system performance. Examples
include failure in only one of the
database, datafeed, [*].
</TABLE>
6
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
<TABLE>
<CAPTION>
WORK ORDER 1
<S> <C> <C> <C>
* Resolve level 3 faults --Serious failures 7 X 24 .5 hr response 3
which cause the PointCast network to be 1 hrs/repair annually
off-line. Will have spare parts on hand
for immediate replacement, also have
vendors contracts to supply the fastest
possible recovery. Examples include
failure of all database, datafeeds, [*].
* BACKUP/RECOVERY PROCESS -- Protects data
through non-intrusive duplication and
restore processes.
* Perform offsite storage -- Tapes stored for 2 n/a 1/week
months.
* Perform full backup of [*], Sat or Sun scheduled 1/week
datafeeds 4 hrs/
occurrence
* Perform incremental backup of [*], 6/week scheduled daily
datafeeds 1 hr/ (except
occurrence on full
back up
day)
* Restore image from off-site tape 5 X 8 4 hour response 1/qtr
to start restore
* Restore image from on-site tape 7 X 24 2 hour response 1/mo
to start restore
* [*], performance and table space 5 X 8 2 week notice 1/qtr
tuning 2 hrs/
occurrence
* CAPACITY & PERFORMANCE MANAGEMENT AND
REPORTING PROCESS -- Measures, monitors
and adjusts operating parameters of system
components - network, application and
operating system parameters to maintain
performance.
* Network Review Scheduled 1/mo
1 hr/occurrence
* Processing Review Scheduled 1/mo
1 hr/occurrence
* Storage Review Scheduled 1/mo
1 hr/occurrence
POINTCAST RESPONSIBILITIES -- Documentation,
Processes, Procedures and Participation that
EDS must receive from PointCast in order
for EDS to perform to SLA standards.
* Gold Disk Installation process and Revised 1 week notice 1/mo
procedures Documentation. Version
* Initial Installation Startup 1 week notice 1/mo
* Initial Orientation Startup included in Startup
above
* [*], performance and table space Startup included in Startup
tuning training above
* [*], network configuration, Startup included in Startup
[*], start services, stop services above
training
</TABLE>
7
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 1
IN WITNESS WHEREOF the parties have executed this Work Order 1, Attachment I as
of the date of the signature of the last party to sign, as set forth below.
Electronic Data Systems Corporation PointCast Incorporated
BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett
NAME: William R. Winters NAME: Christopher R. Hassett
TITLE: President, INM TITLE: President & CEO
DATE: 1/2/97 DATE: 12/20/96
8
<PAGE>
WORK ORDER 1
ATTACHMENT 2 - SCHEDULE A.
- -------------------------
1. EQUIPMENT LIST The system to operate the PointCast Network, will consist of
the
--------------
following equipment, or equivalents, thereof. Any equipment substitutions
will be pre-approved, in writing, by PointCast:
<TABLE>
<CAPTION>
SERVERS DESCRIPTION QTY MANUFACTURER
- ------- --------------------------------------- ----------- -------------
<S> <C> <C> <C>
[*]
</TABLE>
* All PCs must have licenses for [*].
9
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 1
** EDS can substitute the specified Item with its own monitoring tools.
*** All PCs must have [*]
IN WITNESS WHEREOF, the parties have executed this Work Order 1, Attachment 2 as
of the date of the signature of the last party to sign, as set forth below.
Electronic Data Systems Corporation PointCast Incorporated
BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett
NAME: William R. Winters NAME: Christopher P. Hassett
TITLE: President, INM TITLE: President & CEO
DATE: 1/2/97 DATE: 12/20/96
10
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 2
Schedule A EDS Services
- -----------------------
This Work Order will only become effective if Pointcast requests in writing that
EDS increase the capacity of the Pointcast Texas Data Center approximately
500,000 PCN Clients, and all obligations under this Work Order will expire three
(3) years from the date of acceptance under Work Order 1. EDS will expand the
Pointcast Texas Data Center, as represented by Pointcast to handle such number
of PCN Clients upon such request and will purchase and maintain the additional
equipment listed below.
EDS will provide the following equipment for the data center for the purpose of
hosting the PCN in Plano, Texas (the "PointCast Texas Data Center"):
1. Equipment List. The following equipment, or equivalents, will be added to
--------------
the Texas PointCast Data Center. Any equipment substitutions will be pre-
approved, in writing, by PointCast:
<TABLE>
<CAPTION>
Servers Description Qty Manufacturer
- ------- ------------------------------------ --- -------------
<S> <C> <C> <C>
[*]
</TABLE>
2. EDS OBLIGATIONS.
---------------
The PointCast Texas Data Center will provide secure hosting for the
PointCast application and data servers in a high security environment as is
standard for all EDS Information Processing Centers.
3. Acceptance Testing.
------------------
11
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 2
Prior to the time PCN is ready to go live in Plano, Texas, the parties will
develop and mutually agree on acceptance criteria and tests for the PointCast
Texas Data Center, which will then be applied and conducted as described in this
paragraph. Contingent upon the receipt of hardware from suppliers by dates
agreed upon at time of execution of this Work Order, EDS will use best efforts
to make the PointCast Texas Data Center ready for acceptance testing within
fourteen (14) business days after such execution date. Once the required
equipment is in place and the PointCast software is installed, PointCast will
conduct acceptance test during the following two-week period to verify that the
PointCast Texas Data Center meets the agreed upon acceptance criteria. If at
the end of such two-week period, the PointCast Texas Data Center has failed the
acceptance tests, the parties will work together to determine the reasons for
such failure. The party whose action or inaction is determined to be the cause
of such failure, will, with the cooperation and assistance of the other party,
work to remedy such fault. If the PointCast Texas Data Center has not passed
the acceptance tests within thirty (30) days after the end of such two week
period, and if the cause has been attributed to PointCast, PointCast will
immediately begin making the monthly payment to EDS called for by this Work
Order. If the cause has been attributed to EDS, PointCast shall have the right,
upon written notice to EDS, to terminate this Work Order or this Agreement at
the end of such thirty day period. Once PointCast has accepted the PointCast
Texas Data Center in accordance with the agreed upon acceptance tests, EDS will
immediately staff its operations team and begin operating the PointCast Texas
Data Center.
<PAGE>
WORK ORDER 2
SCHEDULE B POINTCAST OBLIGATIONS
- --------------------------------
POINTCAST OBLIGATIONS.
- ---------------------
PointCast will provide EDS with all custom developed and PCN server related
software and documentation including, but not limited to [*]. PointCast hereby
grants to EDS for the term of this Work Order a non-exclusive, nontransferable
(except to a permitted assignee under this Agreement) right and license to
reproduce and use the such PointCast software delivered by PointCast in
Cupertino, California when EDS personnel are at the latter site. Such
reproduction and use shall be limited to authorized EDS employees and
contractors and to such copying and use as is required to carry out the EDS
Services for PointCast under this Work Order. EDS shall not use such software in
the performance of any other services for any other person or entity and may not
sublicense the rights granted hereunder. EDS shall not and shall not permit any
other person or entity to, decompile, disassemble, reverse engineer, or
otherwise attempt to derive source code from or modify such software.
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WORK ORDER 2
SCHEDULE C
- ----------
1. FEES. PointCast will pay EDS the following fees:
----
* a monthly fee of [*] for the term of Work Order 1, beginning upon
written notification by PointCast. The monthly fee will be prorated on
a 30-day-month basis for any partial month during the term covered by
this Work Order.
* Above price valid until March 31, 1997.
2. TRAVEL AND RELATED EXPENSES. PointCast will reimburse EDS, in accordance
---------------------------
will the requirements set forth in Section 7 of the Agreement, for all
reasonable travel and travel-related, living and other out-of-pocket
expenses (without any markup) incurred by EDS for travel authorized by
PointCast in connection with the EDS Services provided under this Work
Order.
3. INVOICES. EDS will send to PointCast each month an invoice for charges for
--------
EDS Services for the previous month. EDS will invoice PointCast separately
for all travel, travel related and other expenses, which invoices will be
sent by EDS to PointCast after EDS incurs such expenses. Any sum or charge
due under this Agreement will be due and payable within thirty (30) days
following receipt of the invoice therefor. Any sum not paid by its due date
will bear interest until paid at a rate of interest equal to the lesser of
(i) the prime rate established from time to time by Citibank N.A., New
York, plus two percent, or (ii) the maximum rate of interest allowed by
applicable law.
IN WITNESS WHEREOF, the parties have executed this Work Order 2 as of the date
of the signature of the last party to sign, as set forth below.
Electronic Dam Systems Corporation PointCast Incorporated
BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett
NAME: Will R. Winters NAME: Christopher R. Hassett
TITLE: President, INM TITLE: President & CEO
DATE: 1/2/97 DATE: 12/20/96
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
EXHIBIT 10.21
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
PREFERRED STOCK PURCHASE WARRANT
Warrant No. 1
POINTCAST INCORPORATED
Void after July 31, 2002
1. ISSUANCE. In consideration of $100, receipt of which is
hereby acknowledged, this Warrant is issued to Lighthouse Capital Partners,
L.P. by Pointcast Incorporated, a California corporation (hereinafter with its
successors called "COMPANY").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of
this Warrant (the "HOLDER"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal office of the Company, to purchase form the Company
at a per share (the "Next Purchase Price") equal to the price per share of the
series of Preferred Stock of the Company next issued by the Company after July
1, 1995 (the "Next Preferred Stock") that number of fully paid and
nonassessable shares of Next Preferred Stock equal to $52,500 divided by the
Next Purchase Price. Notwithstanding the foregoing, if the closing sale of
the Next Preferred Stock has not occurred by December 31, 1995, the Holder
shall be entitled to purchase from the Company pursuant to the conditions set
forth above 83,758 shares of Series A Preferred Stock at $0.6268 per share
(the "Series A Purchase Price"). The Series A Preferred Stock or Next
Purchase Stock, as the case may be, shall hereafter be known as the "Preferred
Stock," and the Next Purchase Price or Series A Purchase Price, as the case
may be, shall hereafter be known as the "Purchase Price." Until such time as
this Warrant is exercised in full, or expires, the Purchase Price and the
securities issuable upon exercise of this Warrant are subject to adjustment as
hereinafter provided. The person or persons in whose name or names any
certificate representing shares of Preferred Stock is issued hereunder shall
be deemed to have become the holder of record of the shares represented
thereby as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company shall
be closed.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i)
in cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, or by (iii) by any combination of the foregoing.
4. NET ISSUE ELECTION. The Holder may elect to receive, without
the payment by the Holder of any additional consideration, shares of Preferred
Stock equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto duly executed, at the principal office of the
Company. Thereupon, the Company shall issue to the Holder such number of fully
paid and nonassessable shares of Preferred Stock as is computed using the
following formula:
Y(A-B)
X= --------
A
1
<PAGE>
where: X= the number of shares of Preferred Stock to be issued
to the Holder pursuant to this Section 4.
Y= the number of shares of Preferred Stock covered by
this Warrant in respect of which the net issues
election is made pursuant to the Section 4.
A= the fair market value of one share of Preferred Stock,
as determined in good faith by the Board, as at the time
the net issue election is made pursuant to this Section
4.
B= the Purchase Price in effect under this Warrant at the
time the net issue election is made pursuant to this
Section 4.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and
the Holder shall be entitled to receive a new warrant, which shall be dated as
of the date of this Warrant, covering the number of shares in respect of which
this Warrant shall not have been exercised.
6. FRACTIONAL SHARES. In no event shall any fractional share of
Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise
of this Warrant as an entirety, the Holder would, except as provided in this
Section 6, be entitled to receive a fractional share of Preferred Stock, then
the Company shall issue the next lower number of full shares of Preferred
Stock. The Company shall pay to the Holder upon exercise the fair market
value, determined by the Board of Directors of the Company in its sole
discretion, acting reasonably, of any fractional share of Preferred Stock
otherwise issuable upon exercise of this Warrant.
7. EXPIRATION DATE. This Warrant shall expire at the close of
business on July 31, 2002, and shall be void thereafter. Notwithstanding the
term of this Warrant fixed pursuant to Section 7 hereof and the provisions of
Section 10 below, the right to purchase Preferred Stock as granted herein
shall expire, if not previously exercised, immediately upon the closing of a
merger or consolidation of the Company with or into another corporation when
the Company is not the surviving corporation (other than a merger or
consolidation for the principal purpose of changing the domicile of the
Company), or the sale of all or substantially all of the Company's properties
and assets to any other person (the "Merger"), provided that the price per
share paid in the Merger is equal to or greater than two times the Purchase
Price per share.
The Company shall notify the Holder, in accordance with Section 13 below, of
any Merger, and if the Company fails to deliver such notice, then
notwithstanding anything to the contrary in this Warrant, the rights to
purchase the Company's Preferred Stock shall not expire until ten (10)
business days after the actual receipt by Holder of such notice; provided,
however, that notwithstanding the foregoing, in no event shall the right to
purchase Preferred Stock under this Warrant expire in Section 7 unless the
Holder receives written notice of the proposed merger at least five (5)
business days prior to the closing of such Merger. If such closing does not
take place, the Company shall promptly notify the Holder that such proposed
transaction has been terminated, and the Holder may rescind any exercise of
its purchase rights promptly after such notice of termination of the proposed
transaction if the exercise of the Warrant occurred after the Company notified
the Holder that the Merger was proposed, or if the exercise was otherwise
precipitated by such proposed Merger. In the event of such rescission, the
Warrant will continue to be exercisable on the same terms and conditions
contained herein.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it
will at all times from and after the earlier of the closing of the Next
Preferred Stock or December 31, 1995 reserve and keep available such number of
its authorized shares of such Preferred Stock and any Common Stock issuable
upon the conversion thereof, $0.001 par value, of the Company (the "Common
Stock"), free from all preemptive or similar rights therein, as will be
sufficient to permit, respectively, the exercise of this Warrant in full and
the conversion into shares of Common Stock of all shares of Preferred Stock
receivable upon such exercise. The Company further covenants that such shares
as may be issued pursuant to such exercise and/or conversion will, upon
issuance, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof.
2
<PAGE>
9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company
shall subdivide the Preferred Stock, by split-up or otherwise, or combine the
Preferred Stock, or issue additional shares of Preferred Stock in payment of a
stock dividend on the Preferred Stock, the number of shares of Preferred Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall forthwith
be proportionately decreased in the case of a subdivision or stock dividend,
or proportionately increased in the case of a combination.
10. MERGERS AND RECLASSIFICATIONS. Subject in all respects to Section
7 above, if after the date hereof the Company shall enter into any
Reorganization (as hereinafter defined), then, as a condition of such
Reorganization, lawful provisions shall be made, and duly executed documents
evidencing the same from the Company or its successor shall be delivered to
the Holder, so that the Holder shall thereafter have the right to purchase, at
a total price not to exceed that payable upon the exercise of this Warrant in
full, the kind and amount of shares of stock and other securities and property
receivable upon such Reorganization by a holder of the number of shares of
Preferred Stock which might have been purchased by the Holder immediately
prior to such Reorganization, and in any such case appropriate provisions
shall be made with respect to the rights and interest of the Holder to the end
that the provisions hereof (including without limitation, provisions for the
adjustment of the Purchase Price and the number of shares issuable
hereunder) shall thereafter be applicable in relation to any shares of stock
or other securities and property thereafter deliverable upon exercise hereof.
For the purposes of this Section 10, the term "REORGANIZATION" shall include
without limitation any reclassification, capital reorganization or change of
the Preferred Stock (other than as a result of a subdivision, combination or
stock dividend provided for in Section 9 hereof), or any consolidation of the
Company with, or merger of the Company into, another corporation or other
business organization (other than a merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding Preferred Stock), or any sale or conveyance to
another corporation or other business organization of all or substantially all
of the assets of the Company.
11. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is
adjusted, as herein provided, the Company shall promptly deliver to the holder
a certificate of the Company's chief financial officer setting forth the
Purchase Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.
12. NO RIGHTS AS SHAREHOLDERS. Except as provided herein, this Warrant
does not entitle the Holder to any voting rights as a shareholder of the
Company prior to the exercise if the Holder's rights to purchase Preferred
Stock as provided herein.
13. NOTICE OF RECORD DATE, ETC. In the event of:
(a) any taking of the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or dispose of any shares of
stock of any class or any other securities or property, or to receive any
other right;
(b) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or convergence of all or substantially all of its assets; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then and in each such event the Company will provide or cause to be provided
to the Holder a written notice thereof. Such notice shall be provided at least
twenty (20) business days prior to the date specified in such notice on which
any such action is taken.
3
<PAGE>
14. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued
and delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
A. The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant
has been duly authorized, issued, executed and delivered by the Company and is
the valid and binding obligation of the Company, enforceable in accordance
with its terms.
B. The shares of Preferred Stock issuable upon the exercise of this
Warrant will be duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable.
C. This issuance, execution and delivery of this Warrant do not, and
the issuance of the shares of Preferred Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or
contravene the Company's Articles of Incorporation or by-laws, or any law,
statute, regulation, rule, judgment or order applicable to the Company, (ii)
violate, contravene or result in a breach or default under any contract,
agreement or instrument to which the Company is a party or by which the
Company or any of its assets are bound or (iii) require the consent or
approval of or the filing of any notice or registration with any person or
entity.
D. As long as this Warrant is, or any shares of Preferred Stock issued
upon exercise of this Warrant or any shares of Common Stock issued upon
conversion of such shares of Preferred Stock are, issued and outstanding, the
Company will provide to the Holder the financial and other information
described in that certain Lease Line Schedule No. 01 to Master Equipment Lease
Agreement No. 111 between the Company and Lighthouse Capital Partners, L.P.
dated as of August 10, 1995.
E. The Company hereby grants to the Holder the Registration Rights
contained in Section 1 of the Company's Investor Rights Agreement dated as of
June 4, 1994, so that (i) the shares of Common Stock issuable upon conversion
of the shares of Preferred Stock issuable upon exercise of this Warrant shall
be Registrable Securities, and (ii) the Holder shall be a "Holder", for all
purposes of such Investor Rights Agreement.
15. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder.
16. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Preferred Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:
(a) INVESTMENT PURPOSE. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Holder's rights contained herein
will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
(b) ACCREDITED INVESTOR. Holder is an "accredited investor" within the
meaning of the Securities and Exchange Rule 501 of Regulation D, as presently
in effect.
(c) PRIVATE ISSUE. The Holder understands (i) that the Preferred Stock
issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant Agreement
will be exempt from the registration and qualification requirements thereof,
and (ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 16.
(d) DISPOSITION OF HOLDER'S RIGHTS. In no event will the Holder make a
disposition of any of its rights to acquire Preferred Stock or Preferred Stock
issuable upon exercise of such rights unless and until (i)
<PAGE>
it shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall nave furnished the Company with an opinion
of counsel (which counsel may either be inside or outside counsel to the
Holder) reasonably satisfactory to the Company and its counsel to the effect
that (A) appropriate action necessary for compliance with the 1933 Act has
been taken, or (B) an exemption from the registration requirements of the 1933
Act is available; provided that the Company shall not require Holder to
provide an opinion of counsel if the transfer is to an affiliate Holder or if
there is no material question as to the availability of current information as
referenced in Rule 144(c), Holder represents that it has complied with Rule
144(d) and (e) in reasonable detail, the selling broker represents that it has
complied with Rule 144(f), and the Company is provided with a copy of Holder's
notice of proposed sale. Notwithstanding the foregoing, the restrictions
imposed upon the transferability of any of its rights to acquire Preferred
Stock or Preferred Stock issuable on the exercise of such rights do not apply
to transfers from the beneficial owner of any of the aforementioned securities
to its nominee or from such nominee to its beneficial owner, and shall
terminate as to any particular share of Preferred Stock when (1) such security
shall have been effectively registered under the 1933 Act and sold by the
holder thereof in accordance with such registration or (2) such security shall
have been sold without registration in compliance with Rule 144 under the 1933
Act, or (3) a letter shall have been issued to the Holder at its request by
the staff of the Securities and Exchange Commission or a ruling shall have
been issued to the Holder at its request by such Commission stating that no
action shall be recommended by such staff or taken by such Commission, as the
case may be, if such security is transferred without registration under the
1933 Act in accordance with the conditions set forth in such letter or ruling
and such letter or ruling specifies that no subsequent restrictions or
transfer are required. Whenever the restrictions imposed hereunder shall
terminate, as hereinabove provided, the Holder or holder of a share of
Preferred Stock then outstanding as to which such restrictions have terminated
shall be entitled to receive from the Company, without expense to such holder,
one or more new certificates for the Warrant or for such shares of Preferred
Stock not bearing any restrictive legend.
(e) FINANCIAL RISK. The Holder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment and has the ability to bear the economic
risks of its investments.
(f) RISK OF NO REGISTRATION. The Holder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section
15(d) of the Securities Exchange Act of 1934 (the "1934 Act"), or of a
registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell (i) the rights to purchase Preferred Stock
pursuant to this Warrant Agreement, or (ii) the Preferred Stock issuable upon
exercise of the right to purchase, it may be required to hold such securities
for an indefinite period. The Holder also understands that any sale of the
rights of the Holder to purchase Preferred Stock which might be made by it in
reliance upon Rule 144 under the 1933 Act may be made only in accordance with
the terms and conditions of that Rule.
17. NOTICE TRANSFERS, ETC.
A. Any notice or written communication required or permitted
to be given to the Holder may be given by mail or delivered to the Holder at
the address most recently provided by the Holder to the Company.
B. Subject to compliance with applicable federal and state
securities laws, and to the Holder's obtaining the Company's prior written
consent, which shall not be unreasonably withheld, this Warrant may be
transferred by the Holder with respect to any or all of the shares purchasable
hereunder. Upon surrender of this Warrant to the Company, together with the
assignment notice annexed hereto duly executed, for transfer of this Warrant
as an entirety by the Holder, the Company shall issue a new warrant of the
same denomination to the assignee. Upon surrender of this Warrant to the
Company, together with the assignment hereof properly endorsed, by the Holder
for transfer with respect to a portion of the shares of Preferred Stock
purchasable hereunder, the Company shall issue a new warrant to the assignee,
in such denomination as shall be requested by the Holder hereof, and shall
issue to such Holder a new warrant covering the number of shares in respect of
which this Warrant shall not have been transferred.
5
<PAGE>
C. In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of an affidavit of the Holder or other
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant.
18. NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance of performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder.
19. GOVERNING LAW. The provisions and terms of this Warrant shall
be governed by and construed in accordance with the internal laws of the State
of California.
20. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
21. BUSINESS DAYS. If the last or appointed day for the taking of
any action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
22. QUALIFYING PUBLIC OFFERING. If the Company shall effect a firm
commitment underwritten public offering of shares of Common Stock which results
in the conversion of the Preferred Stock into Common Stock pursuant to the
Company's Articles of Incorporation in effect immediately prior to such
offering, then, effective upon such conversion, this Warrant shall change from
the right to purchase shares of Preferred Stock to the right to purchase shares
of Common Stock, and the Holder shall thereupon have the right to purchase, at a
total price equal to that payable upon the exercise of this Warrant in full, the
number of shares of Common Stock which would have been receivable by the Holder
upon the exercise of this Warrant for shares of Preferred Stock immediately
prior to such conversion of such shares of Preferred Stock into shares of Common
Stock, and in such event appropriate provisions shall be made with respect to
the right and interest of the Holder to the end that the provisions hereof
(including, without limitation, provisions for the adjustment of the Purchase
Price and of the number of shares purchasable upon exercise of this Warrant)
shall thereafter be applicable to any shares of Common Stock deliverable upon
the exercise hereof.
23. VALUE; TAX INDEMNITY. The Company and the Holder agree that the
value of this Warrant on the date of grant is $100. The Company hereby agrees to
pay, indemnify and hold the Holder harmless from, and to reimburse the Holder
for, all taxes, penalties, fines, additions to tax or interest thereon
(collectively, "Taxes") imposed on, incurred by or asserted against the Holder
by any Federal, state or local taxing authority to the extent resulting from
income attributable to such Holder due to warrant accretion expense incurred by
the Company. The Company further agrees that, with respect to any payment or
indemnity hereunder, such payment or indemnity shall include any amount
necessary to hold the recipient of the payment or indemnity harmless on a net
aggregate after tax basis from all Taxes required to be paid by the recipient
with respect to such payment or indemnity under the laws of any Federal, state
or local taxing authority. Any payment or indemnity payable by the Company
pursuant to this Section 23 shall be payable five (5) days prior to the time
that the Taxes giving rise to such payment nor indemnity become payable.
6
<PAGE>
Dated: August 10, 1995
-------------------
POINTCAST INCORPORATED
(Corporate Seal) By: /s/ John Jewett
----------------------------------------
Name: John Jewett
--------------------------------------
Title: Vice President Finance & Operations
-------------------------------------
Attest:
- --------------------------
VICE PRESIDENT
7
<PAGE>
Subscription
To: ____________________________ Date: _________________________________
The undersigned hereby subscribes for _________________ shares of Preferred
Stock covered by this Warrant. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:
_______________________________________
Signature
_______________________________________
Name for Registration
_______________________________________
Mailing Address
Net Issue Election Notice
To: ____________________________ Date: _________________________________
The undersigned hereby elects under Section 4 to surrender the right to
purchase _______ shares of Preferred Stock pursuant to this Warrant. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
_______________________________________
Signature
_______________________________________
Name for Registration
_______________________________________
Mailing Address
8
<PAGE>
Assignment
For value received _______________________________ hereby sells, assigns
and transfers unto ___________________________________________________________
(Please print or typewrite name and address of Assignee)
______________________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_____________________________ its attorney to transfer the within Warrant on the
books of the within named Company with full power of substitution on the
premises.
Dated: ____________________
________________________________________
In the Presence of:
___________________________________
9
<PAGE>
EXHIBIT 10.22
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD,
DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
(I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) AN OPINION OF
COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (III)
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION
TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
NO. ____ POINTCAST INCORPORATED DECEMBER 11, 1997
A CALIFORNIA CORPORATION
This certifies that, for value received, Benchmark Capital Partners, L.P.
(together with any registered assignee(s), the "Holder") is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time on or
after the date hereof and at or prior to 11:59 p.m. on the Expiration Date (as
defined below), but not thereafter, to acquire from PointCast Incorporated, a
California corporation (the "Company"), in whole or from time to time in part,
up to 38,321 fully paid and nonassessable shares of Common Stock of the Company
("Warrant Stock") at a purchase price equal to $5.00 per share (the "Exercise
Price"). Such number of shares, type of security and Exercise Price are subject
to adjustment as provided herein, and all references to "Warrant Stock" and
"Exercise Price" herein shall be deemed to include any such adjustment or series
of adjustments.
1. TERM
(a) Termination and Expiration. If not earlier exercised, the Warrant
--------------------------
shall expire on the date (the "Expiration Date") that is the
earlier of (i) eighteen (18) months after the consummation of a
firmly underwritten public offering pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), by the Company of its
capital stock with aggregate gross proceeds to the Company of not
less than $20,000,000 and with a price per share of not less than
$9.50, subject to appropriate adjustment for stock splits, stock
dividends, combinations, recapitalizations and the like (a
"Qualified IPO") and (ii) 60 months after the date first set forth
above.
(b) Exceptions. Notwithstanding the foregoing, in the event the
----------
Company is proposed to be acquired in a bona fide transaction
(i.e., not a mere recapitalization, reincorporation for the
purpose of changing corporate domicile,
<PAGE>
or similar transaction) (the "Acquisition"), regardless of the
form of the transaction (e.g., merger, consolidation, exclusive
license, sale or lease of assets or sale of stock), the Company
shall give the Holder not less than fifteen (15) business days
notice of the record date for determining the shareholders of the
Company entitled to vote on (or otherwise approve) the
Acquisition; the Company shall provide the Holder with all
information with respect to the Acquisition that is otherwise
provided to shareholders of the Company at such time and from time
to time during the pendency of the Acquisition, including (but not
limited to) the proposed price to be paid in the proposed
Acquisition; the Holder shall have the right to exercise same on
or prior to the record date of shareholders eligible to vote (or
otherwise approve) with respect to the proposed Acquisition; if
the Warrant is not exercised on or prior to such record date, the
Warrant shall expire upon the occurrence of the consummation of
the Acquisition, provided that if the Acquisition is not
consummated, then the Holder shall be entitled to revoke the
exercise of this Warrant pursuant to the operation of this Section
1(a).
2. EXERCISE OF WARRANT
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the principal executive
office of the Company at the address set forth on the signature page hereof (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased by cash, check or wire transfer or, at the election of
the Warrantholder, may be made on a "net exercise" basis, in which event the
Company shall issue the Warrantholder a number of shares of Common Stock
computed using the following formula:
Y = X(A-B)/A
Where:
X = the number of equal shares of Common Stock for which this Warrant is
exercisable;
Y = the number of shares of Common Stock to be issued to the Holder;
A = the Fair Market Value (as defined below) of one share of the
Company's Common Stock on the date of conversion of this Warrant; and
B = the Exercise Price for one share of the Company's Common Stock under
this Warrant.
-2-
<PAGE>
If the above calculation results in a negative number, then no shares of
Warrant Stock shall be issued or issuable upon conversion of this Warrant.
"Fair Market Value" of a share of Common Stock shall mean:
(a) if this Warrant is exercised (i) immediately prior to a Qualified IPO,
and (ii) if the Company's Registration Statement on Form S-1 or SB-2
(or successor or equivalent forms) relating to such public offering
has been declared effective by the Securities and Exchange Commission,
then the Fair Market Value per share shall be the price per share to
the public as specified in the final prospectus with respect to the
offering;
(b) if this Warrant is exercised after the consummation of a Qualified
IPO, then:
(i) if traded on a securities exchange, the Fair Market Value per
share of Common Stock shall be deemed to be the average of the
closing sales prices of the Company's Common Stock over a ten
(10) day trading period (or for such shorter period as the
Company's Common Stock may have been trading) ending three (3)
days before the Exercise Date, or
(ii) if traded over-the-counter, the Fair Market Value per share of
Common Stock shall be deemed to be the average of the prices of
the Company's Common Stock quoted on The Nasdaq Stock Market,
Inc. (or NASD bulletin board or any similar system) over the ten
(10) day trading period (or for such shorter period as the
Company's Common Stock has been trading) ending three (3) days
before the Exercise Date; or
(c) if this Warrant is exercised prior to a Qualified IPO (except as
provided in clause (a) above), the Fair Market Value per share of
Common Stock shall be equal to an amount determined in good faith by
the Company's Board of Directors, but shall in no event be less than
the actual sale price per share in the Company's latest financing.
Upon exercise of this Warrant in accordance with this Section 2, the holder
of this Warrant shall be entitled to receive from the Company a stock
certificate in proper form representing the number of shares of Warrant Stock so
purchased, and a new Warrant in substantially identical form and dated as of
such exercise for the purchase of that number of shares of Warrant Stock equal
to the difference, if any, between the number of shares of Warrant Stock subject
hereto and the number of shares of Warrant Stock as to which this Warrant is so
exercised.
3. CONVERSION OF WARRANT
The Holder shall have the right to convert this Warrant, in whole or in
part, at any time (including, but not limited to, the occurrence of an
Acquisition of the Company) and from time to time at or prior to the Expiration
Time by the payment of the Exercise Price (as hereinafter defined), and
surrender of this Warrant and the Notice of Conversion form attached hereto duly
executed to the principal executive office of the Company at the address set
forth on the signature page hereof (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
such Holder appearing on the books of the Company), into shares of Warrant Stock
as
-3-
<PAGE>
provided in this Section 3. Payment of the Exercise Price may be made by cash,
check or wire transfer or, at the election of the Warrantholder, may be made on
a "net exercise" basis, in which event the Company shall issue the Warrantholder
a number of shares of Common Stock computed using the formula set forth in
Section 2.
Upon conversion of this Warrant in accordance with this Section 3, the
Holder hereof shall be entitled to receive a certificate for the number of
shares of Warrant Stock determined in accordance with the foregoing, and a new
Warrant in substantially identical form and dated as of such conversion for the
purchase of that number of shares of Warrant Stock equal to the difference, if
any, between the number of shares of Warrant Stock subject hereto and the number
of shares of Warrant Stock as to which this Warrant is so converted.
4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP
Certificates for shares purchased hereunder or issuable upon conversion
hereof shall be delivered to the Holder promptly after the date on which this
Warrant shall have been exercised or converted in accordance with the terms
hereof. The Company hereby represents and warrants that all shares of Warrant
Stock which may be issued upon the exercise or conversion of this Warrant will,
upon such exercise or conversion, be duly and validly authorized and issued,
fully paid and nonassessable and free from all liens and encumbrances in respect
of the issuance thereof (other than liens or encumbrances created by or imposed
upon the Holder of the Warrant Stock). The Company agrees that the shares so
issued shall be and shall for all purposes be deemed to have been issued to such
Holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been exercised or converted in accordance
with the terms hereof. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise or conversion of this Warrant. With
respect to any fraction of a share called for upon the exercise or conversion of
this Warrant, an amount equal to such fraction multiplied by the Fair Market
Value of a share of Warrant Stock on the date of exercise or conversion shall be
paid in cash or check to the Holder.
5. CHARGES, TAXES AND EXPENSES
Issuance of certificates for shares of Warrant Stock upon the exercise or
conversion of this Warrant shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance of
such certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such name
or names as may be directed by the Holder provided, however, that in the event
certificates for shares of Warrant Stock are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise or conversion
shall be accompanied by the Assignment Form attached hereto duly executed by the
Holder.
6. RIGHTS AS SHAREHOLDERS
No Holder of this Warrant, as such, shall be entitled to vote upon any
matter submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or be deemed the holder of
-4-
<PAGE>
Common Stock until this Warrant shall have been exercised or converted in whole
or in part and the Warrant Stock purchasable upon such exercise shall have
become deliverable, as provided herein.
7. COMPANY'S RIGHT OF FIRST REFUSAL PRIOR TO WARRANT EXERCISE
Before the Warrant may be sold or otherwise transferred by the Holder or
any transferee (including transfer by gift or operation of law), the Company or
its assignee(s) shall have a right of first refusal to purchase the Warrant on
the terms and conditions set forth in this Section 7 (the "Right of First
Refusal").
(a) Notice of Proposed Transfer. The Holder shall deliver to the
---------------------------
Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer the Warrant;
(ii) the name of the proposed purchaser or other transferee
("Proposed Transferee"); and (iii) the bona fide cash price or
other consideration for which the Holder proposes to transfer the
Warrant (the "Offered Price"), and the Holder shall offer the
Warrant at the Offered Price to the Company or its assignee(s),
provided that any such assignee is a securityholder of the
Company.
(b) Exercise of Right of First Refusal. At any time within 20 days
----------------------------------
after receipt of the Notice, the Company or its assignee(s) may,
by giving written notice to the Holder, elect to purchase the
Warrant proposed to be transferred to the Proposed Transferee, at
the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Warrant purchased by the Company or its assignee(s) under this
Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined in good faith by the
Board of Directors of the Company.
(d) Payment. Payment of the Purchase Price shall be made in cash (by
-------
check) within 15 days of the Company's written notice to the
Holder pursuant to Section 7(b).
(e) Holder's Right to Transfer. If the Warrant proposed in the Notice
--------------------------
to be transferred to a given Proposed Transferee is not purchased
by the Company or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Warrant to
that Proposed Transferee at the Offered Price or at a higher
price, provided that such sale or other transfer is consummated
within 90 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 7 shall
continue to apply to the Warrant in the hands of such Proposed
Transferee. If the Warrant described in the Notice is not
transferred to the Proposed Transferee
-5-
<PAGE>
within such period, a new Notice shall be given to the Company,
and the Company or its assignees shall again be offered the Right
of First Refusal before the Warrant held by the Holder may be sold
or otherwise transferred.
(f) Exception for Certain Transfers. The Warrant may be transferred
-------------------------------
without the Company being offered the Right of First Refusal in
the following transactions; provided that any Transferee shall
agree to the terms of this Section 7 as to the Warrant:
(1) A Holder's transfer of the Warrant in whole or in part to the
Company or to any shareholder of the Company.
(2) A Holder's transfer of the Warrant in whole or in part to a
person who, at the time of such transfer, is an officer or
director of the Company.
(3) A Holder's transfer of the Warrant in whole or in part
pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital
reorganization of the corporate shareholder, or pursuant to a
sale of all or substantially all of the stock or assets of a
corporate shareholder.
(4) A transfer by a Holder which is a limited or general
partnership to any or all of its partners or former partners
or any professional employee (or entity of which such
employees are the beneficiaries) of such partnership.
(5) A transfer by a Holder which is a corporation to any parent
company of the Holder, or any majority-owned subsidiary of
such parent company, provided that any such transferee does
not derive a majority of its revenues from products or
services that compete directly with products or services from
which the Company derives a majority of its revenues.
(6) Any transfer by a Holder which is a limited liability company
to any or all of its members or former members or any
professional employee (or entity of which such employees are
the beneficiaries) of such limited liability company.
Any such transfer shall be made upon surrender of this Warrant together
with the Assignment Form attached hereto properly endorsed.
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate (i) as to any Warrant Stock acquired upon the
exercise or conversion of the Warrant in whole or in part, on the
effective date of such exercise or conversion and (ii) as to any
portion of the Warrant not previously exercised or converted, on
the date 180 days after the date of the final prospectus (the
"Final Prospectus")
-6-
<PAGE>
contained in a registration statement filed with and declared
effective by the Securities and Exchange Commission under the
Securities Act relating to the initial public offering by the
Company of its capital stock.
8. MARKET STAND-OFF AGREEMENT
The Holder hereby agrees in connection with any registration of the
Company's securities (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), upon request of the
Company or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, pledge (or otherwise
encumber or hypothecate), grant any option for the purchase of, or otherwise
directly or indirectly dispose of any shares or other securities of the Company
(other than those included in the registration) without the prior written
consent of the Company and such managing underwriters for such period of time,
not to exceed 180 days following the date of the Final Prospectus, as the Board
of Directors establishes pursuant to its good faith negotiations with such
managing underwriters; provided, however, that the Holder shall not be subject
to such market stand-off unless the officers and directors of the Company who
own stock of the Company shall also be bound by such restrictions. The Company
may impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.
9. EXCHANGE AND REGISTRY OF WARRANT
This Warrant is exchangeable, upon the surrender hereof by the Holder at
the above-mentioned office or agency of the Company, for a new Warrant in
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the registered Holder of this Warrant. This Warrant may be
surrendered for exchange, transfer, exercise or conversion, in accordance with
its terms, at such office or agency of the Company, and the Company shall be
entitled to rely in all respects, prior to written notice to the contrary, upon
such registry.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
On receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and in
case of any such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a
new warrant in substantially identical form, dated as of such cancellation and
reissuance.
11. SATURDAYS, SUNDAYS AND HOLIDAYS
If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall be a Saturday or a Sunday or shall
be a legal holiday, then such action may be taken or such right may be exercised
on the next succeeding business day.
-7-
<PAGE>
12. ADJUSTMENTS
The type and number of securities of the Company issuable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as set forth
below:
(a) If the Company shall at any time declare a dividend payable in
shares of Common Stock, then the Warrantholder, upon exercise of
this Warrant after the record date for the determination of
holders of Common Stock entitled to receive such dividend, shall
be entitled to receive upon exercise of this Warrant, in addition
to the number of shares of Common Stock as to which this Warrant
is exercised, such additional shares of Common Stock as such
holder would have received had this Warrant been exercised
immediately prior to such record date.
(b) If the Company shall at any time effect a recapitalization or
reclassification of such character that the shares of Common Stock
shall be changed into or become exchangeable for a larger or
smaller number of shares, then upon the effective date thereof the
number of shares of Common Stock which the Warrantholder shall be
entitled to purchase upon exercise of this Warrant shall be
increased or decreased, as the case may be, in direct proportion
to the increase or decrease in the number of shares of Common
Stock by reason of such recapitalization or reclassification, and
the Exercise Price shall be, in the case of an increase in the
number of shares, proportionately decreased and, in the case of a
decrease in the number of shares, proportionately increased.
(c) If the Company shall at any time distribute to holders of Common
Stock cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of
earned surplus) then, in any such case, the Warrantholder shall be
entitled to receive, upon exercise of this Warrant, with respect
to each share of Common Stock issuable upon such exercise, the
amount of cash or evidences of indebtedness or other securities or
assets which such holder would have been entitled to receive with
respect to each such share of Common Stock as a result of the
happening of such event had this Warrant been exercised
immediately prior to the record date or other date fixing
stockholders to be affected by such event.
(d) If at any time on or after the date hereof the Company shall
subdivide its outstanding shares of Common Stock into a greater
number of shares, the Warrant Price in effect immediately prior to
such subdivision shall thereby be proportionately reduced and the
number of shares receivable upon exercise of the Warrant shall
thereby be proportionately increased; and, conversely, if at any
time on or after the date hereof the outstanding number of shares
of Common Stock shall be combined into a smaller number of shares,
the Warrant Price in effect immediately prior to such combination
shall thereby be proportionately increased
-8-
<PAGE>
and the number of shares receivable upon exercise of the Warrant
shall thereby be proportionately decreased.
(e) As used in this Warrant the term "Exercise Price" shall mean the
purchase price per share specified in this Warrant until the
occurrence of an event stated in subsections (b) or (d) of this
Section 12 and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said
subsections. No adjustment made pursuant to any provision of this
Section 12 shall have the effect of increasing the total
consideration payable upon exercise of this Warrant in respect of
all the Common Stock as to which this Warrant may be exercised.
(f) In the event that at any time, as a result of an adjustment made
pursuant to this Section 12, the Warrantholder shall, upon
exercise of this Warrant, become entitled to receive shares and/or
other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common
Stock shall be deemed to refer to and include such shares and/or
other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to
adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 12.
(g) In case of any adjustment in the Exercise Price or number and type
of securities issuable on the exercise of this Warrant, the
Company will promptly give written notice thereof to the Holder in
the form of a certificate, confirmed by an officer of the Company,
setting forth such adjustment and showing in reasonable detail the
facts upon which adjustment is based.
13. NOTICES OF RECORD DATE, ETC.
In the event of:
(a) any taking by the Company of a record of the holders of Warrant
Stock or securities into which the Warrant Stock is convertible
for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution,
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, or any
transfer of all or substantially all the assets of the Company to,
or consolidation or merger of, the Company with or into any
person,
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
-9-
<PAGE>
(d) a sale of substantially all of the outstanding capital stock of
the Company or the issuance of new shares representing the
majority of the Company's right to vote, or
(e) the consummation of any Qualified IPO of the Company's Common
Stock,
then and in each such event the Company will mail to the Holder a notice
specifying the record date for voting or the date of closing , as applicable, of
any event (a)-(e) above. Such notice shall be delivered to the Holder at least
fifteen (15) days prior to the actual or proposed date of consummation of the
relevant event.
14. REPRESENTATIONS AND WARRANTIES
The Company hereby represents, warrants and agrees that:
(a) during the period this Warrant is outstanding, the Company will
reserve from its authorized and unissued Warrant Stock a
sufficient number of shares to provide for the issuance of Warrant
Stock upon the exercise or conversion of this Warrant;
(b) during the period this Warrant or the Warrant Stock issuable
hereunder is outstanding, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of shares
to provide for the issuance of Common Stock upon conversion of the
Warrant Stock issuable upon exercise or conversion of this
Warrant;
(c) the issuance of this Warrant shall constitute full authority to
the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates
for the shares of Warrant Stock issuable upon exercise or
conversion of this Warrant;
(d) the Company has all requisite legal and corporate power to execute
and deliver this Warrant, to sell and issue the Warrant Stock
hereunder, to issue the Common Stock issuable upon conversion of
the Warrant Stock and to carry out and perform its obligations
under the terms of this Warrant; and
(e) all corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery
and performance of this Warrant by the Company, the authorization,
sale, issuance and delivery of the Warrant Stock and the Common
Stock issuable upon conversion of the Warrant Stock, the grant of
registration rights as provided herein and the performance of the
Company's obligations hereunder has been taken;
-10-
<PAGE>
(f) upon conversion, the Warrant Stock, when issued in compliance with
the provisions of this Warrant and the Company's Amended and
Restated Articles of Incorporation, will be validly issued, fully
paid and nonassessable, and free of any liens or encumbrances, and
will be issued in compliance with all applicable federal and state
securities laws; and
(g) upon conversion, the Warrant Stock will not be subject to any
preemptive rights, rights of first refusal or similar rights.
15. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the State of California.
[Remainder of Page Intentionally Left Blank.]
-11-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer.
Dated: __________, 1997. POINTCAST INCORPORATED
Signature: ____________________________________
Name: _________________________________________
Title: ________________________________________
Address: ______________________________________
______________________________________
-12-
<PAGE>
NOTICE OF EXERCISE
To: PointCast Incorporated
(1) The undersigned hereby elects to purchase __________ shares of Common
Stock of PointCast Incorporated pursuant to the terms of the attached Warrant,
and tenders herewith payment of the Exercise Price in accordance therewith.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
______________________________________
(Name)
______________________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
________________ Signature: ______________________________________
(Date)
Name: ___________________________________________
Title: __________________________________________
Address: ________________________________________
________________________________________
-13-
<PAGE>
NOTICE OF CONVERSION
To: PointCast Incorporated
(1) The undersigned hereby elects to convert that portion of the attached
Warrant representing the right to purchase ________ shares of Common Stock into
such number of shares of Common Stock of PointCast Incorporated as is determined
pursuant to Section 3 of such Warrant, which conversion shall be effected
pursuant to the terms of the attached Warrant.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
______________________________________
(Name)
______________________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
________________ Signature: ______________________________________
(Date)
Name: ___________________________________________
Title: __________________________________________
Address: ________________________________________
________________________________________
-14-
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, _______________________________ ("Transferor") hereby
sells, assigns and transfers unto _________________________________
("Transferee") the right to purchase Shares represented by the foregoing
Warrant to the extent of ___________ shares of Common Stock and does hereby
irrevocably constitute and appoint _____________________________, attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises. Transferee agrees to be bound by all of the terms and conditions
of this Warrant (in proportion to its rights under the Warrant vis-a-vis
Transferor or any other transferee of rights under this Warrant) as though it
were a party to the Warrant in the place of Transferor.
Dated: _______________ TRANSFEROR
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Address: ___________________________________
___________________________________
TRANSFEREE
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Address: ___________________________________
___________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be medallion guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-15-
<PAGE>
EXHIBIT 10.23
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD,
DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
(I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) AN OPINION OF
COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (III)
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION
TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
NO. ____ POINTCAST INCORPORATED DECEMBER 11, 1997
A CALIFORNIA CORPORATION
This certifies that, for value received, Benchmark Founders' Fund, L.P.
(together with any registered assignee(s), the "Holder") is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time on or
after the date hereof and at or prior to 11:59 p.m. on the Expiration Date (as
defined below), but not thereafter, to acquire from PointCast Incorporated, a
California corporation (the "Company"), in whole or from time to time in part,
up to 38,321 fully paid and nonassessable shares of Common Stock of the Company
("Warrant Stock") at a purchase price equal to $5.00 per share (the "Exercise
Price"). Such number of shares, type of security and Exercise Price are subject
to adjustment as provided herein, and all references to "Warrant Stock" and
"Exercise Price" herein shall be deemed to include any such adjustment or series
of adjustments.
1. TERM
(a) Termination and Expiration. If not earlier exercised, the Warrant
--------------------------
shall expire on the date (the "Expiration Date") that is the
earlier of (i) eighteen (18) months after the consummation of a
firmly underwritten public offering pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), by the Company of its
capital stock with aggregate gross proceeds to the Company of not
less than $20,000,000 and with a price per share of not less than
$9.50, subject to appropriate adjustment for stock splits, stock
dividends, combinations, recapitalizations and the like (a
"Qualified IPO") and (ii) 60 months after the date first set forth
above.
(b) Exceptions. Notwithstanding the foregoing, in the event the
----------
Company is proposed to be acquired in a bona fide transaction
(i.e., not a mere recapitalization, reincorporation for the
purpose of changing corporate domicile,
<PAGE>
or similar transaction) (the "Acquisition"), regardless of the
form of the transaction (e.g., merger, consolidation, exclusive
license, sale or lease of assets or sale of stock), the Company
shall give the Holder not less than fifteen (15) business days
notice of the record date for determining the shareholders of the
Company entitled to vote on (or otherwise approve) the
Acquisition; the Company shall provide the Holder with all
information with respect to the Acquisition that is otherwise
provided to shareholders of the Company at such time and from time
to time during the pendency of the Acquisition, including (but not
limited to) the proposed price to be paid in the proposed
Acquisition; the Holder shall have the right to exercise same on
or prior to the record date of shareholders eligible to vote (or
otherwise approve) with respect to the proposed Acquisition; if
the Warrant is not exercised on or prior to such record date, the
Warrant shall expire upon the occurrence of the consummation of
the Acquisition, provided that if the Acquisition is not
consummated, then the Holder shall be entitled to revoke the
exercise of this Warrant pursuant to the operation of this Section
1(a).
2. EXERCISE OF WARRANT
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the principal executive
office of the Company at the address set forth on the signature page hereof (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased by cash, check or wire transfer or, at the election of
the Warrantholder, may be made on a "net exercise" basis, in which event the
Company shall issue the Warrantholder a number of shares of Common Stock
computed using the following formula:
Y = X(A-B)/A
Where:
X = the number of equal shares of Common Stock for which this Warrant is
exercisable;
Y = the number of shares of Common Stock to be issued to the Holder;
A = the Fair Market Value (as defined below) of one share of the
Company's Common Stock on the date of conversion of this Warrant; and
B = the Exercise Price for one share of the Company's Common Stock under
this Warrant.
-2-
<PAGE>
If the above calculation results in a negative number, then no shares of
Warrant Stock shall be issued or issuable upon conversion of this Warrant.
"Fair Market Value" of a share of Common Stock shall mean:
(a) if this Warrant is exercised (i) immediately prior to a Qualified IPO,
and (ii) if the Company's Registration Statement on Form S-1 or SB-2
(or successor or equivalent forms) relating to such public offering
has been declared effective by the Securities and Exchange Commission,
then the Fair Market Value per share shall be the price per share to
the public as specified in the final prospectus with respect to the
offering;
(b) if this Warrant is exercised after the consummation of a Qualified
IPO, then:
(i) if traded on a securities exchange, the Fair Market Value per
share of Common Stock shall be deemed to be the average of the
closing sales prices of the Company's Common Stock over a ten
(10) day trading period (or for such shorter period as the
Company's Common Stock may have been trading) ending three (3)
days before the Exercise Date, or
(ii) if traded over-the-counter, the Fair Market Value per share of
Common Stock shall be deemed to be the average of the prices of
the Company's Common Stock quoted on The Nasdaq Stock Market,
Inc. (or NASD bulletin board or any similar system) over the ten
(10) day trading period (or for such shorter period as the
Company's Common Stock has been trading) ending three (3) days
before the Exercise Date; or
(c) if this Warrant is exercised prior to a Qualified IPO (except as
provided in clause (a) above), the Fair Market Value per share of
Common Stock shall be equal to an amount determined in good faith by
the Company's Board of Directors, but shall in no event be less than
the actual sale price per share in the Company's latest financing.
Upon exercise of this Warrant in accordance with this Section 2, the holder
of this Warrant shall be entitled to receive from the Company a stock
certificate in proper form representing the number of shares of Warrant Stock so
purchased, and a new Warrant in substantially identical form and dated as of
such exercise for the purchase of that number of shares of Warrant Stock equal
to the difference, if any, between the number of shares of Warrant Stock subject
hereto and the number of shares of Warrant Stock as to which this Warrant is so
exercised.
3. CONVERSION OF WARRANT
The Holder shall have the right to convert this Warrant, in whole or in
part, at any time (including, but not limited to, the occurrence of an
Acquisition of the Company) and from time to time at or prior to the Expiration
Time by the payment of the Exercise Price (as hereinafter defined), and
surrender of this Warrant and the Notice of Conversion form attached hereto duly
executed to the principal executive office of the Company at the address set
forth on the signature page hereof (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
such Holder appearing on the books of the Company), into shares of Warrant Stock
as
-3-
<PAGE>
provided in this Section 3. Payment of the Exercise Price may be made by cash,
check or wire transfer or, at the election of the Warrantholder, may be made on
a "net exercise" basis, in which event the Company shall issue the Warrantholder
a number of shares of Common Stock computed using the formula set forth in
Section 2.
Upon conversion of this Warrant in accordance with this Section 3, the
Holder hereof shall be entitled to receive a certificate for the number of
shares of Warrant Stock determined in accordance with the foregoing, and a new
Warrant in substantially identical form and dated as of such conversion for the
purchase of that number of shares of Warrant Stock equal to the difference, if
any, between the number of shares of Warrant Stock subject hereto and the number
of shares of Warrant Stock as to which this Warrant is so converted.
4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP
Certificates for shares purchased hereunder or issuable upon conversion
hereof shall be delivered to the Holder promptly after the date on which this
Warrant shall have been exercised or converted in accordance with the terms
hereof. The Company hereby represents and warrants that all shares of Warrant
Stock which may be issued upon the exercise or conversion of this Warrant will,
upon such exercise or conversion, be duly and validly authorized and issued,
fully paid and nonassessable and free from all liens and encumbrances in respect
of the issuance thereof (other than liens or encumbrances created by or imposed
upon the Holder of the Warrant Stock). The Company agrees that the shares so
issued shall be and shall for all purposes be deemed to have been issued to such
Holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been exercised or converted in accordance
with the terms hereof. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise or conversion of this Warrant. With
respect to any fraction of a share called for upon the exercise or conversion of
this Warrant, an amount equal to such fraction multiplied by the Fair Market
Value of a share of Warrant Stock on the date of exercise or conversion shall be
paid in cash or check to the Holder.
5. CHARGES, TAXES AND EXPENSES
Issuance of certificates for shares of Warrant Stock upon the exercise or
conversion of this Warrant shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance of
such certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such name
or names as may be directed by the Holder provided, however, that in the event
certificates for shares of Warrant Stock are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise or conversion
shall be accompanied by the Assignment Form attached hereto duly executed by the
Holder.
6. RIGHTS AS SHAREHOLDERS
No Holder of this Warrant, as such, shall be entitled to vote upon any
matter submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or be deemed the holder of
-4-
<PAGE>
Common Stock until this Warrant shall have been exercised or converted in whole
or in part and the Warrant Stock purchasable upon such exercise shall have
become deliverable, as provided herein.
7. COMPANY'S RIGHT OF FIRST REFUSAL PRIOR TO WARRANT EXERCISE
Before the Warrant may be sold or otherwise transferred by the Holder or
any transferee (including transfer by gift or operation of law), the Company or
its assignee(s) shall have a right of first refusal to purchase the Warrant on
the terms and conditions set forth in this Section 7 (the "Right of First
Refusal").
(a) Notice of Proposed Transfer. The Holder shall deliver to the
---------------------------
Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer the Warrant;
(ii) the name of the proposed purchaser or other transferee
("Proposed Transferee"); and (iii) the bona fide cash price or
other consideration for which the Holder proposes to transfer the
Warrant (the "Offered Price"), and the Holder shall offer the
Warrant at the Offered Price to the Company or its assignee(s),
provided that any such assignee is a securityholder of the
Company.
(b) Exercise of Right of First Refusal. At any time within 20 days
----------------------------------
after receipt of the Notice, the Company or its assignee(s) may,
by giving written notice to the Holder, elect to purchase the
Warrant proposed to be transferred to the Proposed Transferee, at
the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Warrant purchased by the Company or its assignee(s) under this
Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined in good faith by the
Board of Directors of the Company.
(d) Payment. Payment of the Purchase Price shall be made in cash (by
-------
check) within 15 days of the Company's written notice to the
Holder pursuant to Section 7(b).
(e) Holder's Right to Transfer. If the Warrant proposed in the Notice
--------------------------
to be transferred to a given Proposed Transferee is not purchased
by the Company or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Warrant to
that Proposed Transferee at the Offered Price or at a higher
price, provided that such sale or other transfer is consummated
within 90 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 7 shall
continue to apply to the Warrant in the hands of such Proposed
Transferee. If the Warrant described in the Notice is not
transferred to the Proposed Transferee
-5-
<PAGE>
within such period, a new Notice shall be given to the Company,
and the Company or its assignees shall again be offered the Right
of First Refusal before the Warrant held by the Holder may be sold
or otherwise transferred.
(f) Exception for Certain Transfers. The Warrant may be transferred
-------------------------------
without the Company being offered the Right of First Refusal in
the following transactions; provided that any Transferee shall
agree to the terms of this Section 7 as to the Warrant:
(1) A Holder's transfer of the Warrant in whole or in part to the
Company or to any shareholder of the Company.
(2) A Holder's transfer of the Warrant in whole or in part to a
person who, at the time of such transfer, is an officer or
director of the Company.
(3) A Holder's transfer of the Warrant in whole or in part
pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital
reorganization of the corporate shareholder, or pursuant to a
sale of all or substantially all of the stock or assets of a
corporate shareholder.
(4) A transfer by a Holder which is a limited or general
partnership to any or all of its partners or former partners
or any professional employee (or entity of which such
employees are the beneficiaries) of such partnership.
(5) A transfer by a Holder which is a corporation to any parent
company of the Holder, or any majority-owned subsidiary of
such parent company, provided that any such transferee does
not derive a majority of its revenues from products or
services that compete directly with products or services from
which the Company derives a majority of its revenues.
(6) Any transfer by a Holder which is a limited liability company
to any or all of its members or former members or any
professional employee (or entity of which such employees are
the beneficiaries) of such limited liability company.
Any such transfer shall be made upon surrender of this Warrant together
with the Assignment Form attached hereto properly endorsed.
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate (i) as to any Warrant Stock acquired upon the
exercise or conversion of the Warrant in whole or in part, on the
effective date of such exercise or conversion and (ii) as to any
portion of the Warrant not previously exercised or converted, on
the date 180 days after the date of the final prospectus (the
"Final Prospectus")
-6-
<PAGE>
contained in a registration statement filed with and declared
effective by the Securities and Exchange Commission under the
Securities Act relating to the initial public offering by the
Company of its capital stock.
8. MARKET STAND-OFF AGREEMENT
The Holder hereby agrees in connection with any registration of the
Company's securities (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), upon request of the
Company or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, pledge (or otherwise
encumber or hypothecate), grant any option for the purchase of, or otherwise
directly or indirectly dispose of any shares or other securities of the Company
(other than those included in the registration) without the prior written
consent of the Company and such managing underwriters for such period of time,
not to exceed 180 days following the date of the Final Prospectus, as the Board
of Directors establishes pursuant to its good faith negotiations with such
managing underwriters; provided, however, that the Holder shall not be subject
to such market stand-off unless the officers and directors of the Company who
own stock of the Company shall also be bound by such restrictions. The Company
may impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.
9. EXCHANGE AND REGISTRY OF WARRANT
This Warrant is exchangeable, upon the surrender hereof by the Holder at
the above-mentioned office or agency of the Company, for a new Warrant in
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the registered Holder of this Warrant. This Warrant may be
surrendered for exchange, transfer, exercise or conversion, in accordance with
its terms, at such office or agency of the Company, and the Company shall be
entitled to rely in all respects, prior to written notice to the contrary, upon
such registry.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
On receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and in
case of any such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a
new warrant in substantially identical form, dated as of such cancellation and
reissuance.
11. SATURDAYS, SUNDAYS AND HOLIDAYS
If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall be a Saturday or a Sunday or shall
be a legal holiday, then such action may be taken or such right may be exercised
on the next succeeding business day.
-7-
<PAGE>
12. ADJUSTMENTS
The type and number of securities of the Company issuable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as set forth
below:
(a) If the Company shall at any time declare a dividend payable in
shares of Common Stock, then the Warrantholder, upon exercise of
this Warrant after the record date for the determination of
holders of Common Stock entitled to receive such dividend, shall
be entitled to receive upon exercise of this Warrant, in addition
to the number of shares of Common Stock as to which this Warrant
is exercised, such additional shares of Common Stock as such
holder would have received had this Warrant been exercised
immediately prior to such record date.
(b) If the Company shall at any time effect a recapitalization or
reclassification of such character that the shares of Common Stock
shall be changed into or become exchangeable for a larger or
smaller number of shares, then upon the effective date thereof the
number of shares of Common Stock which the Warrantholder shall be
entitled to purchase upon exercise of this Warrant shall be
increased or decreased, as the case may be, in direct proportion
to the increase or decrease in the number of shares of Common
Stock by reason of such recapitalization or reclassification, and
the Exercise Price shall be, in the case of an increase in the
number of shares, proportionately decreased and, in the case of a
decrease in the number of shares, proportionately increased.
(c) If the Company shall at any time distribute to holders of Common
Stock cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of
earned surplus) then, in any such case, the Warrantholder shall be
entitled to receive, upon exercise of this Warrant, with respect
to each share of Common Stock issuable upon such exercise, the
amount of cash or evidences of indebtedness or other securities or
assets which such holder would have been entitled to receive with
respect to each such share of Common Stock as a result of the
happening of such event had this Warrant been exercised
immediately prior to the record date or other date fixing
stockholders to be affected by such event.
(d) If at any time on or after the date hereof the Company shall
subdivide its outstanding shares of Common Stock into a greater
number of shares, the Warrant Price in effect immediately prior to
such subdivision shall thereby be proportionately reduced and the
number of shares receivable upon exercise of the Warrant shall
thereby be proportionately increased; and, conversely, if at any
time on or after the date hereof the outstanding number of shares
of Common Stock shall be combined into a smaller number of shares,
the Warrant Price in effect immediately prior to such combination
shall thereby be proportionately increased
-8-
<PAGE>
and the number of shares receivable upon exercise of the Warrant
shall thereby be proportionately decreased.
(e) As used in this Warrant the term "Exercise Price" shall mean the
purchase price per share specified in this Warrant until the
occurrence of an event stated in subsections (b) or (d) of this
Section 12 and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said
subsections. No adjustment made pursuant to any provision of this
Section 12 shall have the effect of increasing the total
consideration payable upon exercise of this Warrant in respect of
all the Common Stock as to which this Warrant may be exercised.
(f) In the event that at any time, as a result of an adjustment made
pursuant to this Section 12, the Warrantholder shall, upon
exercise of this Warrant, become entitled to receive shares and/or
other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common
Stock shall be deemed to refer to and include such shares and/or
other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to
adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 12.
(g) In case of any adjustment in the Exercise Price or number and type
of securities issuable on the exercise of this Warrant, the
Company will promptly give written notice thereof to the Holder in
the form of a certificate, confirmed by an officer of the Company,
setting forth such adjustment and showing in reasonable detail the
facts upon which adjustment is based.
13. NOTICES OF RECORD DATE, ETC.
In the event of:
(a) any taking by the Company of a record of the holders of Warrant
Stock or securities into which the Warrant Stock is convertible
for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution,
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, or any
transfer of all or substantially all the assets of the Company to,
or consolidation or merger of, the Company with or into any
person,
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
-9-
<PAGE>
(d) a sale of substantially all of the outstanding capital stock of
the Company or the issuance of new shares representing the
majority of the Company's right to vote, or
(e) the consummation of any Qualified IPO of the Company's Common
Stock,
then and in each such event the Company will mail to the Holder a notice
specifying the record date for voting or the date of closing , as applicable, of
any event (a)-(e) above. Such notice shall be delivered to the Holder at least
fifteen (15) days prior to the actual or proposed date of consummation of the
relevant event.
14. REPRESENTATIONS AND WARRANTIES
The Company hereby represents, warrants and agrees that:
(a) during the period this Warrant is outstanding, the Company will
reserve from its authorized and unissued Warrant Stock a
sufficient number of shares to provide for the issuance of Warrant
Stock upon the exercise or conversion of this Warrant;
(b) during the period this Warrant or the Warrant Stock issuable
hereunder is outstanding, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of shares
to provide for the issuance of Common Stock upon conversion of the
Warrant Stock issuable upon exercise or conversion of this
Warrant;
(c) the issuance of this Warrant shall constitute full authority to
the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates
for the shares of Warrant Stock issuable upon exercise or
conversion of this Warrant;
(d) the Company has all requisite legal and corporate power to execute
and deliver this Warrant, to sell and issue the Warrant Stock
hereunder, to issue the Common Stock issuable upon conversion of
the Warrant Stock and to carry out and perform its obligations
under the terms of this Warrant; and
(e) all corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery
and performance of this Warrant by the Company, the authorization,
sale, issuance and delivery of the Warrant Stock and the Common
Stock issuable upon conversion of the Warrant Stock, the grant of
registration rights as provided herein and the performance of the
Company's obligations hereunder has been taken;
-10-
<PAGE>
(f) upon conversion, the Warrant Stock, when issued in compliance with
the provisions of this Warrant and the Company's Amended and
Restated Articles of Incorporation, will be validly issued, fully
paid and nonassessable, and free of any liens or encumbrances, and
will be issued in compliance with all applicable federal and state
securities laws; and
(g) upon conversion, the Warrant Stock will not be subject to any
preemptive rights, rights of first refusal or similar rights.
15. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the State of California.
[Remainder of Page Intentionally Left Blank.]
-11-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer.
Dated: __________, 1997. POINTCAST INCORPORATED
Signature: ___________________________________________
Name: ___________________________________________
Title: ___________________________________________
Address: ___________________________________________
___________________________________________
-12-
<PAGE>
NOTICE OF EXERCISE
To: PointCast Incorporated
(1) The undersigned hereby elects to purchase __________ shares of Common
Stock of PointCast Incorporated pursuant to the terms of the attached Warrant,
and tenders herewith payment of the Exercise Price in accordance therewith.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
_____________________________________
(Name)
_____________________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
________________ Signature: ____________________________________________
(Date)
Name: ____________________________________________
Title: ____________________________________________
Address: ____________________________________________
____________________________________________
-13-
<PAGE>
NOTICE OF CONVERSION
To: PointCast Incorporated
(1) The undersigned hereby elects to convert that portion of the attached
Warrant representing the right to purchase ________ shares of Common Stock into
such number of shares of Common Stock of PointCast Incorporated as is determined
pursuant to Section 3 of such Warrant, which conversion shall be effected
pursuant to the terms of the attached Warrant.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
_____________________________________
(Name)
_____________________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
________________ Signature: ____________________________________________
(Date)
Name: ____________________________________________
Title: ____________________________________________
Address: ____________________________________________
____________________________________________
-14-
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, _______________________________ ("Transferor") hereby
sells, assigns and transfers unto _________________________________
("Transferee") the right to purchase Shares represented by the foregoing
Warrant to the extent of ___________ shares of Common Stock and does hereby
irrevocably constitute and appoint _____________________________, attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises. Transferee agrees to be bound by all of the terms and conditions
of this Warrant (in proportion to its rights under the Warrant vis-a-vis
Transferor or any other transferee of rights under this Warrant) as though it
were a party to the Warrant in the place of Transferor.
Dated: _______________ TRANSFEROR
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Address: ________________________________
________________________________
TRANSFEREE
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Address: ________________________________
________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be medallion guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
-15-
<PAGE>
EXHIBIT 10.24
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD,
DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
(i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF
COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii)
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION
TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
NO. 1 POINTCAST INCORPORATED DECEMBER 10, 1996
--- -----------
SERIES D PREFERRED STOCK PURCHASE WARRANT
This certifies that, for value received, Cable News Network, Inc. (together
with any registered assignee(s), the "Holder") is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time on or after the
date hereof and at or prior to 11:59 p.m. on the Expiration Date (as defined
below), but not thereafter, to acquire from PointCast Incorporated, a California
corporation (the "Company"), in whole or from time to time in part, and in
accordance with the provisions of Section 1 below, up to 526,316 fully paid and
nonassessable shares of Series D Preferred Stock of the Company ("Warrant
Stock") at a purchase price equal to $9.50 per share (the "Exercise Price").
Such number of shares, type of security and Exercise Price are subject to
adjustment as provided herein, and all references to "Warrant Stock" and
"Exercise Price" herein shall be deemed to include any such adjustment or series
of adjustments.
1. TERM
(a) Termination and Expiration. If not earlier exercised, the Warrant
--------------------------
shall expire on the date (the "Expiration Date") that is the earlier of (i) 18
months after the effective date of an initial public offering by the Company of
its capital stock with aggregate gross proceeds to the Company of not less than
$20,000,000 and with a price per share of not less than $9.50 (a "Qualified
IPO") and (ii) 36 months after the date first set forth above.
(b) Exceptions. Notwithstanding the foregoing, the Warrant shall
----------
terminate, if not earlier exercised, in the event of an acquisition of the
Company. In the event the Company is proposed to be acquired in a bona fide
transaction (the "Acquisition") (i.e., not a mere recapitalization,
reincorporation for the purpose of changing corporate domicile, or similar
transaction), regardless of the form of the transaction (e.g., merger,
consolidation, sale or lease of assets or sale of stock), the Company shall give
the Holder not less than (i) fifteen (15) business days' notice of the record
date for determining the shareholders of the Company entitled to vote on (or
otherwise approve) the
<PAGE>
Acquisition or (ii) 60 calendar days' notice of the effective date of the
Acquisition, whichever is longer; the Company shall provide the Holder with all
information with respect to the Acquisition that is otherwise provided to
shareholders of the Company at such time and from time to time during the
pendency of the Acquisition, including (but not limited to) the proposed price
to be paid in the proposed Acquisition; the Holder shall have the right to
exercise same on or prior to the record date of shareholders eligible to vote
(or otherwise approve) with respect to the proposed Acquisition; if the Warrant
is not exercised on or prior to such record date, the Warrant shall expire upon
the occurrence of the closing of the Acquisition.
2. EXERCISE OF WARRANT
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the headquarters office
of the Company at the address set forth on the signature page hereof (or such
other office or agency of the Company as it may designate by notice in writing
to the registered holder hereof at the address of such holder appearing on the
books of the Company), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Company or by cancellation of indebtedness of the Company to the holder hereof,
if any, at the time of exercise in an amount equal to the purchase price of the
shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Company a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased, and a new
Warrant in substantially identical form and dated as of such exercise for the
purchase of that number of shares of Warrant Stock equal to the difference, if
any, between the number of shares of Warrant Stock subject hereto and the number
of shares of Warrant Stock as to which this Warrant is so exercised.
3. CONVERSION OF WARRANT
The Holder shall have the right to convert this Warrant, in whole or in
part, at any time (including, but not limited to, the occurrence of an
Acquisition of the Company) and from time to time at or prior to the Expiration
Time by the surrender of this Warrant and the Notice of Conversion form attached
hereto duly executed to the headquarters office of the Company at the address
set forth on the signature page hereof (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
such Holder appearing on the books of the Company), into shares of Warrant Stock
as provided in this Section 3. Upon exercise of this conversion right, the
Holder shall be entitled to receive that number of shares of the Company's
Preferred Stock computed by using the following formula:
X(A-B)
y = --------
A
-2-
<PAGE>
Y = the number of shares of Series D Preferred Stock to be issued to the
Holder.
A = the Fair Market Value (as defined below) of one share of the
Company's Series D Preferred Stock on the date of conversion of this
Warrant.
B = the Exercise Price for one share of the Company's Series D Preferred
Stock under this Warrant.
X = the number of shares of Series D Preferred Stock purchasable under
this Warrant.
If the above calculation results in a negative number, then no shares of
Warrant Stock shall be issued or issuable upon conversion of this Warrant.
"Fair Market Value" of a share of Series D Preferred Stock shall mean:
(a) if the conversion right is being exercised in connection with the
initial public offering (the "IPO") of the Company's Common Stock
(the "Common Stock"), the IPO price per share (before deducting
commissions, discounts or expenses) at which the Common Stock is
sold to the public in the IPO, multiplied by the number of shares
of Common Stock into which a share of Series D Preferred Stock is
convertible at the time of the exercise of the conversion right
(the "Conversion Rate").
(b) if the conversion right is being exercised in connection with an
Acquisition, the price per share to be paid to holders of the
Company's Series D Preferred Stock by the acquiring entity; or,
if no such price per share has been established, the price per
share to be paid to the holders of the Company's Common Stock
multiplied by the Conversion Rate.
(c) if the conversion right is being exercised after the IPO (other
than in connection with an Acquisition) the average of the
closing prices for the Company's Common Stock for the ten (10)
trading days prior to the date the Company receives the Warrant
and duly executed Notice of Conversion, multiplied by the
Conversion Rate.
(d) in all other cases, the fair value as determined in good faith by
the Company's Board of Directors.
Upon conversion of this Warrant in accordance with this Section 3, the
Holder hereof shall be entitled to receive a certificate for the number of
shares of Warrant Stock determined in accordance
-3-
<PAGE>
with the foregoing, and a new Warrant in substantially identical form and dated
as of such conversion for the purchase of that number of shares of Warrant Stock
equal to the difference, if any, between the number of shares of Warrant Stock
subject hereto and the number of shares of Warrant Stock as to which this
Warrant is so converted.
4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP
Certificates for shares purchased hereunder or issuable upon conversion
hereof shall be delivered to the Holder within a reasonable time after the date
on which this Warrant shall have been exercised or converted in accordance with
the terms hereof. The Company hereby represents and warrants that all shares of
Warrant Stock which may be issued upon the exercise or conversion of this
Warrant will, upon such exercise or conversion, be duly and validly authorized
and issued, fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issuance thereof (other than liens or charges created
by or imposed upon the holder of the Warrant Stock). The Company agrees that
the shares so issued shall be and shall for all purposes be deemed to have been
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised or
converted in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise or conversion
of this Warrant. With respect to any fraction of a share called for upon the
exercise or conversion of this Warrant, an amount equal to such fraction
multiplied by the Fair Market Value of a share of Warrant Stock on the date of
exercise or conversion shall be paid in cash or check to the Holder.
5. CHARGES, TAXES AND EXPENSES
Issuance of certificates for shares of Warrant Stock upon the exercise or
conversion of this Warrant shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance of
such certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such name
or names as may be directed by the Holder provided, however, that in the event
certificates for shares of Warrant Stock are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise or conversion
shall be accompanied by the Assignment Form attached hereto duly executed by the
Holder.
6. RIGHTS AS SHAREHOLDERS
The Holder shall not, solely as such, be entitled to vote upon any matter
submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to be deemed the holder of Series D Preferred Stock until this
Warrant shall have been exercised or converted in whole or in part and the
Warrant Stock purchasable upon such exercise shall have become deliverable, as
provided herein. Thereafter, upon the Holder's signing of the Investor Rights
Agreement (as hereinafter defined), the Holder shall have the rights and
responsibilities of an Investor under the Amended and Restated Investor Rights
Agreement (the "Investor Rights Agreement"), dated as of July 19, 1996, by
-4-
<PAGE>
and among the Company, the persons set forth on the Schedule of Investors
attached thereto as Exhibit A, Lighthouse Capital Partners, L.P. and certain
officers of the Company, with each share of Warrant Stock being deemed
equivalent to one share of Registrable Securities or Shares, as the case may be,
under such Investor Rights Agreement.
7. COMPANY'S RIGHT OF FIRST REFUSAL
Before any Warrants, or if exercised, any shares of Series D Preferred
Stock or Common Stock (the "Converted Shares") held by the Holder or any
transferee may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder shall deliver to the
---------------------------
Company a written notice (the "Notice") stating: (i) the Holder's bona fide
intention to sell or otherwise transfer such Warrants or Converted Shares, as
the case may be; (ii) the name of each proposed purchaser or other transferee
("Proposed Transferee"); (iii) the number of Warrants or Converted Shares to be
transferred to each Proposed Transferee; and (iv) the bona fide cash price or
other consideration for which the Holder proposes to transfer the Warrants or
the Converted Shares (the "Offered Price"), and the Holder shall offer the
Warrants or the Converted Shares at the Offered Price to the Company or its
assignee(s).
(b) Exercise of Right of First Refusal. At any time within 30 days
----------------------------------
after receipt of the Notice, the Company or its assignee(s) may, by giving
written notice to the Holder, elect to purchase all, but not less than all, of
the Warrants or Converted Shares proposed to be transferred to any one or more
of the Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Warrants or Converted Shares purchased by the Company or its assignee(s) under
this Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board of Directors of the Company in
good faith.
(d) Payment. Payment of the Purchase Price shall be made in cash (by
-------
check) within 45 days of receipt of the Notice.
(e) Holder's Right to Transfer. If all of the Warrants or Converted
--------------------------
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Warrants or Converted Shares
to that Proposed Transferee at the Offered Price or at a higher price, provided
that such sale or other transfer is consummated within 120 days after the date
of the Notice and provided further that any such sale or other transfer is
effected in accordance with
-5-
<PAGE>
any applicable securities laws and the Proposed Transferee agrees in writing
that the provisions of this Section shall continue to apply to the Warrants or
Converted Shares in the hands of such Proposed Transferee. If the Warrants or
Converted Shares described in the Notice are not transferred to the Proposed
Transferee within such period, a new Notice shall be given to the Company, and
the Company or its assignees shall again be offered the Right of First Refusal
before any Warrants or Converted Shares held by the Holder may be sold or
otherwise transferred.
(f) Exception for Certain Transfers. The Warrant or Converted Shares
-------------------------------
may be transferred without the Company being offered the Right of First Refusal
in the following transactions; provided that any Transferee shall agree to the
terms of this Section 7 as to the Warrant or any Converted Shares:
(1) A Holder's transfer of the Warrant or Converted Shares
in whole or in part to the Company or to any shareholder of the Company.
(2) A Holder's transfer of the Warrant or Converted Shares
in whole or in part to a person who, at the time of such transfer, is an officer
or director of the Company.
(3) A Holder's transfer of the Warrant or Converted Shares
in whole or in part pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital reorganization of the
corporate shareholder, or pursuant to a sale of all or substantially all of the
stock or assets of a corporate shareholder.
(4) A transfer by a Holder which is a limited or general
partnership to any or all of its partners or former partners or any professional
employee (or entity of which such employees are the beneficiaries) of such
partnership.
(5) A transfer by a Holder to any entity who (i) at the date
hereof or at the date of the proposed transfer is, or has the power to become
through the exercise or conversion of securities, an affiliate, as such term is
defined in Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act"), of a Holder, and (ii) does not derive a substantial portion
of its revenues from products or services that compete with products or services
from which the Company derives a substantial portion of its revenues.
Any such transfer shall be made upon surrender of this Warrant or Converted
Shares together with the Assignment Form attached hereto properly endorsed.
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate as to any Shares 90 days after the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act.
-6-
<PAGE>
8. MARKET STAND-OFF AGREEMENT
The Holder hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any shares of the Company under the Securities Act, the Holder shall
not sell or otherwise transfer any shares or other securities of the Company
during the 180-day period following the date of the final Prospectus contained
in a registration statement of the Company filed under the Securities Act;
provided, however, that such restriction shall only apply to the first
registration statement of the Company to become effective under the Securities
Act which includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.
9. EXCHANGE AND REGISTRY OF WARRANT
This Warrant is exchangeable, upon the surrender hereof by the Holder at
the above-mentioned office or agency of the Company, for a new Warrant in
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the registered holder of this Warrant. This Warrant may be
surrendered for exchange, transfer, exercise or conversion, in accordance with
its terms, at such office or agency of the Company, and the Company shall be
entitled to rely in all respects, prior to written notice to the contrary, upon
such registry.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
On receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and in
case of any such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a
new warrant in substantially identical form, dated as of such cancellation and
reissuance.
11. SATURDAYS, SUNDAYS AND HOLIDAYS
If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall be a Saturday or a Sunday or shall
be a legal holiday, then such action may be taken or such right may be exercised
on the next succeeding business day.
12. ADJUSTMENT TO NUMBER AND TYPE OF SECURITIES, EXERCISE PRICE
The type and number of securities of the Company issuable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as set forth
below:
-7-
<PAGE>
(a) Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
----------------------------------------------------------------
Automatic Conversion, etc. The Exercise Price and the number and type of
- --------------------------
securities or other property issuable upon exercise of this Warrant shall be
appropriately and proportionately adjusted to reflect any stock dividend, stock
split, combination of shares, reclassification, recapitalization, automatic
conversion, redemption or other similar event affecting the number or character
of outstanding shares of Warrant Stock, other than an adjustment to the
conversion price of the Warrant Stock pursuant to the antidilution provisions
set forth in the Company's Articles, so that the number and type of securities
or other property issuable upon exercise of this Warrant shall be equal to that
which would have been issuable with respect to the number of shares of Warrant
Stock subject hereto at the time of such event, had such shares of Warrant Stock
then been outstanding.
(b) Certificate as to Adjustments. In case of any adjustment in the
-----------------------------
Exercise Price or number and type of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the Holder in
the form of a certificate, certified and confirmed by an officer of the Company,
setting forth such adjustment and showing in reasonable detail the facts upon
which adjustment is based.
13. NOTICES OF RECORD DATE, ETC.
In the event of:
(1) any taking by the Company of a record of the holders of Warrant
Stock or securities into which the Warrant Stock is convertible for the purpose
of determining the holders thereof who are entitled to receive any dividend or
other distribution,
(2) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, or any transfer of all or
substantially all the assets of the Company to, or consolidation or merger of,
the Company with or into any person,
(3) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
(4) a sale of substantially all of the outstanding capital stock of
the Company or the issuance of new shares representing the majority of the
Company's right to vote, or
(5) the initial public offering of the Company's Common Stock,
then and in each such event the Company will mail to the Holder a notice
specifying the record date for voting or the date of closing, as applicable, of
any event (a)-(e) above. Such notice shall be delivered to the Holder at least
fifteen (15) days prior to the date of the relevant event.
14. REPRESENTATIONS AND WARRANTIES
-8-
<PAGE>
The Company hereby represents and warrants to the Holder that:
(a) during the period this Warrant is outstanding, the Company will
reserve from its authorized and unissued Warrant Stock a sufficient number of
shares to provide for the issuance of Warrant Stock upon the exercise or
conversion of this Warrant;
(b) during the period this Warrant or the Warrant Stock issuable
hereunder is outstanding, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon conversion of the Warrant Stock issuable upon exercise or
conversion of this Warrant;
(c) the issuance of this Warrant shall constitute full authority to
the Company's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares of
Warrant Stock issuable upon exercise or conversion of this Warrant;
(d) the Company has all requisite legal and corporate power to execute
and deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the Common Stock issuable upon conversion of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(e) all corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Company, the authorization, sale, issuance
and delivery of the Warrant Stock and the Common Stock issuable upon conversion
of the Warrant Stock, the grant of registration rights as provided herein and
the performance of the Company's obligations hereunder has been taken;
(f) the Warrant Stock and the Common Stock issuable upon conversion of
the Warrant Stock, when issued in compliance with the provisions of this Warrant
and the Articles, will be validly issued, fully paid and nonassessable, and free
of any liens or encumbrances, and will be issued in compliance with all
applicable federal and state securities laws; and
(g) the issuance of the Warrant Stock and the Common Stock issuable
upon conversion of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
[This space left blank intentionally]
-9-
<PAGE>
15. GOVERNING LAW
This Warrant shall be governed by and construed in accordance with the laws
of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer.
Dated: December 10, 1996. POINTCAST INCORPORATED
/s/ Christopher Hassett
-----------------------------------------
By: Christopher Hassett
-----------------------------------------
Title: CEO
----------------------------------------
Address: 10101 N. DeAnza Blvd.
---------------------------------------
Cupertino, CA 95014
---------------------------------------
-10-
<PAGE>
NOTICE OF EXERCISE
To: PointCast Incorporated
(1) The undersigned hereby elects to purchase __________ shares of Series D
Preferred Stock of PointCast Incorporated pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
________________________________________
(Name)
________________________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
____________________ ________________________________________
(Date)
<PAGE>
NOTICE OF CONVERSION
To: PointCast Incorporated
(1) The undersigned hereby elects to convert that portion of the attached
Warrant representing the right to purchase ________ shares of Series D Preferred
Stock into such number of shares of Series D Preferred Stock of PointCast
Incorporated as is determined pursuant to Section 3 of such Warrant, which
conversion shall be effected pursuant to the terms of the attached Warrant.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
____________________________________________
(Name)
____________________________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
_________________ ____________________________________________
(Date)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
____________________________________________________________________________
(Please Print)
whose address is ___________________________________________________________
(Please Print)
Dated: ________________________________________________________________
Holder's Signature: ___________________________________________________
Holder's Address: _____________________________________________________
Guaranteed Signature: ______________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE>
Exhibit 10.25
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD,
DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
(i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF
COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii)
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION
TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
NO. 2 POINTCAST INCORPORATED DECEMBER 10, 1996
-------- -----------
SERIES D PREFERRED STOCK PURCHASE WARRANT
This certifies that, for value received, Time Inc. New Media (together with
any registered assignee(s), the "Holder") is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time on or after the
date hereof and at or prior to 11:59 p.m. on the Expiration Date (as defined
below), but not thereafter, to acquire from PointCast Incorporated, a California
corporation (the "Company"), in whole or from time to time in part, up to
526,316 fully paid and nonassessable shares of Series D Preferred Stock of the
Company ("Warrant Stock") at a purchase price equal to $9.50 per share (the
"Exercise Price"). Such number of shares, type of security and Exercise Price
are subject to adjustment as provided herein, and all references to "Warrant
Stock" and "Exercise Price" herein shall be deemed to include any such
adjustment or series of adjustments.
1. TERM
1.1 Termination and Expiration. If not earlier exercised, the
--------------------------
Warrant shall expire on the date (the "Expiration Date") that is the earlier of
(i) eighteen (18) months after the effective date of the registration statement
for an initial public offering by the Company of its capital stock with
aggregate gross proceeds to the Company of not less than $20,000,000 and with a
price per share of not less than $9.50 (a "Qualified IPO") and (ii) 60 months
after the date first set forth above.
1.2 Exceptions. Notwithstanding the foregoing, in the event the
----------
Company is proposed to be acquired in a bona fide transaction (i.e., not a mere
recapitalization, reincorporation for the purpose of changing corporate
domicile, or similar transaction) (the "Acquisition"), regardless of the form of
the transaction (e.g., merger, consolidation, sale or lease of assets or sale of
stock), the Company shall give the Holder not less than fifteen (15) business
days notice of the record date for determining the shareholders of the Company
entitled to vote on (or otherwise approve) the Acquisition; the Company shall
provide the Holder with all information with respect to the Acquisition that is
otherwise provided to shareholders of the Company at such time and from time to
time during the pendency of the Acquisition, including (but not limited to) the
proposed price to be paid in the proposed Acquisition; the Holder shall have the
right to exercise same on or prior to the record date of shareholders eligible
to vote (or otherwise approve) with respect to the proposed Acquisition; if the
Warrant is not exercised on or prior to such record date, the Warrant shall
expire upon the occurrence of the closing of the Acquisition.
<PAGE>
2. EXERCISE OF WARRANT
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the headquarters office
of the Company at the address set forth on the signature page hereof (or such
other office or agency of the Company as it may designate by notice in writing
to the registered holder hereof at the address of such holder appearing on the
books of the Company), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Company or by cancellation of indebtedness of the Company to the holder hereof,
if any, at the time of exercise in an amount equal to the purchase price of the
shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Company a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased, and a new
Warrant in substantially identical form and dated as of such exercise for the
purchase of that number of shares of Warrant Stock equal to the difference, if
any, between the number of shares of Warrant Stock subject hereto and the number
of shares of Warrant Stock as to which this Warrant is so exercised.
3. CONVERSION OF WARRANT
The Holder shall have the right to convert this Warrant, in whole or in
part, at any time (including, but not limited to, the occurrence of an
Acquisition of the Company) and from time to time at or prior to the Expiration
Time by the surrender of this Warrant and the Notice of Conversion form attached
hereto duly executed to the headquarters office of the Company at the address
set forth on the signature page hereof (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
such Holder appearing on the books of the Company), into shares of Warrant Stock
as provided in this Section 3. Upon exercise of this conversion right, the
Holder shall be entitled to receive that number of shares of the Company's
Preferred Stock computed by using the following formula:
X(A-B)
Y = ------
A
Y = the number of shares of Series D Preferred Stock to be
issued to the Holder.
A = the Fair Market Value (as defined below) of one share of the
Company's Series D Preferred Stock on the date of conversion
of this Warrant.
B = the Exercise Price for one share of the Company's Series D
Preferred Stock under this Warrant.
X = the number of shares of Series D Preferred Stock that the
Holder desires to purchase pursuant to complete or partial
conversion of the Warrant.
If the above calculation results in a negative number, then no shares of
Warrant Stock shall be issued or issuable upon conversion of this Warrant.
"Fair Market Value" of a share of Series D Preferred Stock shall mean:
(a) if the conversion right is being exercised in connection with
the initial public offering (the "IPO") of the Company's
Common Stock (the "Common Stock"),
-2-
<PAGE>
the IPO price per share (before deducting commissions,
discounts or expenses) at which the Common Stock is sold to
the public in the IPO, multiplied by the number of shares of
Common Stock into which a share of Series D Preferred Stock
is convertible at the time of the exercise of the conversion
right (the "Conversion Rate").
(b) if the conversion right is being exercised in connection with
an Acquisition, the price per share to be paid to the holders
of the Company's Series D Preferred Stock by the acquiring
entity, or, if no such price per share has been established,
the price per share to be paid to the holders of the
Company's Common Stock multiplied by the Conversion Rate.
(c) if the conversion right is being exercised after the IPO
(other than in connection with an Acquisition), then (i) if
the Company's Common Stock is listed on a national securities
exchange, the average of last sale prices for the Company's
Common Stock for the fifteen (15) trading days prior to the
date the Company receives the Warrant and duly executed
Notice of Conversion (the "Notice Receipt Date"), multiplied
by the Conversion Rate, or (ii) if the Company's Common Stock
is listed on The Nasdaq Stock Market, the average of the
average bid and ask price for each of the fifteen (15)
trading days prior to the Notice Receipt Date, multiplied by
the Conversion Rate.
(d) in all other cases, the fair value as determined in good
faith by the Company's Board of Directors.
Upon conversion of this Warrant in accordance with this Section 3, the
Holder hereof shall be entitled to receive a certificate for the number of
shares of Warrant Stock determined in accordance with the foregoing, and a new
Warrant in substantially identical form and dated as of such conversion for the
purchase of that number of shares of Warrant Stock equal to the difference, if
any, between the number of shares of Warrant Stock subject hereto and the number
of shares of Warrant Stock as to which this Warrant is so converted.
4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP
Certificates for shares purchased hereunder or issuable upon conversion
hereof shall be delivered to the Holder promptly after the date on which this
Warrant shall have been exercised or converted in accordance with the terms
hereof. The Company hereby represents and warrants that all shares of Warrant
Stock which may be issued upon the exercise or conversion of this Warrant will,
upon such exercise or conversion, be duly and validly authorized and issued,
fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issuance thereof (other than liens or charges created by or
imposed upon the holder of the Warrant Stock). The Company agrees that the
shares so issued shall be and shall for all purposes be deemed to have been
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised or
converted in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise or conversion
of this Warrant. With respect to any fraction of a share called for upon the
exercise or conversion of this Warrant, an amount equal to such fraction
multiplied by the Fair Market Value of a share of Warrant Stock on the date of
exercise or conversion shall be paid in cash or check to the Holder.
-3-
<PAGE>
5. CHARGES, TAXES AND EXPENSES
Issuance of certificates for shares of Warrant Stock upon the exercise or
conversion of this Warrant shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance of
such certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such name
or names as may be directed by the Holder provided, however, that in the event
certificates for shares of Warrant Stock are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise or conversion
shall be accompanied by the Assignment Form attached hereto duly executed by the
Holder.
6. RIGHTS AS SHAREHOLDERS
No holder of this Warrant, as such, shall be entitled to vote upon any
matter submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or be deemed the holder of Series D Preferred Stock until this Warrant
shall have been exercised or converted in whole or in part and the Warrant Stock
purchasable upon such exercise shall have become deliverable, as provided
herein. Thereafter, the Holder thereof shall have the rights and
responsibilities of: (i) an Investor under the Amended and Restated Investor
Rights Agreement (the "Investor Rights Agreement"), dated as of July 19, 1996,
by and among the Company, the persons set forth on the Schedule of Investors
attached thereto as Exhibit A, Lighthouse Capital Partners, L.P. and certain
officers of the Company, with each share of Warrant Stock being deemed
equivalent to one share of Registrable Securities or Shares, as the case may be,
under such Investor Rights Agreement; and (ii) a Series D Purchaser under each
of (A) the Amended and Restated Investors' Co-Sale Agreement, dated as of July
19, 1996, by and among the Company, the purchasers of the Company's Series D
Preferred Stock, the holders of the Company's other series of Preferred Stock,
and certain officers of the Company and (B) the Amended and Restated Co-Sale
Agreement of even date therewith by and among the same parties (such agreements
being referred to collectively as the "Co-Sale Agreements"), with each share of
Warrant Stock being deemed equivalent to one share of Co-Sale Securities under
such Co-Sale Agreements; in each case of (i) and (ii), as if such Holder were a
signatory to each such agreement.
7. COMPANY'S RIGHT OF FIRST REFUSAL PRIOR TO WARRANT EXERCISE
Before the Warrant may be sold or otherwise transferred by the Holder or
any transferee (including transfer by gift or operation of law), the Company or
its assignee(s) shall have a right of first refusal to purchase the Warrant on
the terms and conditions set forth in this Section (the "Right of First
Refusal").
(a) Notice of Proposed Transfer. The Holder shall deliver to the
---------------------------
Company a written notice (the "Notice") stating: (i) the Holder's bona fide
intention to sell or otherwise transfer the Warrant; (ii) the name of the
proposed purchaser or other transferee ("Proposed Transferee"); and (iii) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Warrant (the "Offered Price"), and the Holder shall offer the
Warrant at the Offered Price to the Company or its assignee(s), provided that
any such assignee is a securityholder of the Company.
(b) Exercise of Right of First Refusal. At any time within 20 days
----------------------------------
after receipt of the Notice, the Company or its assignee(s) may, by giving
written notice to the Holder, elect to purchase the Warrant proposed to be
transferred to the Proposed Transferee, at the purchase price determined in
accordance with subsection (c) below.
-4-
<PAGE>
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Warrant purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made in cash (by
-------
check) within 30 days of receipt of the Notice.
(e) Holder's Right to Transfer. If the Warrant proposed in the Notice
--------------------------
to be transferred to a given Proposed Transferee is not purchased by the Company
or its assignee(s) as provided in this Section, then the Holder may sell or
otherwise transfer such Warrant to that Proposed Transferee at the Offered Price
or at a higher price, provided that such sale or other transfer is consummated
within 120 days after the date of the Notice and provided further that any such
sale or other transfer is effected in accordance with any applicable securities
laws and the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Warrant in the hands of such Proposed
Transferee. If the Warrant described in the Notice is not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company or its assignees shall again be offered the Right of
First Refusal before the Warrant held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Transfers. The Warrant may be transferred
-------------------------------
without the Company being offered the Right of First Refusal in the following
transactions; provided that any Transferee shall agree to the terms of this
Section 9 as to the Warrant:
(1) A Holder's transfer of the Warrant in whole or in part to
the Company or to any shareholder of the Company.
(2) A Holder's transfer of the Warrant in whole or in part to
a person who, at the time of such transfer, is an officer or director of the
Company.
(3) A Holder's transfer of the Warrant in whole or in part
pursuant to and in accordance with the terms of any merger, consolidation,
reclassification of shares or capital reorganization of the corporate
shareholder, or pursuant to a sale of all or substantially all of the stock or
assets of a corporate shareholder.
(4) A transfer by a Holder which is a limited or general
partnership to any or all of its partners or former partners or any professional
employee (or entity of which such employees are the beneficiaries) of such
partnership.
(5) A transfer by a Holder which is a corporation to any
parent company of the Holder, or any majority-owned subsidiary of such parent
company, provided that any such transferee does not derive a majority of its
revenues from products or services that compete directly with products or
services from which the Company derives a majority of its revenues.
Any such transfer shall be made upon surrender of this Warrant together
with the Assignment Form attached hereto properly endorsed.
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate (i) as to any Warrant Stock acquired upon the exercise or
conversion of the Warrant in whole or in part, on the effective
-5-
<PAGE>
date of such exercise or conversion and (ii) as to any portion of the Warrant
not previously exercised or converted, on the date 90 days after the date of the
final prospectus (the "Final Prospectus") contained in a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act") for the
initial public offering by the Company of its capital stock.
8. MARKET STAND-OFF AGREEMENT
The Holder hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any shares of the Company under the Securities Act, the Holder shall
not sell or otherwise transfer any shares or other securities of the Company
during the 180-day period following the date of the Final Prospectus; provided,
however, that such restriction shall only apply to the first registration
statement of the Company to become effective under the Securities Act which
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such 180-day period.
9. EXCHANGE AND REGISTRY OF WARRANT
This Warrant is exchangeable, upon the surrender hereof by the Holder at
the above-mentioned office or agency of the Company, for a new Warrant in
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the registered holder of this Warrant. This Warrant may be
surrendered for exchange, transfer, exercise or conversion, in accordance with
its terms, at such office or agency of the Company, and the Company shall be
entitled to rely in all respects, prior to written notice to the contrary, upon
such registry.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
On receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and in
case of any such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a
new warrant in substantially identical form, dated as of such cancellation and
reissuance.
11. SATURDAYS, SUNDAYS AND HOLIDAYS
If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall be a Saturday or a Sunday or shall
be a legal holiday, then such action may be taken or such right may be exercised
on the next succeeding business day.
12. ADJUSTMENT TO NUMBER AND TYPE OF SECURITIES, EXERCISE PRICE
The type and number of securities of the Company issuable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as set forth
below:
(a) Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
----------------------------------------------------------------
Automatic Conversion, etc. The Exercise Price and the number and type of
- --------------------------
securities or other property issuable upon exercise of this Warrant shall be
appropriately and proportionately adjusted to reflect any stock dividend, stock
split, combination
-6-
<PAGE>
of shares, reclassification, recapitalization, automatic conversion, redemption
or other similar event affecting the number or character of outstanding shares
of Warrant Stock, other than an adjustment to the conversion price of the
Warrant Stock pursuant to the antidilution provisions set forth in the Company's
Articles, so that the number and type of securities or other property issuable
upon exercise of this Warrant shall be equal to that which would have been
issuable with respect to the number of shares of Warrant Stock subject hereto at
the time of such event, had such shares of Warrant Stock then been outstanding.
(b) Certificate as to Adjustments. In case of any adjustment in the
-----------------------------
Exercise Price or number and type of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the Holder in
the form of a certificate, certified and confirmed by an officer of the Company,
setting forth such adjustment and showing in reasonable detail the facts upon
which adjustment is based.
13. NOTICES OF RECORD DATE, ETC.
In the event of:
(a) any taking by the Company of a record of the holders of Warrant
Stock or securities into which the Warrant Stock is convertible for the purpose
of determining the holders thereof who are entitled to receive any dividend or
other distribution,
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, or any transfer of all or
substantially all the assets of the Company to, or consolidation or merger of,
the Company with or into any person,
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
(d) a sale of substantially all of the outstanding capital stock of
the Company or the issuance of new shares representing the majority of the
Company's right to vote, or
(e) the initial public offering of the Company's Common Stock,
then and in each such event the Company will mail to the Holder a notice
specifying the record date for voting or the date of closing , as applicable, of
any event (a)-(e) above. Such notice shall be delivered to the Holder at least
fifteen (15) days prior to the date of the relevant event.
14. REPRESENTATIONS AND WARRANTIES
The Company hereby represents, warrants and agrees that:
(a) during the period this Warrant is outstanding, the Company will
reserve from its authorized and unissued Warrant Stock a sufficient number of
shares to provide for the issuance of Warrant Stock upon the exercise or
conversion of this Warrant;
(b) during the period this Warrant or the Warrant Stock issuable
hereunder is outstanding, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon conversion of the Warrant Stock issuable upon exercise or
conversion of this Warrant;
-7-
<PAGE>
(c) the issuance of this Warrant shall constitute full authority to
the Company's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares of
Warrant Stock issuable upon exercise or conversion of this Warrant;
(d) the Company has all requisite legal and corporate power to execute
and deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the Common Stock issuable upon conversion of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(e) all corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Company, the authorization, sale, issuance
and delivery of the Warrant Stock and the Common Stock issuable upon conversion
of the Warrant Stock, the grant of registration rights as provided herein and
the performance of the Company's obligations hereunder has been taken;
(f) the Warrant Stock and the Common Stock issuable upon conversion of
the Warrant Stock, when issued in compliance with the provisions of this Warrant
and the Articles, will be validly issued, fully paid and nonassessable, and free
of any liens or encumbrances, and will be issued in compliance with all
applicable federal and state securities laws; and
(g) the issuance of the Warrant Stock and the Common Stock issuable
upon conversion of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
[This space left blank intentionally]
-8-
<PAGE>
15. GOVERNING LAW
This Warrant shall be governed by and construed in accordance with the laws
of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer.
Dated: December 10, 1996. POINTCAST INCORPORATED
Signature: /s/ Christopher Hassett
-----------------------------
Name: Christopher Hassett
-----------------------------
Title: CEO
-----------------------------
Address: 10101 N. DeAnza Blvd.
-----------------------------
Cupertino, CA 95014
-----------------------------
-9-
<PAGE>
NOTICE OF EXERCISE
To: PointCast Incorporated
(1) The undersigned hereby elects to purchase __________ shares of Series D
Preferred Stock of PointCast Incorporated pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
______________________________
(Name)
______________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
_______________________ ____________________________
(Date)
<PAGE>
NOTICE OF CONVERSION
To: PointCast Incorporated
(1) The undersigned hereby elects to convert that portion of the attached
Warrant representing the right to purchase ________ shares of Series D Preferred
Stock into such number of shares of Series D Preferred Stock of PointCast
Incorporated as is determined pursuant to Section 3 of such Warrant, which
conversion shall be effected pursuant to the terms of the attached Warrant.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
______________________________
(Name)
______________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, except in
compliance with applicable federal and state securities laws.
_________________________ ______________________________
(Date)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________________________________
(Please Print)
whose address is_______________________________________________________
(Please Print)
Dated: ___________________________________________
Holder's Signature: ______________________________
Holder's Address: ______________________________
______________________________
Guaranteed Signature: _________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE>
Exhibit 10.26
LOAN & SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT entered into as of the 18th day of November,
1997 by and between MetLife Capital Corporation, a Delaware corporation, whose
address is 10900 NE 4th Street, Suite 500, Bellevue, WA 98004 ("Lender") and
PointCast Incorporated, a California corporation, whose address is 501 Marcara
Avenue, Sunnyvale, CA 94086 ("Borrower").
WHEREAS, Lender has agreed to make a commercial loan or loans to Borrower:
and
WHEREAS, as a condition to making the loans, and in order to secure the
repayment thereof, Lender has required Borrower to execute and deliver to Lender
this Loan and Security Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower and Lender agree as follows:
1. CREATION OF SECURITY INTEREST. As security for the due and punctual
-----------------------------
payment of any and all of the present and future obligations of the borrower to
Lender under this Loan and Security Agreement and the other Loan Documents (as
defined below), whether direct or contingent or joint or several, Borrower
hereby conveys, assigns and grants to Lender a continuing security interest in
all of Borrower's rights, title and interests in and to the equipment described
in the Supplemental Security Agreement(s) entered into pursuant to this Loan and
Security Agreement from time to time ("Equipment") including all present and
future additions, attachments and accessories thereto, all substitutions
therefor and replacements thereof and all proceeds thereof, including all
proceeds of insurance (such Equipment and property hereinafter called
"Collateral").
2. THE LOANS.
---------
(a) Subject to the terms and conditions of this Loan and Security Agreement,
lender agrees to make a loan or loans to Borrower. The maximum principal amount
of any loan or loans to be made by Lender to Borrower shall be within Lender's
discretion, subject to the exercise of Lender's reasonable business judgment,
and shall be as stated in the loan commitment letter issued by lender to
Borrower, or in the event a commitment letter is not issued by Lender, in
Lender's internal credit approval (each such loan or loans shall be referred to
as "the Loan Amount").
(b) The Loan Amounts shall be repaid by Borrower as a term loan or term loans
("Term Loan"). The Term Loan shall be evidenced by a promissory note or notes in
the form attached hereto as Exhibit "A" ("Term Note"). The payment provisions of
each Term Note shall be stated therein.
(c) If requested by Borrower, and in accordance with the terms and conditions
of Section 3 hereof, Lender shall make interim fundings to Borrower of a Term
Loan as partial advances of the Loan Amount ("Interim Loans"). The interim Loans
shall either be for the payment of the acquisition cost of any items of
Equipment delivered and accepted by Borrower prior to the expiration date of
Lender's loan commitment to Borrower ("Commitment Expiration date") or to fund
progress payments to the vendor or manufacturer of the Equipment, if the making
of progress payments was agreed to by Lender in its commitment or approval to
make the loan or loans to Borrower. The Interim Loans shall be evidenced by
promissory notes in the form attached hereto as Exhibit "B" ("interim Note").
Interest on all Interim Loans shall be payable as provided therein. The
principal amount due under the Interim Loans shall be due as provided in the
Interim Notes, at which time, provided no Event of Default hereunder has
occurred and is continuing or event which with the passing of time or giving of
notice or both would become an Event of Default hereunder has occurred and is
continuing. Lender shall consolidate all Interim Loans and convert them to a
Term Loan evidenced by a Term Note or Notes. Whether or not a Term Loan is
evidenced by one or more Term Notes shall be agreed between Lender and Borrower,
or in the absence of such an agreement, as decided by Lender,
<PAGE>
in the exercise of its reasonable business judgment.
(d) In the event that the amount loan pursuant to the Interim Loans is less
than the Loan Amount, subject to Borrowers compliance with the terms and
conditions of this Loan and Security Agreement (including the satisfaction of
the conditions of borrowing set forth in Section 7 of this Loan and Security
Agreement including but not limited to providing Lender with a description of
the items of Equipment), Lender shall disburse to Borrower the balance of the
Loan Amount on the same date that the Interim Loans are converted into a term
loan.
3. METHOD FOR BORROWING ON INTERIM LOAN. Borrower shall give Lender at least
------------------------------------
five (5) business days written notice of a request for the disbursement of an
Interim Loan ("Request"), specifying the date on which the Interim Loan is to be
disbursed. Such Request shall be in the form attached hereto as Exhibit "C".
Such Request shall be accompanied by an original copy of the invoice or invoices
to be paid from the Interim Loan. Such Request shall constitute a representation
and warranty by the Borrower that (i) as of the date of the Request no Event of
Default or event which with the passing of time or the giving of notice or both
would constitute an Event of Default hereunder has occurred and is continuing
and (ii) in the event items of Equipment have been delivered to Borrower,
Borrower has unconditionally accepted the Equipment from the vendor thereof.
Subject to the conditions of this Loan and Security Agreement, Lender shall
disburse the Interim Loan to the invoicing party, or if Borrower shall have paid
the amount of such invoice, Lender shall reimburse Borrower, upon receipt of
proof of payment from Borrower.
4. CROSS COLLATERAL/CROSS DEFAULT. All Collateral shall secure the payment
------------------------------
and performance of all of Borrower's liabilities and obligations to Lender
hereunder and under any of the loan documents relating hereto including, but not
limited to all Interim Notes and all Term Notes (the Loan and Security
Agreement, the Interim Notes, the Term Notes, the Supplemental Security
Agreement(s) and all other loan documents relating hereto may be referred to
herein collectively as the Loan Documents"). Lender's security interest in the
Collateral shall not be terminated until and unless all of Borrower's
obligations to Lender under any of the Loan Documents are fully paid and
performed. The occurrence of an event of default under any other of the Loan
Documents shall be deemed to be an Event of Default hereunder and an Event of
Default hereunder shall be deemed to be an event of default under any other of
the Loan Documents.
Page 1 of 6
<PAGE>
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants as
------------------------------
follows:
(a) Power and Authorization. Borrower has the full power and (corporate)
authority to execute deliver and perform Borrower's obligations under the Loan
Documents. The execution and delivery of the Loan Documents have been authorized
by all requisite corporate (or partnership) action on the part of Borrower. The
execution, delivery and performance of the Loan Documents have not constituted
and will not constitute a breach, default or violation of or under Borrower's
articles of incorporation, by-laws (partnership agreement), or any other
agreement, indenture, contract, lease, law, order, decree judgment or injunction
to which Borrower is a party or may be bound and have not resulted and will not
result in the creation of any lien upon the Equipment pursuant to any agreement,
indenture, lease, contract or other instrument to which Borrower is a party,
except the lien created by this Loan and Security Agreement.
(b) Existence. If Borrower is a corporation, Borrower (i) is duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation, (ii) has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry out its business as now
conducted, and (iii) is duly qualified to transact business as now conducted,
and (iii) is duly qualified to transact business as a foreign corporation in
each jurisdiction where the Equipment will be located and in the jurisdiction
where its principal place of business is located. If Borrower is a partnership,
Borrower (i) has been duly formed as a (limited or general) partnership under
the laws of the state of its organization, (ii) is comprised of the general
partner(s) listed an the Schedule of Partners attached to this Loan and Security
Agreement, and (iii) is in good standing under the laws of the state of its
formation.
(c) Binding Effect. This Loan and Security Agreement constitutes the valid and
binding agreement of the Borrower; the Interim Notes and the Term Note, when
executed and delivered, will constitute the valid and binding obligations of the
Borrower, and the Loan Documents are enforceable in accordance with their terms
except as (i) the enforceability thereof may be limited by the bankruptcy laws,
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability,
(d) Litigation. There is no action, suit or proceeding pending against, or to
the knowledge of the Borrower, threatened against or affecting the Borrower,
before any court of arbitrator or any governmental body, agency or official
which has not been previously disclosed to the Lender in writing and in which
there is a reasonable possibility of an adverse decision which could materially
adversely affect the business, financial condition or results of operations of
the Borrower or which would in any manner draw into question the validity of any
of the Loan Documents.
(e) Filing of Tax Returns. The Borrower has filed all tax returns required to
have been filed and has paid all taxes shown to be due and payable on such
returns, including interest and penalties, and all other taxes which are payable
by it, to the extent the same have become due and payable. The Borrower knows of
no proposed tax assessment against it and all tax liabilities of the Borrower
are adequately provided for.
(f) Title. The Borrower has or shall have at the time it executes the Term
Note good and indefeasible title to the Collateral free and clear of all liens
other than the Lender's lien.
(g) Compliance with Law. The business and operations of the Borrower have been
and are being conducted in accordance with all applicable laws, rules and
regulations, other than violations which could not (either individually or
collectively) have a material adverse effect on the financial condition or
operations of the Borrower.
(h) Full Disclosure. All documents, records, instruments, certificates,
statements (including, but not by way of limitations financial statements of
Borrower) and information provided to Lender by Borrower in connection with this
Loan and Security Agreement are true and
<PAGE>
accurate in all material respects and do not contain any untrue statement, or
fail to contain any statement of a material fact necessary to make the
statements contained herein or therein not misleading. There is no fact known
to the Borrower that Borrower has not disclosed which could materially and
adversely affect the financial condition or operations of Borrower.
(i) Security Interest. The security interest granted to Lender hereunder is a
valid, first priority security interest in the Collateral and has been, or
Promptly after the execution of the Supplemental Security Agreement describing
the Collateral will be, perfected in accordance with the requirements of all
states in which any item of the Collateral is located.
(j) Personal Property. Under the laws of the state(s) in which the Collateral
is to be located, the Collateral is deemed to consist solely of personal
property.
(k) Pollution and Environmental Control. Borrower has obtained all permits,
licenses and other authorizations which are required under, and is in material
compliance with all federal, state, and local laws and regulations relating to
pollution, reclamation, or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or Toxic materials or wastes into air,
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Pollutants, contaminants or hazardous or toxic materials or wastes Borrower
shall maintain all such permits, licenses, and authorizations current.
6. COVENANTS. Borrower hereby agrees and covenants as follows:
---------
(a) Payment. Borrower shall pay the indebtedness secured hereby as provided
herein and in the Interim Notes and Term Notes.
(b) Location of Collateral. Borrower will keep the Collateral located at the
location or locations stated on the Supplemental Security Agreements provided,
however, that Borrower may change the location of the Collateral with Lender's
prior written consent.
(c) No Liens. Except for the security interest granted hereby or under any
other agreement under which Lender is the secured party whether as mortgagee,
beneficiary or otherwise, Borrower shall keep the Collateral free and clear of
any security interest, lien or encumbrance of any kind and Borrower shall no
sell, assign (by operation of law or otherwise) exchange or otherwise dispose of
any of the Collateral.
Page 2 of 6
<PAGE>
(d) Insurance. Borrower shall procure and continuously maintain and pay for
(a) all risk physical damage and property insurance covering loss or damage to
the equipment for not less than the full replacement value thereof naming Lender
as loss payee and (b) bodily injury and property damage combined single limit
liability insurance, all in such amounts and against such risks and hazards as
are reasonably required by Lender, with insurance companies and pursuant to
contracts or policies and with deductibles satisfactory to Lender. All contracts
and policies shall include provisions for the protection of Lender
notwithstanding any act or neglect of or breach or default by Borrower, shall
provide for payment of property insurance proceeds to Lender, shall provide that
they may not be modified, terminated or canceled unless Lender is given at least
thirty (30) days' advance written notice thereof, and shall provide that the
coverage is "primary coverage" for the protection of Borrower or Lender
notwithstanding any other coverage carried by Lender protecting against similar
risks. Borrower shall promptly notify any appropriate insurer and Lender of each
and every occurrence, which may become the basis of a claim or cause of action
against the insured and provide Lender with all data pertinent to such
occurrence. Borrower shall furnish Lender with certificates of such insurance or
copies of policies upon request and shall furnish Lender with renewal
certificates not less than thirty (30) days prior to the renewal date. Proceeds
of all property insurance are payable first to Lender to the extent of its
interest.
(e) Financing Statements. At the request of Lender, Borrower will join Lender
in executing one or more financing statements pursuant to the Uniform Commercial
Code and other documents deemed necessary by Lender under applicable law to
record or perfect its security interest in the Collateral, including
continuation statements, in form satisfactory to Lender and will pay the cost of
filing the same in all public offices wherever filing is deemed by Lender to be
necessary or desirable. Borrower hereby authorizes Lender, in such jurisdictions
where such action is authorized by law, to effect any such recordation or filing
of financing statements or other documents without Borrower's signature thereto.
(f) Change of Name or Address. Borrower will immediately notify Lender in
writing of any change in its place of business or the adoption or change of any
tradename or fictitious business name, and will upon request of Lender, execute
any additional financing statements or other similar documents necessary to
perfect or maintain its security interest.
(g) Use of Equipment, Maintenance. Borrower will cause the Equipment to be
used in a careful and proper manner, will comply with and conform to all
governmental laws, rules and regulations relating thereto, and will cause the
Equipment to be operated in accordance with the manufacturer's or supplier's
instructions or manuals and only by competent and duly qualified personnel.
Borrower will cause the Equipment to be kept and maintained in good repair,
condition and working order and will furnish all parts, replacements,
mechanisms, devices and servicing required therefor so that the value, condition
and operating efficiency thereof will at all times be maintained and preserved,
normal wear and tear excepted. All such repairs, parts, mechanisms, devices and
replacements shall immediately, without further act, become part of the
Equipment and subject to the security interest created by this Loan and Security
Agreement. Borrower will not make any improvement, change, addition or
alteration to the Equipment if such improvement, change, addition or alteration
will impair the originally intended function or use of the Equipment or impair
the value of the Equipment as it existed immediately prior to such improvement,
change, addition or alteration. Any part added to the Equipment in connection
with any improvement, change, addition or alteration shall immediately, without
further act, become part of the Equipment and subject to the security interest
created by this Loan and Security Agreement.
(h) Inspection. Lender may at any reasonable time or times inspect the
Equipment and may at any reasonable time or times inspect the books and
records of Borrower.
(i) Taxes. Borrower shall promptly pay, when due, all charges, fees,
assessments and taxes (excluding all taxes measured by Lender's income) which
may now or hereafter be imposed upon the ownership, leasing, possession,, sale
or use of the Collateral. Borrower may, in good-faith and by proper proceedings,
contest taxes and assessment for
<PAGE>
which Borrower has created an appropriate reserve in accordance with generally
accepted accounting principles consistently applied, so long as any such contest
does not result in a lien being imposed on any of the Collateral.
(j) Performance by Lender. If Borrower fails to perform any agreement or
obligation contained herein, Lender may itself perform, or cause the performance
of such agreement or obligation. Borrower will pay, or reimburse Lender, on
demand, for any and all fees, including attorneys' fees, costs and expenses of
whatever kind or nature incurred by Lender in connection with (i) the creation,
preservation and protection of Lender's security interest in the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, (ii)
payments or discharge of any taxes or liens upon or in respect of the
Collateral, (iii) premiums for insurance with respect to the Equipment and (iv)
this Loan and Security Agreement and with protecting, maintaining or preserving
the Collateral and Lender's interests therein, whether through judicial
proceedings or otherwise, or in connection with defending or prosecuting any
actions, suits or proceedings arising out of or related to the Loan and Security
Agreement and the Loan Documents or in connection with any debt restructuring,
loan workout negotiations or bankruptcy or insolvency case or proceedings. All
such amounts shall constitute obligations of Borrower secured by the Collateral.
In the event that Borrower fails to perform any of its agreements contained
herein, Borrower will, on demand, reimburse Lender for all such expenditures,
together with interest thereon from the date of such expenditure until fully
reimbursed at the rate of one percent (1%) per month on the outstanding balance
of such expenditures or the highest rate permitted by law, whichever is less.
(k) Power of Attorney. Borrower hereby irrevocably appoints Lender Borrower's
attorney-in-fact with full authority in the place and stead of Borrower and in
the name of Borrower or otherwise, from time to time in the Lenders discretion,
to take any action and to execute any instrument which Lender may deem necessary
or advisable to accomplish the purposes of this Loan and Security Agreement,
including, without limitation: (i) to obtain, compromise and adjust insurance
required to be paid to Lender; (ii) to ask, demand, collect, sue for, recover,
receive, and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral; (iii) to receive, endorse, and
collect any drafts or other instruments, documents, and chattel paper in
connection with clause (i) or (ii) above; and (iv) to file any claims or take
any action or institute any proceedings which Lender may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Lender with respect to any of the Collateral.
(l) No Duties. The powers conferred on Lender hereunder am solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys
Page 3 of 6
<PAGE>
actually received by it hereunder, Lender shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve right against
prior parties or any other rights pertaining to any Collateral.
(m) Financial Data. Borrower will furnish to Lender and will cause any
guarantor of Borrower's obligations to furnish to Lender on request (i) annual
balance sheet and profit and loss statements prepared in accordance with
generally accepted accounting principles and practice consistently applied and,
if Lender so requires, accompanied by the annual audit report of an Independent
certified public accountant reasonably acceptable to Lender, and (ii) all either
financial information and reports that Lender may from time to time reasonably
request including, if Lender so requires, income tax returns of Borrower and any
guarantor of Borrower's obligations hereunder.
7. CONDITIONS OF BORROWING. Lender shall not be obligated to make any loan
hereunder unless:
(a) The Interim Notes or Term Notes evidencing such loan shall have been duly
executed and delivered to Lender.
(b) Borrower shall have executed and delivered to Lender the Supplemental
Security Agreement describing the Collateral and stating except with respect to
progress payment fundings, the location thereof;
(c) Except with respect to progress payment fundings, Lender shall have
received evidence (as described in Section 6d hereof) that insurance has been
obtained in accordance with the provisions of this Loan and Security Agreement;
(d) Lender shall have received any and all third party consents, waivers or
releases deemed necessary or desirable by it in connection with the loan and the
Collateral being financed, including, without limitation, Uniform Commercial
Code lien releases and the consent and waiver, in form and substance
satisfactory to Lender, of each and every realty owner, landlord and mortgagee
holding an interest in or encumbrance on the real property where any of the
Collateral is to be located;
(e) All filings, recordings and other actions deemed necessary or desirable by
Lender in order to establish, protect, pro-serve and perfect its security
interest in the Collateral being financed by such loan as a valid perfected
first priority security interest shall have been duly effected, Including.
without limitation, the filing of financing statements and the recordation of
landlord (owners) and/or mortgages waivers or disclaimers, all in form and
substance satisfactory to Leader, and all fees, taxes and other charger relating
to such filings and recordings shall have been paid by Borrower;
(f) The representations and warranties contained in this Loan and Security
Agreement shall be true and correct in all respects on and as of the date of the
making of any loan hereunder with the same effect as if made on and as of such
date;
(g) In the sole judgment of Lender, there shall have been no material adverse
change in the financial condition, business or operations of Borrower from the
most recent date of any financial statement, credit report, business report or
similar document submitted to Lender for its review;
(h) All Loan Documents shall be satisfactory to Lender's attorneys; and
(i) Lender shall have received, in form and substance satisfactory to Lender,
such other documents as Lender shall require including, but not limited to, a
Request, proof of payment, vendor invoices and certificates of authority and
incumbency.
8. DEFAULT. The occurrence of any of the following events, following the
giving of any required notice and/or the expiration of any applicable period of
grace, shall constitute an event of default ("Event of Default") hereunder:
(a) Borrower's default in payment of any Installment of the principal of or
interest on any Interim Note or Term Note when and after the
<PAGE>
same shall become due and payable, whether at the due date thereof or by
acceleration or otherwise, which default shall continue unremedied for ton (10)
days after receipt by Borrower of written notice thereof; or
(b) The failure by Borrower to make payment of any other amount payable
hereunder or under any Interim Note or Term Note, and the continuance of such
failure for more than ten (10) days after written notice thereof by Lender to
Borrower; or
(c) The failure by Borrower to perform or observe any covenant, condition,
obligation or agreement to be performed or observed by it hereunder, which
failure shall continue unremedied for thirty (30) days after written notice
thereof by Lender to Borrower; or
(d) The occurrence of a default described in Section 4 hereof; or
(e) Any warranty, representation or statement made or furnished with respect to
the Borrower or the Collateral to Lender by or on behalf of Borrower, in
connection with this Loan and Security Agreement, or the indebtedness secured
hereby, shall prove to have been false in any adverse, material respect when
made or furnished; or
(f) Borrower shall become insolvent or bankrupt or make an assignment for the
benefit of creditors or consent to the appointment of a trustee or receiver; or
a trustee or a receiver shall be appointed for Borrower or for a substantial
part of its property without its consent and shall not be dismissed for a period
of sixty (60) days; or bankruptcy, reorganization, liquidation, insolvency or
dissolution proceedings shall be instituted by or against Borrower and, if
instituted against Borrower, shall be consented to or be pending and not
dismissed for a period of sixty (60) days; or any execution or writ of process
shall be issued under any action or proceeding against Borrower in such capacity
whereby any of the Collateral may be taken or restrained; Borrower shall cease
doing business as a going concern; or, without the prior written Consent of
Lender, Borrower shall sell, transfer or dispose of all or substantially all of
its assets or property (excluding, however, any transfer of cash or stock to
acquire a business, if such acquisition does not constitute an Event of Default
under Section 8(h) and any sole of all or substantially all of Borrower's assets
or property that does not constitute an Event of Default under section 8(i)); or
Page 4 of 6
<PAGE>
(g) The liquidation, consolidation, reorganization (excluding, however, any
acquisition by Borrower of a business for cash or stock, if such acquisition
does not constitute an Event of Default under Section 8(h) and any merger that
does not constitute an Event of Default under Section 8(i)), conversion to an
"S" status or dissolution, if Borrower is a corporation or partnership, of
Borrower, if in Lender's reasonable opinion, such act shall materially and
adversely affect Borrower's ability to perform under any of the Loan Documents:
or
(h) Without Lender's consent, Borrower (i) acquires another business for cash
in excess of (A) $5,000,000 prior to Borrower's initial pubic offering or (B)
$15,000,000 thereafter, or (ii) acquires another business for stock if such
acquisition would result in a material reduction of Borrower's tangible net
worth; or
(i) Without Lender's consent, which shall be given or withheld based on
Lender's good faith analysis of the credit quality of Borrower's successor and
shall not be unreasonably withheld, Borrower (1) sells all or substantially all
of its assets and, in conjunction therewith, assigns its obligations under this
Loan and Security Agreement without complying with Section 13 hereof, or (2)
merges with another entity; provided that, in the event Lender withholds such
consent, the Term Loans may be prepaid without penalty or premium; or
(j) Any item of Collateral is seized or levied on under legal or governmental
process or for any reason Lender deems itself insecure. Lender shall be entitled
to deem itself insecure when some event occurs, fails to occur or is threatened
or some objective condition exists or is threatened which significantly impairs
the prospects that any of Borrower's obligations to Lender will be paid when due
or which significantly impairs the value of the Collateral to Lender.
The occurrence of an Event of Default shall terminate any commitment or
obligation by Lender to make any of the loans contemplated by this Loan and
Security Agreement.
9. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default
---------------------
hereunder, Lender may, at its option, do any one or more of the following:
(a) Declare all obligations of Borrower to Lender to be immediately due and
payable, whereupon all unpaid principal of and interest on said indebtedness and
other amounts declared due and payable shall be and become immediately due and
payable;
(b) Take possession of all or any of the Collateral and exclude therefrom
Borrower and all others claiming under Borrower, and thereafter hold, store,
use, operate, manage, maintain and control, make repairs, replacements,
alterations, additions and improvements to and exercise all rights and powers of
Borrower in respect to the Collateral or any part thereof. In the event Lender
demands, or attempts to take possession of the Collateral in the exercise of any
rights under this Loan and Security Agreement, Borrower promises and agrees to
promptly turn over and deliver complete possession thereof to Lender;
(c) Require Borrower to assemble the Collateral, or any portion thereof, at a
place designated by Lender and reasonably convenient to both parties, and
promptly to deliver such Collateral to Lender, or an agent or representative
designated by it;
(d) Sell, lease or otherwise dispose of the Collateral at public or private
sale, without having the Collateral at the place of sale, and upon terms and in
such manner as Lender may determine (and Lender may be a purchaser at any sale);
and
(e) Exercise any remedies of a secured party under the Uniform Commercial Code
as adopted in the state where the Collateral is located or any other applicable
law.
Except as to portions of the Collateral which are perishable or threaten to
decline speedily in value or are of a type customarily sold on a recognized
market, Lender shall give Borrower at least ten (10) days' prior written notice
of the time and place of any public or private sale of the Collateral or other
intended disposition thereof to be
<PAGE>
made. Such notice may be mailed to Borrower at the address set forth in the
first paragraph of this Loan and Security Agreement. Borrower hereby
specifically agrees (to the extent that applicable law and public policy allows
it to effectively do so) that any public or private sale held in accordance with
the terms of this Loan and Security Agreement shall, for the purpose of the
Uniform Commercial Code as adopted in the state where the Collateral is located
and for all other purposes, be deemed to have been conducted in a commercially
reasonable manner and in good faith.
The proceeds of any sale under Section 9(d) shall be applied as follows:
(i) To the repayment of the costs and expenses of retaking, holding and
preparing for the sale and the selling of the Collateral (including legal
expenses and attorneys' fees) and the discharge of all assessments,
encumbrances, charges or liens, if any, on the Collateral prior to the lien
hereof (except any taxes. assessments, encumbrances, charges or liens subject to
which such sale shall have been made);
(ii) To the payment of the whole amount then due and unpaid of the
indebtedness of Borrower to Lender;
(iii) To the payment of other amounts then secured hereunder; and
(iv) The surplus, if any, shall be paid to the Borrower or to whomsoever
may be lawfully entitled to receive the same.
Lender shall have the right to enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to stop or
prevent Lender from pursuing any further remedy which it may have, and any
repossession or retaking or sale of the Collateral pursuant to the terms hereof
shall not operate to release Borrower until full payment of any deficiency has
been made in cast
10. LIMITATION ON INTEREST. It is the intent of the parties to this Loan and
----------------------
Security Agreement to contract in strict compliance with applicable usury laws
from time to time in effect. In furtherance thereof, the parties stipulate and
agree that none of the terms and provisions contained in the Loan Documents
shall ever be construed to create a contract to pay for the use, forbearance or
detention of money at a rate in excess of the maximum interest rate permitted to
be charged by applicable law from time to time in effect.
Page 5 of 6
<PAGE>
11. PERSONAL PROPERTY/TAGS. No item of Equipment will be attached or affixed
----------------------
to realty or any building without Lender's prior knowledge and written consent
and waiver of the landlord and the mortgagee, if any, of the real property. If
so requested by Lender, Borrower will affix tags supplied by Lender, reflecting
Lenders security interest in the Equipment.
12. LOSS AND DAMAGE. Borrower shall bear the risk of damage, loss, theft, or
---------------
destruction, partial or complete of the Equipment, whether or not such loss or
damage is covered by insurance, Lender agrees to apply toward payment of
obligations of Borrower insurance proceeds payable to Lender by reason of such
damage, loss, theft, or destruction. In the event of any damage, loss, theft,
or destruction, partial or complete, of any item of Equipment, Borrower shall
promptly notify Lender in writing and at the option of Lender (a) repair or
restore the Equipment to good condition and working order, or (b) replace the
Equipment with similar equipment in good repair, condition and working order, or
(c) pay Lender, in cash, an amount equal to the unamortized equipment cost for
the item or if the Equipment was not purchased with the loan proceeds, the pro
rata portion of the outstanding principal balance due under the Interim Note or
Term Note, as the case may be, and all other amounts relating to that item of
Equipment then due and owing hereunder, and upon payment of that amount,
Lender's lien shall be terminated with respect to that item of Equipment only,
and Lender will release its interest in that item of Equipment.
13. ASSIGNMENT. Without Lender's consent, which shall be given or withheld
----------
based on Lender's good faith analysis of the credit quality of Borrower's
assignee and shall not be unreasonably withheld, Borrower may not assign or
transfer any rights under this Loan and Security Agreement or to the Collateral.
14. INDEMNIFICATION. Borrower shall indemnify and hold harmless Lender from
---------------
and against any and all claims, losses, liabilities, causes of action, costs and
expenses (including the fees of Lender's attorneys) ("Claims") in any way
relating to or arising out of this Loan and Security Agreement, the other Loan
Documents or the Collateral, except for any Claims resulting solely and directly
from Lender's gross negligence or willful misconduct.
15. NOTICES. Whenever Borrower or Lender shall desire to give or serve any
-------
notice, demand, request or other communication with respect to this Loan and
Security Agreement, each such notice, demand, request or communication shall be
in writing and shall be effective only if the same is physically delivered or is
by certified mail, postage prepaid, return receipt requested, or by overnight
courier, postage prepaid. mailed to the parties at the addresses set forth in
the first paragraph of this Loan and Security Agreement, with a copy to Lender's
Vice President of Credit. Any party hereto may change its address for such
notices by delivering or mailing to the other parties hereto, as aforesaid, a
notice of such change.
16. NO WAIVER BY LENDER. By exercising or failing to exercise any of its
-------------------
rights, options or elections hereunder, lender shall not be deemed to have
waived any breach or default on the part of Borrower or to have released
Borrower from any of the obligations secured hereby, unless such waiver or
release is in writing and is signed by Lender. In addition, the waiver by Lender
of any breach hereof for default in payment of an indebtedness secured hereby
shall not be deemed to constitute a waiver of any succeeding breach or default.
17. FURTHER AGREEMENTS. From time to time, Borrower will execute such further
------------------
instruments as Lender may reasonably require, in order to protect, preserve, and
maintain the security interest granted hereby.
<PAGE>
18. BINDING UPON SUCCESSORS. All agreements, covenants, conditions and
-----------------------
provisions of this Loan and Security Agreement shall apply to and bind the
successors and assigns of all parties hereto.
19. GOVERNING LAWS. This Loan and Security Agreement shall be governed by the
--------------
laws of the State of Washington.
20. AMENDMENT. This Loan and Security Agreement can be modified or rescinded
---------
only by a writing expressly referring to this Loan and Security Agreement,
signed by both of the parties hereto.
21. INVALIDITY OF PROVISIONS. Every provision of this Loan and Security
------------------------
Agreement is intended to be severable. In the event that any term or provision
hereof is declared by a court to be illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the balance of the
terms and provisions hereof, which terms and provisions shall remain binding and
enforceable, then to the extent possible all of the other provisions shall
nonetheless remain in full force and effect.
IN WITNESS WHEREOF: Borrower and Lender have duly executed this Loan and
Security Agreement the day and year first above written.
Lender: MetLife Capital Corporation Borrower: PointCast Incorporated
By: /s/ Mitch Stevens By: /s/ Philip J. Koen
(Print Name): Mitch Stevens (Print Name): Philip J. Koen
Title: Vice President Title: Snr VP & CFO
Social Security Number
(If Borrower is an individual)
FEIN:
<PAGE>
CERTIFICATE OF
CORPORATE RESOLUTION
The undersigned, being the Secretary _________ of PointCast Incorporated
("Company"), a corporation duly organized and validly existing under the laws of
the State of California, hereby certifies that the following resolution was duly
adopted in accordance with the articles of incorporation and bylaws of the
Company at a meeting of the Board of Directors of the Company held on November
18, 1997 and that the same has not been modified or rescinded and is in full
force and effect:
"RESOLVED that it is in the best interests of the Company to borrow in the
name of the Company from METLIFE CAPITAL CORPORATION ("MetLife"), and further
resolved that any one [1] of the following named officers of the, Company
is(are) authorized to pledge or mortgage for and on behalf of the Company such
personal or real property as this Company may now own or hereafter purchase or
in which it may now have or hereafter acquire any interest, to secure the
payment of any loans or other indebtedness or liability to MetLife and to
execute, on behalf of the Company, a loan and security agreement and any addenda
or amendments thereto, any promissory notes, and any other related instruments
and documents that MetLife may require in the course of its dealings with the
Company, in such form and substance as are deemed to be appropriate by such
officer(s), such determination to be conclusively evidenced by such officer(s)
execution thereof.
<TABLE>
<CAPTION>
Names Titles Signatures
(Print or Type) (Print or Type)
<S> <C> <C>
Philip Koen Chief Financial Officer /s/ Philip J. Koen
Jacklyn A. Karceski Controller /s/ Jacklyn A. Karceski
</TABLE>
"Resolved further that this resolution is intended to and does confer upon
the above named officers a general authority to deal with MetLife on behalf and
in the name of the Company, and this resolution shall apply to all transactions
of the Company with MetLife without specifically enumerating them herein. Any
and all actions taken by any officer of the Company in connection herewith prior
to the date of this resolution are hereby ratified, approved and confirmed in
all respects. This resolution shall continue in full force and effect until
notice in writing of its revocation shall be given to and received by MetLife."
The undersigned further certifies that the signatures appearing opposite
the names of the officers in the foregoing resolution the signatures of such
individuals and that such individuals hold the offices indicated above.
IN WITNESS WHEREOF the undersigned has executed this certificate and
affixed the corporate set of the Company thereto this 18th day of November, 1997
(Corporate Seal) /s/ Philip J. Koen
Secretary
<PAGE>
No. 89.001 TERM PROMISSORY NOTE
3,346,590.16 November 18, 1997
FOR VALUED RECEIVED, the undersigned PointCast Incorporated, ("Maker"),
promises to pay to the order of MetLife Capital Corporation, ("Payee"), at its
office at P.O. Box C-97550, Bellevue, Washington 98009, the principal sum of
Three Million Three Hundred Forty-Six Thousand Five Hundred Ninety and 16/100
($3,346,590.16) Dollars together with interest on unpaid principal from the date
of disbursement of such principal amount until payment in full at a rate of Nine
and 70/100 percent (9.70%) per annum ("Rate") computed on the basis of a 360 day
year of twelve consecutive thirty day months. Interest hereunder shall be paid
on the unpaid principal, together with principal, in Thirty-Six (36)
installments of One Hundred Six Thousand Six Hundred Fifty-Two and 20/100
($106,652.20) commencing on November 21, 1997 and monthly thereafter until
October 21, 2000, on which date the entire balance of principal and interest
unpaid shall be due and payable. It is agreed that each installment, when paid,
shall be applied by the holder hereof, first so much as shall be required to the
payment of interest accrued as specified hereto, and the balance thereof to the
repayment of the principal sum.
The Rate expressed above will be adjusted at Loan Closing in accordance
with the following formula: The interest rate shall be fixed at 399 basis
points (3.99%) over the then weekly average yield of Two (2) year U.S. Treasury
Constant Maturities as published in the Federal Reserve Statistical Release H.
15[519].
Except as may be otherwise expressly provided herein, this Note may not be
prepaid in whole or in part, except with the prior written consent of Payee.
Maker shall have the privilege of prepaying all (but not part) of the then
outstanding balance under this Note on September 21, 1999 or on any installment
due date thereafter, subject to giving thirty (30) days prior written notice to
Payee specifying the date of prepayment and further subject to payment of a
prepayment premium equal to the amount, if any, required to offset the adverse
impact to Payee of any decline in interest rates. The prepayment premium is
determined by (i) calculating the decrease, expressed in basis points (but not
less than zero) in the current weekly average yield for Two (2)-year U.S.
Treasury Constant Maturities as published in Federal Reserve Statistical Release
-----------------------------------
15(519) (the
"Index") from the weekly average yield of 5.71% as of November 21, 1997 to the
Friday (or, if Friday is not a business day, the last business day) of the week
immediately preceding the prepayment date (ii) dividing the difference by 100,
(iii) multiplying the result by the applicable "Premium Factor" set forth below,
and (iv) multiplying the product by the principal to be prepaid. Any prepayment
shall be applied first to the prepayment premium, if any, next to accrued
interest and late charges (if any), and thereafter to the principal when
outstanding. The Premium Factor shall be the amount shown on the following
chart for the month in which prepayment occurs.
<TABLE>
<CAPTION>
NUMBER OF MONTHS REMAINING (YEARS) PREMIUM FACTOR
<S> <C> <C>
18 - 13 (2) .010
12 - 1 (1) .005
</TABLE>
In the event the Federal Reserve Board ceases to publish Statistical Release H
15(519), then the decrease in Two (2)-Year U.S. Treasury Constant Maturities
will be determined from another source designated by Payee.
If Maker shall have given to Payee notice of Makers intention to so prepay,
Maker Shall not then be entitled to withdraw such notice, and the indebtedness
proposed to be prepaid in such notice together with the aforesaid prepayment
fee, if applicable, shall be due and payable upon the date specified for such
prepayment in such notice. Upon the occurrence of an Event of Default and
acceleration of payment of indebtedness evidenced hereby during a period open to
prepayment, Maker shall pay to Payee, in addition to any and all other sums due
and payable hereunder, as liquidated damages for the loss of Payee's investment
and not as a penalty, an amount equal to the prepayment fee which would have
been payable hereunder in such date of acceleration in the event of a
<PAGE>
voluntary prepayment. Maker and Payee agree that the foregoing amounts do not
constitute penalties but rather constitute reasonable calculations of the
investment loss that would be sustained by Payee in the event of such
prepayment.
It is specifically understood and agreed by Maker that, in the event of a
default under this Note or under any instrument securing the Note, a tender of
payment of the unpaid principal and accrued interest then outstanding shall be
deemed a prepayment, and, accordingly, said tender must include the premium
herein above required, or if said tender is made prior to the time this
privilege is operative, then said tender must include a premium equal to six (6)
months' interest at the Rate computed on the principal amount so tendered. It
is further understood and agreed by Maker that Payee shall not be obligated to
accept said tender, and said tender shall for all purposes be deemed ineffectual
and deficient, unless said tender shall include the premium herein above
required.
In the event that Payee does not receive any payment on the date due, Maker
will pay Payee a late charge of five percent (5%) of the payment outstanding
together with the payment and, provided said sum is received within ten (10)
days of the date due, Payee agrees not to demand immediate payment of the whole
sum of principal and interest as otherwise permitted herein.
If, from any circumstances whatsoever, payment of any obligation due under
this Note at the time such performance shall be due shall involve exceeding the
maximum amount currently prescribed by any applicable usury statute or any other
applicable law, then such obligation shall be reduced to such maximum amount, so
that in no event shall any payment be possible under this Note, or under any
other instrument evidencing or securing the indebtedness evidenced hereby, that
is in excess of such maximum amount.
In the event that an Event of Default shall occur under the Loan and
Security Agreement (as hereinafter defined) or any other instrument now or
hereafter securing repayment hereof, following any required notice and/or the
expiration of any applicable period of grace, then, and in such event, the
principal indebtedness evidenced hereby, and any other sums advanced hereunder,
together with all unpaid interest accrued thereon, shall, at the option of
Payee, at once become due and payable and may be collected forthwith, regardless
of the stipulated date of maturity. TIME IS OF THE ESSENCE WITH RESPECT TO THIS
NOTE. Interest shall accrue on the outstanding principal for so long as such
default continues, regardless of whether or not there has been an acceleration
of the indebtedness evidenced hereby as set forth herein, at the rate equal to
the lesser of fifteen percent (15%) per annum or the maximum rate allowable
under law. All such interest shall be paid at the time of and as a condition
precedent to the curing of any such default should Payee, at its sole option,
allow such default to be cured. In the event this Note, or any part thereof, is
collected by or through an attorney-at-law, Maker agrees to pay all costs of
collection including, but not limited to, reasonable attorneys' fees, whether or
not suit is filed.
<PAGE>
This Note is one of the notes referred to in and is Secured by the Loan and
Security Agreement dated November 18, 1997 between Maker and Payee. The terms of
the Loan and Security Agreement are incorporated herein by reference.
Maker waives any right of exemption and waives presentment, protest and
demand and notice of protest, demand and of dishonor and nonpayment of this
Note, and consents that any holder hereof shall have the right, without notice,
to grant any extension or extensions of time for payment of this Note or any
part thereof or any other indulgences or forbearances whatsoever, or may release
any of the security for this Note without in any way affecting the liability of
any other party for the payment of this Note.
The due payment and performance of Maker's obligations hereunder shall be
without regard to any counterclaim, right of offset or any other counterclaim
whatsoever which Maker may have against Payee and without regard to any other
obligations of any nature whatsoever which Payee may have to Maker, and no such
counterclaim or offset shall be asserted by Maker in any action, suit or
proceeding instituted by Payee for payment of Maker's obligations hereunder.
This Note and the Loan and Security Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.
Maker acknowledges that there is no presumption that the value of the
property securing this Note is equal to the face amount of the Note, and that a
deficiency judgment may be necessary In proceedings taken for enforcement
hereof.
No amendment to this Note shall be binding upon Payee unless it is in
writing and duly signed by Payee.
IN WITNESS WHEREOF, the Maker has caused these presents to be duly signed
the date first above written.
Borrower: PointCast Incorporated
By: /s/Philip J. Koen
Witness: (Print Name) Philip J. Koen
Title: Snr VP & CFO
<PAGE>
Exhibit 10.27
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
OBLIGOR # NOTE# AGREEMENT DATE
August 4,1997
CREDIT LIMIT INTEREST RATE OFFICER NO./INITIALS
$5,000,000 B + 0.00% 487O3 Mary Beth Suhr
8.50%
THIS AGREEMENT is entered into on August 4, 1997, between Comerica Bank-
California ("Bank") as secured party, whose Headquarter Office is 333 West Santa
Clara Street, San Jose, California and Pointcast Incorporated ("Borrower"), a
California corporation whose sole place of business (if it has only one), chief
executive office (if it has more than one place of business) or residence (if an
individual) is located at 501 Macara Avenue, Sunnyvale, California.
The parties agree as follows:
1. DEFINITIONS.
-----------
1.1 "Agreement" as used in this Agreement means and includes this
Revolving Credit Loan & Security Agreement (Accounts and Inventory), any
concurrent or subsequent rider to this Revolving Credit Loan & Security
Agreement (Accounts and Inventory) and any extensions, supplements, amendments
or modifications to this Revolving Credit Loan & Security Agreement (Accounts
and Inventory) and to any such rider.
1.2 "Bank Expenses" as used in this Agreement means and includes: all
reasonable costs or expenses required to be paid by Borrower under this
Agreement which are paid or advanced by Bank; taxes and insurance premiums of
every nature and kind of Borrower paid by Bank; filing, recording, publication
and search fees, appraiser fees, auditor fees and costs, and title insurance
premiums paid or incurred by Bank in connection with Bank's transactions with
Borrower; costs and expenses incurred by Bank in collecting the Receivables
(with or without suit) to correct any default or enforce any provision of this
Agreement, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, disposing of, preparing for sale and/or advertising
to sell the Collateral, whether or not a sale is consummated; costs and expenses
of suit incurred by Bank in enforcing or defending this Agreement or any portion
hereof, including, but not limited to, expenses incurred by Bank in attempting
to obtain relief from any stay, restraining order, injunction or similar process
which prohibits Bank from exercising any of its rights or remedies; and
reasonable attorneys' fees and expenses incurred by Bank in advising,
structuring, drafting, reviewing, amending, terminating, enforcing, defending or
concerning this Agreement, or any portion hereof or any agreement related
hereto, whether or not suit is brought. Bank Expenses shall include Bank's in-
house legal charges at reasonable rates.
1.3 "Base Rate" as used in this Agreement means that variable rate of
interest so announced by Bank at its headquarters office in San Jose, California
as its "Base Rate" from time to time and which serves as a basis upon which
effective rates of interest are calculated for those loans making reference
thereto.
1
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
1.4 "Borrower's Books" as used in this Agreement means and includes all of
the Borrower's books and records including but not limited to: minute books;
ledgers; records indicating, summarizing or evidencing Borrower's assets,
liabilities, Receivables, business operations or financial conditions, and all
information relating thereto, computer programs; computer disk or tape files;
computer printouts; computer runs; and other computer prepared information and
equipment of any kind.
1.5 "Borrowing Base" as used in this Agreement means the greater of (i)
$2,000,000, or (ii) the sum of (1) eighty percent (80%) of the net amount of
Eligible Accounts after deducting therefrom all payments, adjustments and
credits applicable thereto ("Accounts Receivable Borrowing Base"); and (2) the
amount, if any, of the advances against Inventory agreed to be made pursuant to
any Inventory Rider ("Inventory Borrowing Base"), or other, rider, amendment or
modification to this Agreement, that may now or hereafter be entered into by
Bank and Borrower.
1.6 "Cash Flow" as used in this Agreement means, for any applicable period
of determination, the Net Income (after deduction for income taxes and other
taxes of such person determined by reference to income or profits of such
person) for such period, plus, to the extent deducted in computation of such Net
Income, the amount of depreciation and amortization expenses and the amount of
deferred tax liability during such period, all as determined in accordance with
GAAP.
1.7 "Collateral" as used in this Agreement means and includes each and all
of the following: the Receivables; the Intangibles; the negotiable collateral,
the Inventory; all money, deposit accounts and all other assets of Borrower in
which Bank receives a security interest or which hereafter come into the
possession, custody or control of Bank; and the proceeds of any of the
foregoing, including, but not limited to, proceeds of insurance covering the
collateral and any and all Receivables, Intangibles, negotiable collateral,
Inventory, equipment, money, deposit accounts or other tangible and intangible
property of borrower resulting from the sale or other disposition of the
collateral, and the proceeds thereof. Notwithstanding anything to the contrary
contained herein, collateral shall not include (i) any waste or other materials
which have been or may be designated as toxic or hazardous by Bank (ii) any
equipment or other fixed assets of the Borrower leased from or financed by third
parties to the extent the contracts evidencing such lease or financing prohibit
the granting by Borrower of any security interest therein, provided such
equipment shall automatically be included in the Collateral upon the termination
of such contracts or the consent to such security interest by such third party.
Notwithstanding the foregoing, the term "Collateral" shall not include any
general intangibles or rights under licenses or other contracts of Borrower
(whether owned or held as licensee or lessee, or otherwise) to the extent that
(i) such general intangibles or rights under licenses or other contracts are not
assignable or capable of being encumbered as a matter of law or under the terms
of the license, lease or other agreement applicable thereto (but solely to the
extent that such restriction shall be enforceable under applicable law) without
the consent of the licensor or lessor thereof or other applicable party thereto
and (ii) such consent has not been obtained: provided, however, that the
foregoing grant of security interest shall extend to, and the term "Collateral"
shall include, (A) any general intangible which is an account or a proceed of,
or otherwise related to the
2
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
enforcement or collection of, any account or goods which are the subject of any
account, and (B) any and all proceeds of any general intangibles which are
otherwise excluded to the extent that the assignment or encumbrance of such
proceeds is not so restricted, and (C) upon obtaining the consent of any such
licensor, lessor or other applicable party with respect to any such otherwise
excluded general intangibles, such general intangibles as well as any and all
proceeds thereof that might theretofore have been excluded from such grant of a
security interest and the term "Collateral".
1.8 "Credit" as used in this Agreement means all Obligations, except those
obligations arising pursuant to any other separate contract, instrument, note,
or other separate agreement which, by its terms, provides for a specified
interest rate and term.
1.9 "Current Assets" as used in this Agreement means, as of any applicable
date of determination, all cash, non-affiliated customer receivables, United
States government securities, claims against the United States government, and
inventories.
1.10 "Current Liabilities" as used in this Agreement means, as of any
applicable date of determination (i) all liabilities of a person that should be
classified as current in accordance with GAAP, including without limitation any
portion of the principal of the Indebtedness classified as current, plus (ii) to
the extent not otherwise included, all liabilities of the Borrower to any of its
affiliates whether or not classified as current in accordance with
GAAP.
1.11 "Daily Balance" as used in this Agreement means the amount determined
by taking the amount of the Credit owed at the beginning of a given day, adding
any new Credit advanced or incurred on such date, and subtracting any payments
or collections which are deemed to be paid and are applied by Bank in reduction
of the Credit on that date under the provisions of this Agreement.
1.12 "Eligible Accounts" as used in this Agreement means and includes those
accounts of Borrower which are due an payable within thirty (30) days, or less,
from the date of invoice, have been validly assigned to Bank and strictly comply
with all of Borrower's warranties and representations to Bank; but Eligible
Accounts shall not include the following: (a) accounts with respect to which the
account debtor is an officer, employee, partner, or joint venturer of Borrower;
(b) accounts with respect to which goods are placed on consignment, guaranteed
sale or other terms by reason of which the payment by the account debtor may be
conditional; (c) accounts with respect to which the account debtor is not a
resident of the United States; (d) accounts with respect to which the account
debtor is the United States or any department, agency or instrumentality of the
United States; (e) accounts with respect to which the account debtor is any
State of the United States or any city, county, town municipality or division
thereof, (f) accounts with respect to which the account debtor is a subsidiary
of, related to, affiliated or has common shareholders, officers or directors
with Borrower; (g) accounts with respect to which Borrower is or may become
liable to the account debtor for goods sold or services rendered by the account
debtor to Borrower; (h) accounts not paid by an account debtor within one
hundred twenty (120) days from the date of the invoice; (i) accounts with
respect to which account debtors dispute liability or make any
3
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
claim, or have any defense, crossclaim, counterclaim, or offset; (j) accounts
with respect to which any Insolvency Proceeding is filed by or against the
account debtor, or if an account debtor becomes insolvent, fails or goes out of
business; and (k) accounts owed by any single account debtor which exceed twenty
percent (20%) of all of the Eligible Accounts; and (l) accounts with a
particular account debtor on which over twenty-five percent (25%) of the
aggregate amount owing is greater than one hundred twenty (120) days from the
date of the invoice.
1.13 "Event of Default" as used in this Agreement means those events
described in Section 7 contained herein below.
1.14 "Fixed Charges" as used in this Agreement means and includes, for any
applicable period of determination, the sum, without duplication, of (a) all
interest paid or payable during such period by a person on debt of such person,
plus (b) all payments of principal or other sums paid or payable during such
period by such person with respect to debt of such person having a final
maturity more than one year from the date of creation of such debt, plus (c) all
debt discount and expense amortized or required to be amortized during such
period by such person, plus (d) the maximum amount of all rents and other
payments paid or required to be paid by such person during such period under any
lease or other contract or arrangement providing for use of real or person
property in respect of which such person is obligated as a lessee, use or
obligor, plus (e) all dividends and other distributions paid or payable by such
person or otherwise accumulating during such period on any capital stock of such
person, plus (f) all loans or other advances made by such person during such
period to any Affiliate of such person.
1.15 "GAAP" as used in this Agreement means as of any applicable period,
generally accepted accounting principles in effect during such period.
1.16 "Insolvency Proceeding" as used in this Agreement means and includes
any proceeding or case commenced by or against the Borrower, or any guarantor of
Borrower's Obligations, or any borrower's account debtors, under any provisions
of the Bankruptcy Code, as amended, or any other bankruptcy or insolvency law,
including but not limited to assignments for the benefit of creditors, formal or
informal moratoriums, composition or extensions with some or all creditors, any
proceeding seeking reorganization, arrangement or any other relief under the
Bankruptcy code, as amended, or any other bankruptcy or insolvency law.
1.17 "Intangibles" as used in this Agreement means and includes all
borrower's present and future general Intangibles and other personal property
(including, without limitation, any and all rights in any legal proceeding,
goodwill, patents, trade names, copyrights, trademarks, blueprints, drawings,
purchase orders, computer programs, computer disks, computer tapes, literature,
reports, catalogs and deposit accounts) other than goods and Receivables, as
well as Borrower's Books relating to any of the foregoing.
1.18 "Inventory" as used in this Agreement means and includes all present
and future inventory in which Borrower has any interest, including, but not
limited to, goods held
4
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
by Borrower for sale or lease or to be furnished under a contract of service and
all of Borrower's present and future raw materials, work in process, finished
goods, advertising, materials and packing and shipping materials, wherever
located and any documents of title representing any of the above, and any
equipment, fixtures or other property used in the storing moving preserving,
identifying, accounting for and shipping or preparing for the shipping of
inventory, and any and all other items hereafter acquired by Borrower by way of
substitution, replacement, return, repossession or otherwise, and all additions
and accessions thereto, and the resulting product or mass, and any documents of
title respecting any of the above.
1.19 "Net Income" as used in this Agreement means the net income (or loss)
of a person for any period determined in accordance with GAAP but excluding in
any event:
a. any gains or losses on the sale or other disposition, not in the
ordinary course of business, of investments or fixed or capital assets, and any
taxes on the excluded gains and any tax deductions or credits on account on any
excluded losses; and
b. in the case of the Borrower, net earnings of any Person in which
Borrower has an ownership interest, unless such net earnings shall have actually
been received by Borrower in the form of cash distributions.
1.20 "Judicial Officer or Assignee" as used in this Agreement means and
includes any trustee, receiver, controller, custodian, assignee for the benefit
of creditors or any other person or entity having powers or duties like or
similar to the powers and duties of trustee, receiver, controller, custodian or
assignee for the benefit of creditors.
1.21 "Obligations" as used in this Agreement means and includes any and all
loans, advances, overdrafts, debts, liabilities (including, without limitation,
any and all amounts Charged to Borrower's account pursuant to any agreement
authorizing Bank to charge Borrower's account), obligations, lease payments,
guaranties, covenants and duties owing by Borrower to Bank of any kind and
description whether advanced pursuant to or evidenced by this Agreement; by any
note or other instrument; or by any other agreement between Bank and Borrower
and whether or not for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including, without limitation, any debt, liability or obligation owing from
Borrower to others which Bank may have obtained by assignment, participation,
purchase or otherwise, and further including, without limitation, all interest
not paid when due and all Bank Expenses which Borrower is required to pay or
reimburse by this Agreement, by law, or otherwise.
1.22 "Person" or "person" as used in this Agreement means and includes any
individual, corporation, partnership, joint venture, association, trust
unincorporated association, joint stock company, government, municipality,
political subdivision or agency, or other entity.
1.23 "Receivables" as used in this Agreement means and includes all
presently existing and hereafter arising accounts, instruments, documents,
chattel paper, general
5
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
intangibles, all other forms of obligations owing to Borrower, all of Borrower's
rights in, to and under all purchase orders heretofore or hereafter received,
all moneys due to Borrower under all contracts or agreements (whether or not yet
earned or due), all merchandise returned to or reclaimed by Borrower and the
Borrower's books (except minutes books) relating to any of the foregoing.
1.24 "Subordinated Debt" as used in this Agreement means indebtedness of
the Borrower to third parties which has been subordinated to the Obligations
pursuant to a subordination agreement in form and content reasonably
satisfactory to the Bank.
1.25 "Tangible Effective Net Worth" as used in the Agreement means net
worth as determined in accordance with GAAP consistently applied, increased by
Subordinated Debt, if any, and decreased by the following: patents, licenses,
goodwill, subscription lists, organization expenses, trade receivables converted
to notes, money due from affiliates (including officers, directors, subsidiaries
and commonly held companies).
1.26 "Tangible Net Worth" as used in the Agreement means, as of any
applicable date of determination, the excess of
a. the net book value of all assets of a person (other than patents,
patent rights, trademarks, trade names, franchises, copyrights, licenses,
goodwill, and similar tangible assets) after all appropriate deductions in
accordance with GAAP (including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization), over
b. all Total Liabilities of such person.
1.27 "Total Liabilities" as used in this Agreement means the total of all
items of indebtedness, obligation or liability which, in accordance with GAAP
consistently applied, would be included in determining the total liabilities of
the Borrower as of the date Total Liabilities is to be determined, including
without limitation (a) all obligations secured by any mortgage, pledge, security
interest or other lien on property owned or acquired, whether or not the
obligations secured thereby shall have been assumed; (b) all obligations which
are capitalized lease obligations; and (c) all guaranties, endorsements or other
contingent or surety obligations with respect to the indebtedness of others,
whether or not reflected on the balance sheets of the Borrower, including any
obligation to furnish funds, directly or indirectly through the purchase of
goods, supplies, services, or by way of stock purchase, capital contribution,
advance or loan or any obligation to enter into a contract for any of the
following.
1.28 "Working Capital" as used in this Agreement means, as of any
applicable date of determination, Current Assets less Current Liabilities.
1.29 Any and all terms used in this Agreement shall be construed and
defined in accordance with the meaning and definition of such terms under and
pursuant to the California Uniform Commercial Code (hereinafter referred to as
the "Code") as amended.
6
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
2. LOAN AND TERMS OF PAYMENTS.
--------------------------
For value received, Borrower promises to pay to the order of Bank such
amount, as provided for below, together with interest, as provided for below.
2.1 Upon the request of Borrower, made at any time and from time to time
during the term hereof, and so long as no Event of Default has occurred, Bank
shall lend to Borrower an amount equal to the Borrowing Base; provided, however,
that in no event shall Bank be obligated to make advances to Borrower under this
Section 2.1 whenever the Daily Balance exceeds, at any time, either the
Borrowing Base or the sum of Five Million and no/100 Dollars ($5,000,000), such
amount being referred to herein as an "Overadvance".
2.2 Except as hereinbelow provided, the Credit shall bear interest, on the
Daily Balance owing, at a rate of no (0.00) percentage points per annum above
the Base Rate (the "Rate"). The Credit shall bear interest, from and after the
occurrence of an Event of Default and without constituting a waiver of any such
Event of Default, on the Daily Balance owing, at a rate of three (3) percentage
points per annum above the Rate. All interest chargeable under this Agreement
that is based upon a per annum calculation shall be computed on the basis of a
three hundred sixty (360) day year for actual days elapsed.
The Base Rate as of the date of this Agreement is eight and 500/1000
percent (8.50%) per annum. In the event that the Base Rate announced is, from
time to time hereafter changed, adjustment in the Rate shall be made and based
on the Base Rate in effect on the date of such change. The Rate, as adjusted,
shall apply to the Credit until the Base Rate is adjusted again. All interest
payable by Borrower under the Credit shall be due and payable on the first day
of each calendar month during the term of the Agreement and Bank may, at its
option, elect to treat such interest and any and all Bank Expenses as advances
under the Credit, which amounts shall thereupon constitute Obligations and shall
thereafter accrue interest at the rate applicable to the Credit under the terms
of the Agreement.
3. TERM.
----
3.1 This Agreement shall remain in full force and effect until March 31,
1999, or until terminated by notice by Borrower. Notice of such termination by
Borrower shall be effectuated by providing Bank written notice not less than
three (3) days prior to the effective date of such termination, addressed to the
Bank at the address set forth herein and the termination shall be effective as
of the date so fixed in such notice. Notwithstanding the foregoing, while an
Event of Default is continuing, Bank may terminate this Agreement at any time
without notice. Notwithstanding the foregoing, should either Bank or Borrower
become insolvent or unable to meet its debts as they mature, or fail, suspend,
or go out of business, the other party shall have the right to terminate this
Agreement at any time without notice. On the date of termination all Obligations
shall become immediately due and payable without notice or demand; no notice of
termination by Borrower shall be effective until Borrower shall have paid all
Obligations (other than inchoate indemnity obligations) to Bank in full.
Notwithstanding termination, until all Obligations (other than inchoate
indemnity obligations) have been fully satisfied, Bank shall retain its security
interest in all existing
7
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
Collateral and Collateral arising thereafter, and Borrower shall continue to
perform all of its Obligations.
3.2 After termination and when Bank has received payment in full of
Borrower's Obligations to Bank, Bank shall reassign to Borrower all Collateral
held by Bank, and shall execute a termination of all security agreements and
security interests given by Borrower to Bank, upon the execution and delivery of
mutual general releases.
4. CREATION OF SECURITY INTEREST.
-----------------------------
4.1 Borrower hereby grants to Bank a continuing security interest in all
presently existing and hereafter arising Collateral in order to secure prompt
repayment of any and all Obligations owed by Borrower to Bank and in order to
secure prompt performance by Borrower of each and all of its covenants and
Obligations under the Agreement and otherwise created. Bank's security interest
in the Collateral shall attach to all Collateral without further act on the part
of Bank or Borrower. In the event that any Collateral, including proceeds, is
evidenced by or consists of a letter of credit, advice of credit, instrument,
money, negotiable documents, chattel paper or similar property (collectively
"Negotiable Collateral"), Borrower shall, immediately upon receipt thereof,
endorse and assign such Negotiable Collateral over to Bank and deliver actual
physical possession of the Negotiable Collateral to Bank.
4.2 Bank's security interest in Receivables shall attach to all
Receivables without further act on the part of Bank or Borrower. Upon request
from Bank, Borrower shall provide Bank with schedules describing all Receivables
created or acquired by Borrower (including without limitation agings listing the
names and addresses of, and amounts owing by date by account debtors), provided,
however, Borrower's failure to execute and deliver such schedules shall not
affect or limit Bank's security interest and other rights in and to the
Receivables. Together with each schedule, Borrower shall furnish Bank with
copies of Borrower's customers' invoices or the equivalent, and original
shipping or delivery receipts for all merchandise sold, and Borrower warrants
the genuineness thereof. Upon the occurrence and during the continuance of an
Event of Default, Bank or Bank's designee may notify customers or account
debtors of collection costs and expenses to Borrower's account but, unless and
until Bank does so or gives Borrower other written instructions, Borrower shall
collect all Receivables for Bank, receive in trust all payments thereon as
Bank's trustee, and, if so requested to do so from Bank, Borrower shall
immediately deliver said payments to Bank in their original form as received
from the account debtor and all letters of credit, advices of credit,
instruments, documents, chattel paper or any similar property evidencing or
constituting Collateral. The receipt of any check or other item of payment by
Bank shall not be considered a payment on account until such check is honored
when presented for payment.
4.3 Bank's security interest in Inventory shall attach to all Inventory
without further act on the part of Bank or Borrower. Upon Bank's request
following the occurrence and during the continuance of an Event of Default
Borrower will from time to time at Borrower's expense pledge, assemble and
deliver such Inventory to Bank or to a third party
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(Accounts & Inventory)
as Bank's bailee; or hold the same in trust for Bank's account or store the same
in a warehouse in Bank's name; or deliver to Bank documents of title
representing said Inventory; or evidence of Bank's security interest in some
other manner acceptable to Bank.
4.4 Borrower shall execute and deliver to Bank concurrently with
Borrower's execution of this Agreement, and at any time or times hereafter at
the request of Bank, all financing statements, continuation financing
statements, security agreements, mortgages, assignments, certificates of title,
affidavits, reports, notices, schedules of accounts, letters of authority and
all other documents that Bank may request, in form satisfactory to Bank, to
perfect and maintain perfected Bank's security interest in the Collateral and in
order to fully consummate all of the transactions contemplated under this
Agreement. Effective upon the occurrence and during the continuance of an Event
of Default, Borrower hereby irrevocably makes, constitutes and appoints Bank
(and any of Bank's officers, employees or agents designated by Bank) as
Borrower's true and lawful attorney-in-fact with owner to sign the name of
Borrower on any financing statements, continuation financing statements,
security agreement, mortgage, assignment, certificate of title, affidavit,
letter of authority, notice of other similar documents which must be executed
and/or filed in order to perfect or continue perfected Bank's security interest
in the Collateral.
Borrower shall make appropriate entries in Borrower's Books disclosing
Bank's security interest in the Receivables. Bank (through any of its officers,
employees or agents) all have the right at any time or times hereafter during
Borrower's usual business hours, or during the usual business hours of any third
party having control over the records of Borrower, to inspect and verify
Borrower's Books in order to verify the amount or condition of, or any other
matter, relating to, said Collateral and Borrower's financial condition.
4.5 Effective only while an Event of Default is continuing, Borrower
appoints Bank or any other person whom Bank may designate as Borrower's
attorney-in-fact, with power to endorse Borrower's name on any checks, notes,
acceptances, money order, drafts or other forms of payment or security that may
come into Bank's possession; to sign Borrower's name on any invoice or bill of
lading relating to any Receivables, on drafts against account debtors, on
schedules and assignments of Receivables, on verifications of Receivables and on
notices to account debtors; to establish a lock box arrangement and/or to notify
the post office authorities to change the address for delivery of Borrower's
mail addressed to Borrower to an address designated by Bank, to receive and open
all mail addressed to Borrower, and to retain all mail related to the Collateral
and forward all other mail to Borrower; to send, whether in writing or by
telephone, requests for verification of Receivables; and to do all things
necessary to carry out this Agreement. Borrower ratifies and approves all acts
of the attorney-in-fact. Neither Bank nor its attorney-in-fact will be liable
for any acts or omissions or for any error of judgement or mistake of fact or
law. This power being coupled with an interest, is irrevocable so long as any
Receivables in which Bank has a security interest remain unpaid and until the
Obligations have been fully satisfied.
4.6 Effective only while an Event of Default is continuing, in order to
protect or prefect any security interest which Borrower is granted hereunder,
Borrower may, in its sole discretion, discharge any lien or encumbrance or bond
the same, pay any insurance, maintain
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guards, warehousemen, or any personnel to protect the Collateral, pay any
service bureau, or, obtain any records, and all costs for the same shall be
added to the Obligations and shall be payable on demand.
4.7 Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and
services providers.
Notwithstanding any provision of this Agreement to the contrary, prior to
the occurrence of an Event of Default, Borrower shall not be required to
disclose, permit inspection, examination, copying or making extracts of, or
discuss, any document, information or other matter that (i) constitutes non-
financial trade secrets or non-financial proprietary information, or (ii) the
disclosure of which to Bank, or their designated representative, is then
prohibited by (a) law, or (b) an agreement binding on the Borrower that was not
entered into by the Borrower for the primary purpose of concealing information
from the Bank.
In handling any confidential information Bank and all employees and agents
of Bank, including but not limited to accountants, shall exercise the same
degree of care that it exercises with respect to its own proprietary information
of the same types to maintain the confidentiality of any non-public information
thereby received or received pursuant to this Agreement except that disclosure
of such information may be made (i) to the subsidiaries or affiliates of Bank in
connection with their present or prospective business relations with Borrower,
(ii) to prospective transferees or purchasers of any interest in the
Obligations, provided that they have entered into a comparable confidentiality
agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar
order, (iv) as may be required in connection with the examination, audit or
similar investigation of Bank and (v) as Bank may determine in connection with
the enforcement of any remedies hereunder. Confidential information hereunder
shall not include information that either: (a) is in the public domain or in the
knowledge or possession of Bank when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank through no fault of Bank; or (b) is
disclosed to Bank by a third party, provided Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.
5. CONDITIONS PRECEDENT.
--------------------
5.1 Conditions precedent to the making of the loans and the extension of
the financial accommodations hereunder, Borrower shall execute, or cause to be
executed, and deliver to Bank, in form and substance satisfactory to Bank and
its counsel, the following:
a. This Agreement and other documents required by Bank;
b. Financing statements (Form UCC-1) in form satisfactory to Bank
for filing and recording with the appropriate governmental authorities;
c. If Borrower is a corporation, the certified extracts from the
minutes of the meeting of its board of directors, authorizing the borrowings and
the granting of the
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(Accounts & Inventory)
security interest provided for herein and authorizing specific officers to
execute and deliver the agreements provided for herein;
d. If Borrower is a corporation, then a certificate of good standing
showing that Borrower is in good standing under the laws of the state of its
incorporation and certificates indicating that Borrower is qualified to transact
business and is in good standing in any other state in which it conducts
business where the failure to be so qualified could reasonably be expected to
have a material adverse effect;
e. If Borrower is a partnership, then a copy of Borrower's
partnership agreement certified by each general partner of Borrower;
f. UCC searches, tax lien and litigation searches, fictitious
business statement filings, insurance certificates, notices or other similar
documents which Bank may require and in such form as Bank may require, in order
to reflect, perfect or protect Bank's first priority security interest in the
Collateral and in order to fully consummate all of the transactions contemplated
under this Agreement;
g. Evidence that Borrower has obtained insurance and acceptable
endorsements; and
h. Warranties and representations of officers.
6. WARRANTIES REPRESENTATIONS AND COVENANTS.
----------------------------------------
6.1 If so requested by Bank, Borrower shall, at such intervals designated
by Bank, during the term hereof execute and deliver a Report of Accounts
Receivable or similar report, in form customarily used by Bank. Borrower's
Borrowing Base at all times pertinent hereto shall not be less than the advances
made hereunder. Bank shall have the right to recompute Borrower's Borrowing
Base in conformity with this Agreement.
6.2 If any warranty is breached as to any account, or any account is not
paid in full by an account debtor within ninety (90) days from the date of
invoice, or an account debtor disputes liability or makes any claim with respect
thereto, or a petition in bankruptcy or other application for relief under the
Bankruptcy Code or any other insolvency law is filed by or against an account
debtor, or an account debtor makes an assignment for the benefit of creditors,
becomes insolvent, fails or goes out of business, then Bank may deem ineligible
any and all accounts owing by that account debtor, and reduce Borrower's
Borrowing Base by the amount thereof. Bank may retain its security interest in
all Receivables and accounts, whether eligible or ineligible, until all
Obligations (other than inchoate indemnity obligations) have been fully paid and
satisfied. Returns and allowances, if any, as between Borrower and its
customers, will be on the same basis and in accordance with the usual customary
practices of the Borrower, as they exist at this time. After the occurrence of
an Event of Default and during the continuance thereof, Borrower hereunder, no
discount, credit or allowance shall be granted to any account debtor by Borrower
and no return of merchandise shall be accepted by Borrower without Bank's
consent. Bank may, after default by Borrower, settle or adjust
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disputes and claims directly with account debtors for amounts and upon terms
which Bank considers advisable, and in such cases Bank will credit Borrower's
account with only the net amounts received by Bank in payment of the accounts,
after deducting all Bank Expenses in connection therewith.
6.3 Borrower warrants, represents, covenants and agrees that:
a. Borrower has good and marketable title to the Collateral. Bank
has and shall continue to have a first priority perfected security interest in
and to the Collateral. The Collateral shall at all times remain free and clear
of all liens, encumbrances and security interests (a "Lien") (except those in
favor of Bank except for Permitted Liens). "Permitted Liens" shall mean (i) the
Lien in favor of Bank, (ii) any Liens existing on the date of this Agreement and
disclosed to Bank prior to signing this Loan and Security Agreement, (iii) Liens
for taxes, fees, assessments or other governmental charges or levies, either not
delinquent or being contested in good faith by appropriate proceedings and as to
which adequate reserves are maintained on Borrower's Books in accordance with
GAAP, provided the same have no priority over any of Bank's security interests;
(iv) Liens (a) upon or in any equipment acquired or held by Borrower or any of
its Subsidiaries to secure the purchase price of such equipment or indebtedness
incurred solely for the purpose of financing the acquisition of such equipment,
or (b) existing on such equipment at the time of its acquisition, provided that
--------
the Lien is confined solely to the property so acquired and improvements
thereon, accessions and additions thereto, replacements and proceeds thereof;
(v) leases or subleases and licenses or sublicenses granted to others in the
ordinary course of Borrower's business not interfering in any material respect
with the business of Borrower, and any interest or title of a lessor, licensor
or under any lease or license provided that such leases, subleases, licenses and
sublicenses do not prohibit the grant of a security interest to Bank; (vi)
easements, reservations rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances affecting real
property; (vii) workman's courier's or materialmen's Liens or other similar
statutory or common law Liens incurred in the ordinary course of Borrower's
business; (viii) Liens that are not prior to the Lien of Bank which constitute
rights of set-off of a customary nature or bankers' Liens with respect to
amounts of deposit, whether arising by operation of law or by contract, in
connection with arrangements entered into with banks in the ordinary course of
business; (ix) earn-out and royalty obligations existing on the date hereof or
entered into in connection with an acquisition permitted by this addendum.
b. All accounts are and will, at all times pertinent hereto, be bona
fide existing obligations created by the sale and delivery of merchandise or the
rendition of services to account debtors in the ordinary course of business,
free of liens, claims, encumbrances and security interests (except as held by
Bank and except as may be consented to, in writing, by Bank) and are
unconditionally owed to Borrower without defenses, disputes, offsets,
counterclaims, rights of return or cancellation, except in the ordinary course
of business, and Borrower shall have received no notice of actual or imminent
bankruptcy or insolvency of any account debtor at the time an account due from
such account debtor is included in the Borrowing Base.
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c. At the time an account is included as an Eligible Receivable, all
property giving rise to such account shall have been delivered to the account
debtor or to the agent for the account debtor for immediate shipment to, and
unconditional acceptance by, the account debtor. Borrower shall deliver to
Bank, as Bank may from time to time require, delivery receipts, customer's
purchase orders, shipping instruction, bills of lading and any other evidence of
shipping arrangements. Absent such a request by Bank, copies of all such
documentation shall be held by Borrower as custodian of Bank.
6.4 At the time an eligible account is included as an Eligible Receivable,
all such eligible accounts will be due and payable on terms set forth in Section
1.12, or on such other terms approved in writing by Bank in advance of the
creation of such accounts and which are expressly set forth on the face of all
invoices, copies of which shall be held by Borrower as custodian for Bank, and
no such eligible account will then be past due.
6.5 a. Borrower, immediately upon demand by Bank therefor, shall now and
from time to time hereafter, at such intervals as are requested by Bank, deliver
to Bank, designations of Inventory specifying Borrower's cost of Inventory, the
wholesale market value thereof and such other matters and information relating
to the Inventory as Bank may request;
b. All of the Inventory is and shall remain free from all purchase
money or other security interests, liens or encumbrances, except as held by
Bank, other than Permitted Liens.
c. Borrower does now keep and hereafter at all times shall keep
correct and accurate records itemizing and describing the kind, type, quality
and quantity of the Inventory, its cost therefor and selling price thereof, and
the daily withdrawals therefrom and additions thereto, all of which records
shall be available upon demand to any of Bank's officers, agents and employees
for inspection and copying.
d. All Inventory, now and hereafter at all times, shall be new
Inventory of good and merchantable quality free from material defects.
e. Inventory is not now and shall not at any time or times hereafter
be located or stored with a bailee, warehouseman or other third party without
Bank's prior written consent, and, in such event, Borrower will concurrently
therewith cause any such bailee, warehouseman or other third party to issue and
deliver to Bank, in a form acceptable to Bank, warehouse receipts in Bank's name
evidencing the storage of Inventory or other evidence of Bank's prior rights in
the Inventory. In any event, Bank shall instruct any third party to hold all
such Inventory for Bank's account subject to Borrower's security interests and
its instructions; and
f. Bank shall have the right upon demand now and/or at all times
hereafter, during Borrower's usual business hours, to inspect and examine the
Inventory and to check and test the same as to quality, quantity, value and
condition and Borrower agrees to reimburse Bank for Bank's reasonable costs and
expenses in so doing.
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REVOLVING CREDIT
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6.6 Borrower represents, warrants and covenants with Bank that Borrower
will not, without Bank's prior written consent:
a. Grant a security interest in or permit a lien, claim or
encumbrance upon any of the Collateral to any person, association, firm,
corporation, entity or governmental agency or instrumentality, other than
Permitted Liens;
b. Permit any levy, attachment or restraint to be made affecting any
of Borrower's assets;
c. Permit any Judicial Officer or Assignee to be appointed or to
take possession of any or all of Borrower's assets;
d. Change its name or corporate identity or add any new fictitious
names, without providing Bank at least ten (10) days prior written notice, or
liquidate, merge or consolidate with or into any other business organization;
e. Move or relocate any Collateral outside the ordinary course of
business without providing Bank with prior written notice thereof;
f. Prior to Borrower's initial public offering, acquire any other
business organization in any transactions involving aggregate cash consideration
in excess of Five Million Dollars ($5,000,000) and, after Borrower's initial
public offering, any transactions involving aggregate cash consideration in
excess of Fifteen Million Dollars ($15,000,000); provided that Borrower may
acquire any other business organization in any transactions involving stock
consideration where such transaction does not result in a material reduction of
Borrower's tangible net worth, provided an Event of Default does not exist
before or after giving effect to such transaction.
g. Make any change in Borrower's financial structure or in any of
its business objectives, purposes or operations which would materially adversely
affect the ability of Borrower to repay Borrower's Obligations;
h. Incur any debts outside the ordinary course of Borrower's
business except (i) renewals or extensions of existing debts and interest
thereon (ii) debts consisting of capital leases or entered into for the purpose
of financing equipment, real property (including improvements thereon) and other
property, (iii) indebtedness subordinated to the obligations of Borrower to Bank
on customary terms and conditions, and (iv) other indebtedness not to exceed One
Million Dollars ($1,000,000);
i. Make any advance or loan except in the ordinary course of
Borrower's business as currently conducted;
j. Guarantee or otherwise, directly or indirectly, in any way be or
become responsible for obligations of any other Person, whether by agreement to
purchase the indebtedness of any other Person, agreement for the furnishing of
funds to any other Person
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REVOLVING CREDIT
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(Accounts & Inventory)
through the furnishing of goods, supplies or services, by way of stock purchase,
capital contribution, advance or loan, for the purpose of paying or discharging
(or causing the payment or discharge of) the indebtedness of any other Person,
or otherwise, except for the endorsement of negotiable instruments by the
Borrower in the ordinary course of business for deposit or collection,
k. (a) Sell, lease, transfer or otherwise dispose of properties and
assets having an aggregate book value of more than Five Hundred Thousand Dollars
($500,000), provided that Borrower may not dispose of its accounts (whether in
one transaction or in a series of transactions) except as to the sale of
inventory in the ordinary course of business; (b) consolidate with or merge into
any other corporation, permit another corporation to merge into it, acquire all
or substantially all the properties or assets of any other Person; or (c) enter
into any sale-leaseback transaction;
l. Purchase or hold beneficially any stock or other securities of,
or make any investment or acquire any interest whatsoever in, any other Person,
except for the common stock of the Subsidiaries owned by the Borrower on the
date of this Agreement and except for certificates of deposit with maturities of
one year or less of United States commercial banks with capital, surplus and
undivided profits in excess of $100,000,000 and direct obligations of the United
States Government maturing within one year from the date of acquisition thereof
and other short term investments consistent with the investment policy; provided
that nothing in this Section 6.6(o) shall be construed to preclude (i)
Borrower's acquiring or holding shares of its consolidated subsidiaries or
making investments therein, and (ii) Borrower's acquiring or holding interests
in joint ventures or making investments therein; or
m. Allow any fact, condition or event to occur or exist with respect
to any employee pension or profit sharing plans established or maintained by it
which might constitute grounds for termination of any such plan or for the court
appointment of a trustee to administer any such plan.
6.7 Borrower's sole place of business or chief executive office or
residence is located at the address indicated above and Borrower covenants and
agrees that it will not, during the term of this Agreement, without prior
written notification to Bank, relocate said sole place of business or chief
executive office or residence.
6.8 If Borrower is a corporation, Borrower represents, warrants and
covenants as follows:
a. Borrower will not make any distribution or declare or pay any
dividend (in stock or in cash) to any shareholder or on any of its capital
stock, of any class, whether now or hereafter outstanding, or purchase, acquire,
repurchase, redeem or retire any such capital stock other than (i) repurchases
of equity security owned by any employee, consultant, officer or director upon
termination of their relationship with Borrower (as long as an Event of Default
is not continuing or would not exist after giving effect to such repurchase),
and (ii)
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REVOLVING CREDIT
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(Accounts & Inventory)
repurchases of equity securities with the proceeds of the sale of other equity
securities or Subordinated Debt;
b. Borrower is and shall at all times hereafter be a corporation
duly organized and existing in good standing under the laws of the state of its
incorporation and qualified and licensed to do business in California or any
other state in which it conducts its business unless the failure to do so would
not reasonably be expected to have a Material Adverse Effect;
c. Borrower has the right and power and is duly authorized to enter
into this Agreement; and
d. The execution by Borrower of this Agreement shall not constitute
a breach of any provision contained in Borrower's articles of incorporation or
by-laws.
6.9 The execution of and performance by Borrower of all of the terms and
provisions contained in this Agreement shall not result in a breach of or
constitute an event of default under any agreement to which Borrower is now or
hereafter becomes a party.
6.10 Borrower shall promptly notify Bank in writing of its acquisition by
purchase, lease or otherwise of any after acquired property of the type included
in the Collateral, with the exception of purchase of Inventory in the ordinary
course of business.
6.11 All assessments and taxes, whether real, personal or otherwise, due or
payable by, or imposed, levied or assessed against, Borrower or any of its
property have been paid, and shall hereafter be paid in full, before
delinquency. Borrower shall make due and timely payment or deposit of all
federal, state and local taxes, assessments or contributions required of it by
law, and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof. Borrower will make timely payment
or deposit of all F.I.C.A. payments and withholding taxes required of it by
applicable laws, and will upon request furnish Bank with proof satisfactory to
it that Borrower has made such payments or deposit. If Borrower fails to pay any
such assessment, tax, contribution, or make such deposit, or furnish the
required proof, Bank may, in its sole and absolute discretion, and without
notice to Borrower, (i) make payment of the same or any part thereof; or (ii)
set up such reserves in Borrower's account as Bank deems necessary to satisfy
the liability therefor, or both. Bank may conclusively rely on the usual
statements of the amount owing or other official statements issued by the
appropriate governmental agency. Each amount so paid or deposited by Banks shall
constitute a Bank Expense and an additional advance to Borrower.
6.12 There are no actions or proceedings pending by or against Borrower or
any guarantor of Borrower before any court or administrative agency and Borrower
has no knowledge of any pending, threatened or imminent litigation, governmental
investigations or claims, complaints, actions or prosecutions involving Borrower
or any guarantor of Borrower, except as heretofore specifically disclosed in
writing to Bank. If any of the foregoing arise during the term of the
Agreement, Borrower shall immediately notify Bank in writing.
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(Accounts & Inventory)
6.13 a. Borrower, at its expense, shall keep and maintain its assets
insured against loss or damage by fire, theft, explosion, sprinklers and all
other hazards and risks ordinarily insured against by other owners who use such
properties in similar businesses for the full insurable value thereof; provided
that the foregoing shall not preclude Borrower from having reasonable
deductibles on any such policies. Borrower shall also keep and maintain public
liability and property damage insurance relating to Borrower's ownership and use
of the Collateral and its other assets. All such policies of insurance shall be
in such form, with such companies, in such amounts and upon terms and conditions
standard to Borrower's industry. Borrower shall deliver to Bank certified copies
of such policies of insurance and evidence of the payments of all premiums
therefor at Bank's request. All such policies of insurance (except those of
public liability and property damage) shall contain an endorsement in a form
satisfactory to Bank showing Bank as a loss payee thereof, with a waiver of
warranties (Form 438-BFU), and all proceeds payable thereunder shall be payable
to Bank (other than on proceeds in respect of property financed by third
parties) and, upon receipt by Bank, shall be applied on account of the
Obligations owing to Bank. To secure the payment of the Obligations, Borrower
grants Bank a security interest in and to all such policies of insurance (except
those of public liability and property damage) and the proceeds thereof.
b. Upon the occurrence and during the continuance of an Event of
Default, Borrower hereby irrevocably appoints Bank (and any of Bank's officers,
employees or agents designated by Bank) as Borrower's attorney for the purpose
of making, selling and adjusting claims under such policies of insurance,
endorsing the name of Borrower or any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance.
Borrower will not cancel any of such policies without Bank's prior written
consent. Each such insurer shall agree by endorsement upon the policy or
policies of insurance issued by it to Borrower as required above, or by
independent instruments furnished to Bank, that it will give Bank at least ten
(10) days written notice before any such policy or policies of insurance shall
be altered or canceled, and that no act or default of Borrower, or any other
person, shall affect the right of Bank to recover under such policy or policies
of insurance required above or to pay any premium in whole or in part relating
thereto. Bank, without waiving or releasing any Obligations or any Event of
Default, may, but shall have no obligation to do so, obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect to such policies which Bank deems advisable. All sums so disbursed by
Bank, as well as reasonable attorneys' fees, court costs, expenses and other
charges relating thereto, shall constitute Bank Expenses and are payable on
demand.
6.14 All financial statements and information relating to Borrower
which have been or may hereafter be delivered by Borrower to Bank are true and
correct in au material respects and have been prepared in accordance with GAAP
consistently applied and there has been no material adverse change in the
financial condition of Borrower since the submission of such financial
information to Bank.
6.15 a. Borrower at all times hereafter shall maintain a standard and
Modern system of accounting in accordance with GAAP consistently applied with
ledger and account
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(Accounts & Inventory)
cards and/or computer tapes and computer disks, computer printouts and computer
records pertaining to the Collateral which contain information as may from time
to time be requested by Bank; permit Bank and any of its employees, officers or
agents, upon demand, during Borrower's usual business hours, or the usual
business hour of third persons having control thereof, to have access to and
examine all of the Borrower's Books relating to the Collateral, Borrower's
Obligations to Bank, Borrower's financial condition and the results of
Borrower's operations and in connection therewith, permit Bank or any of its
agents, employees or officers to copy and make extracts therefrom.
b. Borrower shall deliver to Bank within thirty (30) days after the
end of each month, a company prepared balance sheet and profit and loss
statement covering Borrower's operations and deliver to Bank within one hundred
twenty (120) days after the end of each of Borrower's fiscal year an audited CPA
statement of the financial condition of the Borrower for each such fiscal year,
including but not limited to, a balance sheet and profit and loss statement and
any other report requested by Bank relating to the Collateral and the financial
condition of Borrower, and a certificate signed by an authorized employee of
Borrower to the effect that all reports, statements, computer disk or tape
files, computer printouts, computer runs, or other computer prepared information
of any kind or nature relating to the foregoing or documents delivered or caused
to be delivered to Bank under this subparagraph are complete, correct and
thoroughly present the financial condition of Borrower and that there exists on
the date of delivery to Bank no condition or event which constitutes a breach or
Event of Default under this Agreement.
c. In addition to the financial statements requested above, the
Borrower agrees to provide Bank with the following schedules:
X Accounts Receivable and Accounts Payable Agings within 15 days of
-
the last day of each month.
6.16 Borrower shall maintain the following financial ratios and covenants
on a consolidated and non-consolidated basis:
a. Tangible Effective Net Worth in an amount not less than Six
Million Dollars ($6,000,000) to increase by seventy-five percent (75%) of
quarterly net profit after tax plus fifty percent (50%) of new equity raised
excluding the sale of the Company's Series E Preferred Stock on or before
December 31, 1997.
b. A quick ratio of cash plus securities plus Receivables to Current
Liabilities not less than 1.15 to 1.00 to increase to 1.25 to 1.00 upon
completion of new equity. Quick Ratio to include outstandings.
c. Borrower shall not without Bank's prior written consent acquire
or expend for or commit itself to acquire or expend for fixed assets by lease,
purchase or otherwise in an aggregate amount that exceeds Seven Million and
no/100 Dollars ($7,000,000) in any fiscal year; and
18
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REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
d. Semi-annual A/R audits.
All financial covenants shall be computed in accordance with GAAP
consistently applied except as otherwise specifically set forth in this
Agreement. All monies due from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower's assets for all purposes
hereunder.
6.17 Borrower shall promptly supply Bank (and cause any guarantor to
supply Bank) with such other information (including tax returns) concerning its
financial affairs (or that of any guarantor) as Bank may request from time to
time hereafter, and shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event which constitutes
an Event of Default under this Agreement.
6.18 Borrower is now and shall be at all times hereafter solvent and able
to pay its debts (including trade debts) as they mature.
6.19 Borrower shall immediately and without demand reimburse Bank for all
Bank Expenses; Borrower authorizes and approves all advances and payments by
Bank for items described in this Agreement as Bank Expenses.
6.20 Each warranty, representation and agreement contained in this
Agreement shall be automatically deemed repeated with each advance and shall be
conclusively presumed to have been relied on by Bank regardless of any
investigation made or information possessed by Bank. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements which
Borrower shall give, or cause to be given, to Bank either now or hereafter.
6.21 Borrower shall keep all of its principal bank accounts with Bank and
shall notify the Bank immediately in writing of the existence of any other bank
account, deposit account or any other account into which money can be deposited.
6.22 Borrower shall furnish to the Bank: (a) as soon as possible, but in
no event later than thirty (30) days after Borrower knows or has reason to know
that any reportable event with respect to any deferred compensation plan has
occurred, a statement of chief financial officer of Borrower setting forth the
details concerning such reportable event and the action which Borrower proposes
to take with respect thereto, together with a copy of the notice of such
reportable event given to the Pension Benefit Guaranty Corporation, if a copy of
such notice is available to Borrower; (b) promptly after the filing thereof with
the United States Secretary of Labor or the Pension Benefit Guaranty
Corporation, copies of each annual report with respect to each deferred
compensation plan; (c) promptly after receipt thereof, a copy of any notice
Borrower may receive from the Pension Benefit Guaranty Corporation or the
Internal Revenue Service with respect to any deferred compensation plan;
provided, however, this subparagraph shall not apply to notice of general
application issued by the Pension Benefit Guaranty Corporation or the Internal
Revenue Service; and (d) when the same is made available to participants in the
deferred compensation plan, all notices and
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REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
other forms of in-formation from time to time disseminated to the participants
by the administrator of the deferred compensation plan.
6.23 Borrower is now and shall at all times hereafter remain in compliance
with all federal, state and municipal laws, regulations and ordinances relating
to the handling, treatment and disposal of toxic substances, wastes and
hazardous material and shall maintain all necessary authorizations and permits.
7. EVENTS OF DEFAULT.
-----------------
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
a. If Borrower fails or neglects to perform, keep or observe any
term, provision, condition, covenant, agreement, warranty or representation
contained in this Agreement, or any other present or future agreement between
Borrower and Bank, provided that, as to any default under this Section 7.a that
can be cured, Borrower shall have a right to cure such default within ten (10)
days after the occurrence thereof;
b. If any representation, report or certificate made or delivered by
Borrower to Bank is not true and correct in any material respect;
c. If Borrower fails to pay when due and payable, or declared due
and payable, any principal or interest; or fails to pay all or any portion of
the Borrower's obligations other than principal or interest within twenty (20)
days of the due date of such obligations;
d. If there is a material impairment of the prospect of repayment of
all or any portion of Borrower's Obligations or a material impairment of the
value or priority of Bank's security interest in the Collateral;
e. If all or any of Borrower's assets are attached, seized, subject
to a writ or distress warrant, or are levied upon, or come into the possession
of any Judicial Officer or Assignee and the same are not released, discharged or
bonded against within thirty (30) days thereafter;
f. If Borrower becomes insolvent, or if an Insolvency Proceeding is
commenced by Borrower, or if an Insolvency Proceeding is commenced against
Borrower and is not dismissed or stayed within thirty (30) days;
g. If any proceeding is filed or commenced by Borrower for its
dissolution or liquidation;
h. If Borrower is enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;
20
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts &- Inventory)
i. If a notice of Lien, levy or assessment is filed of record with
respect to any or all of Borrower's assets by the United States Government, or
any department, agency or instrumentality thereof, or by any state, county,
municipal or other government agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a lien, whether choate or
otherwise, upon any or all of the Borrower's assets and the same is not paid on
the payment date thereof;
j. If a judgment or other claim becomes a lien or encumbrance upon
any or all of Borrower's assets and the same is not satisfied, dismissed or
bonded against within ten (10) days thereafter;
k. If Borrower permits a default in any material agreement to which
Borrower is a party with third parties so as to result in an acceleration of the
maturity of Borrower's indebtedness to others, whether under any indenture,
agreement or otherwise;
l. If Borrower makes any payment on account of indebtedness which
has been subordinated to Borrower's Obligations to Bank unless permitted by the
terms of the subordination arrangement governing such indebtedness;
m. If any misrepresentation exists now or thereafter in any warranty
or representation made by Bank by any officer or director of Borrower, or if any
such warranty or representation is withdrawn by any officer or director;
n. If any guarantor of Borrower's Obligations dies or terminates its
subordination or guaranty, becomes insolvent or an Insolvency Proceeding is
commenced by or against any such subordinating party or guarantor;
o. If Borrower fails to comply with any of the provisions of Section
6.6 or 6.16; or
p. If any reportable event, which the Bank determines constitutes
grounds for the termination of any deferred compensation plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States District Court of a trustee to administer any such plan, shall have
occurred and be continuing thirty (30) days after written notice of such
determination shall have been given to Borrower by Bank, or any such Plan shall
be terminated within the meaning of Title IV of the Employment Retirement Income
Security Act ("ERISA"), or a trustee shall be appointed by the appropriate
United States District Court to administer any such plan, or the Pension Benefit
Guaranty Corporation shall institute proceedings to terminate any plan and in
case of any event described in this Section 7, the aggregate amount of the
Borrower's liability to the Pension Benefit Guaranty Corporation under Sections
4062, 4063 or 4064 of ERISA shall exceed five percent (5) of Borrower's Tangible
Effective Net Worth.
Notwithstanding anything contained in Section 7 to the contrary, Bank
shall refrain from exercising its rights and remedies and Event of Default shall
thereafter not be deemed to have occurred by reason of the occurrence of any of
the events set forth in
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REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
Sections 7.e, 7.f or 7.j of this Agreement if, within ten (10) days from the
date thereof, the same is released, discharged, dismissed, bonded against or
satisfied; provided, however, if the event is the institution of Insolvency
Proceedings against Borrower, Bank shall not be obligated to make advances to
Borrower during such cure period.
8. BANK'S RIGHTS AND REMEDIES.
--------------------------
8.1 Upon the occurrence and during the continuance of an Event of Default
by Borrower under this Agreement, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
a. Declare Borrower's Obligations, whether evidenced by this
Agreement, installment notes, demand notes or otherwise, immediately due and
payable to the Bank;
b. Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, or any other agreement between Borrower and
Bank;
c. Terminate this Agreement as to any future liability or obligation
of Bank, but without affecting Bank's rights and security interests in the
Collateral, and the Obligations of Borrower to Bank;
d. Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Bank considers necessary or reasonable to
protect its security interest in the Collateral. Borrower agrees to assemble
the Collateral if Bank so requires and to make the Collateral available to Bank
as Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, take and maintain possession of the Collateral and the
premises (at no charge to Bank), or any part thereof, and to pay, purchase,
contest or compromise any encumbrance, charge or lien which in the opinion of
Bank appears to be prior or superior to its security interest and to pay all
expenses incurred in connection therewith;
e. Without limiting Bank's rights under any security interest, Bank
is hereby granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secret, trade
names, trademarks and advertising matter, or any property of a similar nature as
it pertains to the Collateral, in completing production of, advertising for sale
and selling any Collateral and Borrower's rights under all licenses and all
franchise agreement shall inure to Bank's benefit, and Bank shall have the right
and power to enter into sublicense agreements with respect to all such rights
with third parties on terms acceptable to Bank;
f. Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sales and sell (in the manner provided for herein) the
Inventory;
g. Sell or dispose the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at
22
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
such places (including Borrower's premises) as is commercially reasonable in the
opinion of Bank. It is not necessary that the Collateral be present at any such
sale;
h. Bank shall give notice of the disposition of the Collateral as
follows:
(1) Bank shall give the Borrower and each holder of a security
interest in the Collateral who has filed with Bank a written request for notice,
a notice in writing of the time and place of public sale, or, if the sale is a
private sale or some disposition other than a public sale is to be made of the
Collateral, the time on or after which the private sale or the disposition is to
be made;
(2) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower's address appearing in this Agreement, at least five (5)
calendar days before the date fixed for the sale, or at least five (5) calendar
days before the date on or after which the private sale or other disposition is
to be made, unless the Collateral is perishable or threatens to decline speedily
in value. Notice to persons other than Borrower claiming an interest in the
Collateral shall be sent to such addresses as they have furnished to Bank;
(3) If the sale is to be a public sale, Bank shall also give
notice of the time and place by publishing a notice one time at least five (5)
calendar days before the date of this sale in a newspaper of general circulation
in the county in which the sale is to be held; and
(4) Bank may credit bid and purchase at any public sale.
i. Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of its rights and remedies as herein
provided, whether or not suit is commenced by Bank;
j. Any deficiency which exists after disposition of the Collateral
as provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third parties, to
Borrower by Bank, or, in Bank's discretion, to any party who Bank believes, in
good faith, is entitled to the excess; and
k. Without constituting a retention of Collateral in satisfaction of
an obligation within the meaning of 9505 of the Uniform Commercial Code or an
action under California Code of Civil Procedure 726, apply any and all amounts
maintained by Borrower as deposit accounts (as that term is defined under 9105
of the Uniform Commercial Code) or other accounts that Borrower maintains with
Bank against the Obligations.
8.2 Bank's rights and remedies under this Agreement and all other
agreements shall be cumulative. Bank shall have all other rights and remedies
not inconsistent herewith as provided by law or in equity. No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of any
default on Borrower's part shall be deemed a continuing waiver. No delay by
Bank shall constitute a waiver, election or acquiescence by Bank.
23
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY.
------------------------------------------------
If Borrower fails to pay promptly when due to another person or entity, monies
which Borrower is required to pay by reason of any provision in this Agreement,
Bank may, but need not, pay the same and charge Borrower's account therefor, and
Borrower shall promptly reimburse Bank. All such sums shall become additional
indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral. Any payments made by Bank
shall not constitute (i) an agreement by it to make similar payments in the
future; or (ii) a waiver by Bank of any default under this Agreement. Bank need
not inquire as to, or contest the validity of, any such expense, tax security
interest, encumbrance or lien and the receipt of the usual official notice of
the payment thereof shall be conclusive evidence that the same was validly due
and owing. Such payments shall constitute Bank Expenses and additional advances
to Borrower.
10. WAIVERS.
-------
10.1 Borrower agrees that checks and other instruments received by Bank in
payment or on account of Borrower's Obligations constitute only conditional
payment until such items are actually paid to Bank and Borrower waives the right
to direct the application of any and all payments at any time or times hereafter
received by Bank on account of Borrower's Obligations and Borrower agrees that
Bank shall have the continuing exclusive right to apply and reapply such
payments in any manner as Bank may deem advisable, notwithstanding any entry by
Bank upon its books.
10.2 Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
10.3 Bank shall not in any way or manner be liable or responsible for (a)
the safekeeping of the Inventory; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency or other person whomsoever. All risk of loss, damage or
destruction of Inventory shall be borne by Borrower.
10.4 Borrower waives the right and the right to assert a confidential
relationship, if any, it may have with any accountant, accounting firm and/or
service bureau or consultant in connection with any information requested by
Bank pursuant to or in accordance with this Agreement, and agrees that a Bank
may contact directly any such accountants, accounting firm and/or service bureau
or consultant in order to obtain such information.
10.5 BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION HEREUNDER, OR
CONTEMPLATED HEREUNDER, OR ANY OTHER
24
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
CLAIM (INCLUDING TORT OR BREACH OF DUTY CLAIMS) OR DISPUTE HOWSOEVER ARISING
BETWEEN BANK AND BORROWER.
10.6 In the event that Bank elects to waive any rights or remedies
hereunder, or compliance with any of the terms hereof, or delays or fails to
pursue or enforce any terms, such waiver, delay or failure to pursue or enforce
shall only be effective with respect to that single act and shall not be
construed to affect any subsequent transactions or Bank's right to later pursue
such rights and remedies.
11. ONE CONTINUING LOAN TRANSACTION.
-------------------------------
All loans and advances heretofore, now or at any time or times hereafter
made by Bank to Borrower under this Agreement or any other agreement between
Bank and Borrower, shall constitute one loan secured by Bank's security
interests in the Collateral and by all other security interests, liens,
encumbrances heretofore, now or from time to time hereafter granted by Borrower
to Bank.
Notwithstanding the above, (i) to the extent that any portion of the
Obligations are a consumer loan, that portion shall not be secured by any deed
or trust or mortgage on or other security interest in the Borrower's principal
dwelling which is not a purchase money security interest as to that portion,
unless expressly provided to the contrary in another place, or (ii) if the
Borrower (or any of them) has (have) given or give(s) Bank a deed of trust or
mortgage covering real property, that deed of trust or mortgage shall not secure
the loan and any other Obligation of the Borrower (or any of them), unless
expressly provided to the contrary in another place.
12. NOTICES.
-------
Unless otherwise provided in this Agreement, all notices or demands by
either party on the other relating to this Agreement shall be in writing and
sent by regular United States mail, postage prepaid, properly addressed to
Borrower or to Bank at the addresses stated in this Agreement, or to such other
addresses as Borrower or Bank may from time to time specify to the other in
writing. Requests to Borrower by Bank hereunder may be made orally.
13. AUTHORIZATION TO DISBURSE.
-------------------------
Bank is hereby authorized to make loans and advances hereunder upon
telephonic or other instructions received from anyone purporting to be an
officer, employee, or representative of Borrower, or at the discretion of Bank
if said loans and advances are necessary to meet any Obligations of Borrower to
Bank. Bank shall have no duty to make inquiry or verify the authority of any
such party, and Borrower shall hold the Bank harmless from any damage, claims or
Liability by reason of Bank's honor of, or failure to honor, any such
instructions.
25
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
14. DESTRUCTION OF BORROWER'S DOCUMENTS
-----------------------------------
Any documents, schedules, invoices or other papers delivered to Bank, may
be destroyed or otherwise disposed of by Bank six (6) months after they are
delivered to or received by Bank, unless Borrower requests, in writing, the
return of the said documents, schedules, invoices or other papers and makes
arrangements, at Borrower's expense, for their return.
15. CHOICE OF LAW.
-------------
The validity of this Agreement, its construction, interpretation and
enforcement, and the rights of the parties hereunder and concerning the
Collateral, shall be determined according to the laws of the State of
California. The parties agree that all actions or proceedings arising in
connection with this Agreement shall be tried and litigated only in the state
and federal courts in the Northern District of California or County of Santa
Clara.
16. GENERAL PROVISIONS.
------------------
16.1 This Agreement shall be binding and deemed effective when executed by
the Borrower and accepted and executed by Bank at its Headquarter Office.
16.2 This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties, provided, however, that Borrower
may not assign this Agreement or any rights hereunder without Bank's prior
written consent and any prohibited assignment shall be absolutely void. No
consent to an assignment by Bank shall release Borrower or any guarantor from
their Obligations to Bank. Bank may assign this Agreement and its rights and
duties hereunder. Bank reserves the right to sell, assign, transfer, negotiate
or grant participations in all or any part of, or any interest in Bank's rights
and benefits hereunder. In connection therewith, Bank may disclose all
documents and information which Bank now or hereafter may have relating to
Borrower or Borrower's business.
16.3 Paragraph headings and paragraph numbers have been set forth herein
for convenience only; unless the contrary is compelled by the context,
everything contained in each paragraph applies equally to this entire Agreement.
16.4 Neither this Agreement nor any uncertainty or ambiguity herein shall
be construed or resolved against Bank or Borrower, whether under any rule of
construction or otherwise; on the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto. When permitted by the context, the singular includes the
plural and vice versa.
16.5 Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
26
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
16.6 This Agreement cannot be changed or terminated orally. Except as to
currently existing Obligations owing by Borrower to Bank, all prior agreements,
understandings, representations, warranties, and negotiations, if any, with
respect to the subject matter hereof, are merged into this Agreement.
16.7 The parties intend and agree that their respective rights, duties,
powers, liabilities, obligations and discretions shall be performed, carried
out, discharged and exercised reasonably and in good faith.
IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit
Loan & Security Agreement (Accounts and Inventory) to be executed as of the date
first hereinabove written.
ATTEST: BORROWER:
___________________________________ By:_________________________________
Title Signature of
Accepted and effective as of ______ Title:______________________________
at Bank's Headquarters Office
By:_________________________________
Signature of
Title:_______________________________
BANK:
By:_________________________________
Signature of
Title:_______________________________
By:_________________________________
Signature of
Title:_______________________________
27
<PAGE>
REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit
Loan & Security Agreement (Accounts and Inventory) to be executed as of the date
fast hereinabove written.
ATTEST: BORROWER:
___________________________________ By: /s/ Philip J. Koen
Title Signature of
Accepted and effective as of ______ Title: Senior VP & CEO
at Bank's Headquarters Office
By:_________________________________
Signature of
Title:_______________________________
BANK:
By:_________________________________
Signature of
Title:_______________________________
By:_________________________________
Signature of
Title:_______________________________
28
