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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WINK COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 7372 94-3212322
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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1001 MARINA VILLAGE PARKWAY
ALAMEDA, CALIFORNIA 94501
(510) 337-2950
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
MARY AGNES WILDEROTTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
WINK COMMUNICATIONS, INC.
1001 MARINA VILLAGE PARKWAY
ALAMEDA, CALIFORNIA 94501
(510) 337-2950
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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ARTHUR F. SCHNEIDERMAN, ESQ. KENNETH L. GUERNSEY, ESQ.
HERBERT P. FOCKLER, ESQ. CYDNEY S. POSNER, ESQ.
BETSEY SUE, ESQ. LAURA RANDALL WOODHEAD, ESQ.
WILSON SONSINI GOODRICH & ROSATI COOLEY GODWARD LLP
PROFESSIONAL CORPORATION ONE MARITIME PLAZA
650 PAGE MILL ROAD SAN FRANCISCO, CALIFORNIA 94111
PALO ALTO, CALIFORNIA 94304 (415) 693-2000
(650) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
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, check the following box and
list the Securities Act registration 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 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. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
- - -------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value................... $70,000,000 $21,210
=============================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933, as amended.
------------------------
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY
DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 17, 1998
[WINK LOGO]
SHARES
COMMON STOCK
All of the shares of Common Stock offered hereby are being sold by
Wink Communications, Inc. ("Wink" or the "Company"). Prior to this offering,
there has been no public market for the Common Stock of the Company. It is
currently estimated that the initial public offering price will be between
$ and $ per share. See "Underwriting" for information relating to the
method of determining the initial public offering price. Application has been
made for the Common Stock to be listed on the Nasdaq National Market under the
symbol "WINK."
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 8.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share..................................... $ $ $
- - -------------------------------------------------------------------------------------------------------------------
Total(3)...................................... $ $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $ .
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional shares of Common Stock at the price to public less
underwriting discounts and commissions, for the purpose of covering
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively. See "Underwriting."
------------------------
The Common Stock is offered by the Underwriters as stated herein subject to
receipt and acceptance by them and subject to their right to reject any order in
whole or in part. It is expected that delivery of such shares will be made on or
about , 1998, at the office of BancAmerica Robertson Stephens, San
Francisco, California, against payment therefor in immediately available funds.
BANCAMERICA ROBERTSON STEPHENS
HAMBRECHT & QUIST
NATIONSBANC MONTGOMERY SECURITIES LLC
THE DATE OF THIS PROSPECTUS IS , 1998
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[INSIDE COVER PAGES -- GATE-FOLD]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS
AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
<PAGE> 4
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER
TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
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TABLE OF CONTENTS
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Summary..................................................... 4
Risk Factors................................................ 8
Use of Proceeds............................................. 19
Dividend Policy............................................. 19
Capitalization.............................................. 20
Dilution.................................................... 21
Selected Consolidated Financial Data........................ 22
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 23
Business.................................................... 30
Management.................................................. 40
Certain Transactions........................................ 48
Principal Stockholders...................................... 52
Description of Capital Stock................................ 54
Shares Eligible for Future Sale............................. 56
Underwriting................................................ 58
Legal Matters............................................... 59
Experts..................................................... 59
Additional Information...................................... 59
Index to Consolidated Financial Statements.................. F-1
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The Company intends to furnish its stockholders with annual reports
containing consolidated financial statements audited by an independent public
accounting firm and quarterly reports containing unaudited summary consolidated
financial information for each of the first three fiscal quarters of each fiscal
year of the Company.
Wink is a registered trademark of the Company. Wink Communications, the
Wink Communications, Inc. logo, the stylized "i" logo, Wink Engine, Wink
Broadcast Server, Wink Response Server, Wink Server Studio, Wink Response
Network and Wink Enhanced Broadcasting are trademarks of the Company. All other
trade names and trademarks referred to in this Prospectus are the property of
their respective owners.
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the Consolidated Financial Statements
and notes thereto, appearing elsewhere in this Prospectus. Prospective investors
should consider carefully the information discussed under "Risk Factors" and
elsewhere. This Prospectus contains forward-looking statements based upon
current expectations that involve risks and uncertainties. The Company's actual
results and the timing of certain events could differ materially from those
described in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" and elsewhere in this Prospectus.
THE COMPANY
Wink Communications offers a simple-to-use, low-cost enhanced television
broadcasting system, Wink Enhanced Broadcasting, that adds interactivity and
electronic commerce opportunities to traditional television programming and
advertising. Wink Enhanced Broadcasting allows broadcast and cable networks and
advertisers to create interactive programming and commercials to which viewers
can respond by requesting information or ordering products through a remote
control. The Company's Wink Response Network is designed to aggregate these
responses and forward them to advertisers. The Company's business plan is to
derive the primary portion of its revenues through the Wink Response Network by
charging transaction fees to advertisers for each information request or
purchase order obtained from viewers. To encourage broad adoption of Wink
Enhanced Broadcasting, the Company seeks to provide benefits to multiple
participants in the television industry, including viewers, advertisers,
broadcast and cable networks, cable and direct broadcast satellite ("DBS")
system operators and television and set-top terminal manufacturers. In order to
increase the presence of Wink in television households, the Company has formed
strategic relationships with a number of cable system operators, such as Century
Communications, Charter Communications, Intermedia and Jones Programming
Services, and television and set-top terminal manufacturers, such as General
Instrument, Pioneer, Scientific-Atlanta and Toshiba. The Company has also formed
strategic relationships with a number of broadcast and cable networks, such as
CNN, ESPN, NBC and The Weather Channel, in order to promote the development of
Wink-enhanced programming. Wink Enhanced Broadcasting has been deployed in Japan
since October 1996, and was initially deployed in the United States in June 1998
in Kingsport, Tennessee on an Intermedia cable system.
Television is one of the most pervasive communications media in society
today. According to Nielsen Media Research, there were 98 million television
households in the United States in January 1998. Veronis, Suhler & Associates
("Veronis Suhler") estimates that the average person in the United States
watched approximately 1,600 hours of television (approximately 4.3 hours per
day) in 1997. With recent advances in television and set-top terminal
technology, new television sets and advanced analog and digital set-top
terminals can provide a platform for interactive television. According to Paul
Kagan Associates ("Paul Kagan"), in 1997 there were approximately 30 million
set-top terminals in use, of which 4.2 million were advanced analog or digital
set-top terminals. By 2002, Paul Kagan expects that the number of advanced
analog and digital terminals in use will increase to 21 million.
Television advertising is considered to be one of the most effective
methods of building brand recognition and general consumer awareness of products
and services. The total amount spent on television advertising in the United
States in 1995 was approximately $36 billion, according to the Direct Marketing
Association. According to Veronis Suhler, in 1997, approximately $15 billion was
spent on direct response television advertising, and that amount is expected to
grow to $23 billion in 2002. The Company believes that an opportunity exists for
a simple, immediate, inexpensive and automated method of responding to direct
response advertising on television.
Wink enhancements can provide additional information about programming or
advertised products or allow viewers to request information about or purchase
advertised products. To access a Wink enhancement, a television viewer simply
clicks the remote control of a Wink-enabled television or set-top terminal when
the Wink icon appears on the screen. For example, viewers watching CNN Headline
News can click on the Wink icon to obtain additional information about a
specific national or local news story. Similarly, viewers watching
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a Wink-enhanced commercial could request information packages, product brochures
or coupons from the advertiser. If a viewer registers a credit card with the
Wink Response Network, an enhancement can enable the viewer to purchase products
by using the remote control.
Wink Enhanced Broadcasting provides an end-to-end solution for sending
interactive applications along with broadcast video to viewers' televisions.
This system is composed of core, proprietary technologies developed by the
Company, as well as off-the-shelf electronic commerce and database solutions.
Wink Enhanced Broadcasting consists of the Wink Studio and Server Studio
authoring tools that allow networks, advertisers and cable system operators to
design interactive Wink applications; the Wink Broadcast Server that manages the
delivery of those applications; the Wink Engine client software that executes
applications; and the Wink Response Server and Wink Response Network that are
designed to efficiently process viewer responses to applications.
The Company's objective is to capitalize on the pervasiveness and
popularity of television to create a mass market medium for interactivity and
commerce. To achieve this objective, the Company intends to increase the
presence of Wink in television households, promote the development of
Wink-enhanced programming, penetrate the direct response television advertising
market, benefit multiple participants in the television industry, leverage
industry relationships, promote the Wink brand and expand its international
presence.
The Company was incorporated in California in October 1994 and will be
reincorporated in Delaware prior to this offering. The Company's principal
executive office is located at 1001 Marina Village Parkway, Alameda, California
94501, and its telephone number is (510) 337-2950.
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THE OFFERING
Common Stock offered........................ shares
Common Stock to be outstanding after the
offering.................................... shares(1)
Use of proceeds............................. For working capital and other
general corporate purposes,
including expansion of the
Company's sales and marketing
and research and development
activities and expansion of the
Wink Response Network. See "Use
of Proceeds."
Proposed Nasdaq National Market symbol...... WINK
SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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OCTOBER 7, 1994
(INCEPTION) THREE MONTHS ENDED
THROUGH YEAR ENDED DECEMBER 31, MARCH 31,
DECEMBER 31, ----------------------------- ------------------
1994 1995 1996 1997 1997 1998
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CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues................... $ -- $ 100 $ 348 $ 619 $ 87 $ 141
Operating expenses(2)...... 25 2,320 6,484 10,275 1,925 2,976
Loss from operations....... (25) (2,220) (6,136) (9,656) (1,838) (2,835)
Net loss................... (25) (2,148) (5,884) (9,166) (1,829) (2,656)
Net loss per share:
Basic and diluted(3)..... $(0.01) $ (0.37) $ (0.91) $ (1.25) $ (0.27) $ (0.33)
Weighted average
shares(3)............. 5,100 5,860 6,432 7,337 6,802 8,031
Pro forma net loss per
share:
Basic and diluted(3)..... $ (0.75) $ (0.19)
Weighted average
shares(3)............. 12,210 13,942
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MARCH 31, 1998
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AS
ACTUAL ADJUSTED(4)
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CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $13,417 $
Working capital............................................. 10,920
Total assets................................................ 15,494
Long-term obligations, less current portion................. 672
Total stockholders' equity(1)............................... 11,826
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(1) Based on shares outstanding as of March 31, 1998. Excludes (i) 2,461,410
shares of Common Stock issuable upon exercise of outstanding options at
March 31, 1998, at a weighted average exercise price of $1.81 per share,
(ii) 2,800,000 shares reserved for future issuance under the Company's
employee stock plans as of the date of this offering, and (iii) an aggregate
of 1,580,700 shares of Common Stock subject to outstanding warrants at March
31, 1998, at a weighted average exercise price of $6.66 per share, of which
warrants to purchase 917,500 shares of Common Stock are expected to remain
outstanding after the offering. The remaining warrants to purchase 663,200
shares of Common Stock, at a weighted average exercise price of $4.90 per
share, will expire if not exercised prior to the completion of the offering.
Subsequent to March 31, 1998, options to purchase 67,292 shares of Common
Stock were exercised at a weighted average exercise price of $0.36 per share
(through May 31, 1998), and the Company granted additional options to
purchase an aggregate of 231,500 shares of Common Stock under the 1994 Stock
Plan (net of cancellations) at a weighted average exercise price of $6.00
per share. See "Management -- Employee Benefit Plans" and Notes 2, 7, 8 and
9 of Notes to Consolidated Financial Statements.
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(2) Operating expenses include non-cash charges for stock compensation and
warrant amortization totaling $283,000 $4,000 and $455,000 for the years
ended December 31, 1995, 1996 and 1997, respectively, and $0 and $530,000
for the three months ended March 31, 1997 and 1998, respectively. See Notes
7, 8 and 9 of Notes to Consolidated Financial Statements.
(3) See Note 2 of Notes to Consolidated Financial Statements for a discussion of
the computation of basic and diluted net loss per share and weighted average
shares outstanding. Share information for all periods presented has been
retroactively adjusted to reflect a 10-for-1 split of Common Stock and
Preferred Stock in June 1995.
(4) As adjusted to reflect the sale of shares of Common Stock offered hereby
(at an assumed initial public offering price of $ per share) and the
application of the net proceeds therefrom. See "Use of Proceeds,"
"Capitalization" and "Underwriting."
------------------------
Unless the context otherwise requires, the "Company" or "Wink" refers to
Wink Communications, Inc. and its consolidated subsidiary. Except as otherwise
noted herein, all information in this Prospectus (i) assumes no exercise of the
Underwriters' over-allotment option, (ii) gives effect to the conversion of all
outstanding Preferred Stock to Common Stock upon the closing of the offering,
and (iii) gives effect to the Company's reincorporation in Delaware, which will
be consummated prior to the date of this offering.
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RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus, the
following risk factors should be considered carefully in evaluating an
investment in the Common Stock offered by this Prospectus. This Prospectus
contains forward-looking statements that involve risks and uncertainties. When
used in this Prospectus, the words "expects," "anticipates," "intends,"
"estimates" and similar expressions are intended to identify forward-looking
statements. Actual results could differ materially from those described in or
implied by the forward-looking statements as a result of certain risks,
including those described in the risk factors discussed below and elsewhere in
this Prospectus.
UNPROVEN ENHANCED BROADCASTING CONCEPT
The concept of enhanced broadcasting is new and emerging, and, as a result,
demand for and market acceptance of this concept is subject to an unusual degree
of uncertainty. The Company's success depends upon, among other things, broad
acceptance of the concept of enhanced broadcasting by industry participants,
including television viewers, advertisers, broadcast and cable networks, cable
and DBS system operators and manufacturers of televisions and set-top terminals.
There have been a number of well-financed, high-profile attempts to develop and
deploy systems in the broader category of interactive television. None of these
attempts has been wholly successful, and many key industry participants have
been deterred from participating in interactive television for a variety of
reasons, including inconsistent quality of service; the need for new and
expensive hardware in homes, transmission networks and broadcast centers;
complicated and expensive processes for creating interactive content; the need
to alter television viewing habits substantially; uncertain protection of the
confidentiality of stored data and information; and conflicting interests of
various participants. Accordingly, such participants may perceive enhanced
broadcasting negatively and be reluctant to participate.
The Company's financial viability is dependent upon broad acceptance of
Wink Enhanced Broadcasting by a significant number of industry participants.
Establishing relationships with industry participants requires significant
management attention and involves a lengthy process that is subject to
significant risk. The interactive television field is still emerging, with
multiple, often conflicting technologies, an absence of industry standards, and
the potential for frequent new product and service introductions. In addition,
industry participants that have already invested substantial resources in other
approaches to conducting television-based or other electronic commerce and
information exchange may be reluctant to adopt a new standard that may make
their existing investments obsolete. The failure of significant industry
participants to adopt Wink Enhanced Broadcasting would materially adversely
affect the Company's business, operating results and financial condition and
potentially prevent the Company from becoming a financially viable operation.
Moreover, because of the complex interrelationships among industry participants,
failure to adopt Wink Enhanced Broadcasting by a significant industry
participant or group of participants could deter or preclude adoption by other
industry participants.
Dependence on Acceptance of Wink Enhanced Broadcasting by Television
Viewers. The adoption of Wink Enhanced Broadcasting by industry participants
generally is heavily dependent upon convincing advertisers that Wink-enhanced
television is an effective way to communicate with and sell directly to
consumers. There can be no assurance, however, that viewers will react favorably
to Wink Enhanced Broadcasting. For example, viewers may determine that
responding to Wink-enhanced programming and advertising is too complex or does
not add value to or interferes with their viewing experiences. In addition, to
receive Wink Enhanced Broadcasting, viewers will be required to have
Wink-enabled televisions or set-top terminals, which may require an additional
expenditure. Moreover, viewers' reactions may be affected by security or privacy
issues concerning the transmission of personal information through a new
electronic medium. To the extent that television viewers do not request
information or purchase goods and services in response to Wink-enhanced
programming and advertising in significant numbers, advertisers will likely
terminate their use of Wink-enabled advertising or decline to adopt Wink
Enhanced Broadcasting, and the Company's business, operating results and
financial condition would be materially adversely affected.
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Dependence on Acceptance of Wink Enhanced Broadcasting by Advertisers. The
broad use of Wink-enhanced advertising is critical to the Company's success. The
Company's business model assumes that the primary source of its long-term
revenues will be derived from transaction fees paid to the Company by
advertisers for product orders or information requests delivered to them as a
result of Wink Enhanced Broadcasting. Accordingly, advertisers' failure to adopt
Wink Enhanced Broadcasting and use it on a widespread basis as a means for
marketing their products would have a material adverse effect on the business,
operating results and financial condition of the Company. The Company does not
currently have any agreements with third-party advertisers that purchase
television advertising airtime.
Dependence on Acceptance of Wink Enhanced Broadcasting by Broadcast and
Cable Networks and Cable and Direct Broadcast Satellite System Operators. Wink
programming enhancements are available only to viewers of networks that have
adopted Wink Enhanced Broadcasting and who receive their television signals
through a cable system operator that also has adopted Wink Enhanced Broadcasting
(or in the future through a Wink-enabled television). There can be no assurance
that the Company will be able to induce a sufficient number of significant
broadcast and cable networks and cable and DBS system operators to adopt Wink
Enhanced Broadcasting to enable it to achieve the level of widespread commercial
acceptance necessary for viability. The Company has only a limited number of
agreements with broadcast and cable networks and with cable system operators.
The Company's agreements with broadcast and cable networks do not commit the
networks to air any Wink-enhanced programming, and a Wink programming
enhancement may not be available at all times during any such programming. In
addition, the programming to be enhanced is selected at the discretion of the
networks, which may not be willing to employ enhanced broadcasting for all types
of programming. Moreover, these agreements are relatively short-term and
generally terminable after one year, and may terminate earlier upon the
occurrence of certain events, including the failure to achieve certain
performance criteria. The termination of one or more of these agreements, or the
failure of the Company to secure a significant number of new agreements and to
increase programming commitments substantially would materially adversely affect
the Company's business, operating results and financial condition. Moreover, the
Company's agreements with cable system operators generally set forth only a
framework and pricing for adoption of Wink Enhanced Broadcasting by the
operators' local cable system, and in many cases actual deployment may be
subject to additional negotiation and agreement with each local system.
Accordingly, there can be no assurance that any of the Company's current or
future agreements with cable system operators will lead to widespread deployment
of Wink Enhanced Broadcasting by local cable systems. In addition, transmission
of Wink Enhanced Broadcasting responses and purchase requests for cable
subscribers is dependent on the deployment of enhanced store-and-forward or
other return-path technology by cable operators. Cable and DBS system operators
are under no obligation to the Company to undertake these deployments.
Furthermore, to successfully attract usage of Wink Enhanced Broadcasting by
advertisers, the Company must maximize the acceptance of Wink Enhanced
Broadcasting by viewers. The Company believes that the most efficient method of
reaching a large number of viewers is to rely on broadcast and cable networks
and cable and DBS system operators to market Wink Enhanced Broadcasting to their
customers. There can be no assurance that such entities will successfully market
Wink Enhanced Broadcasting to customers or that any such marketing will result
in its commercial acceptance and viability.
Dependence on Acceptance of Wink Engines by Manufacturers. Even if aired by
networks and passed through by cable and DBS system operators, Wink programming
enhancements can be viewed only with a Wink-enabled set-top terminal or a
Wink-enabled television. Currently, in the United States, there are no
Wink-enabled televisions and only limited deployment of Wink-enabled set-top
terminals. The Company has entered into agreements with certain television
manufacturers to incorporate the Company's Wink Engine software into a limited
number of their televisions for distribution in Japan and, commencing in 1999,
the United States. However, the agreements with each of these manufacturers
generally do not contain firm commitments by the manufacturer to ship the Wink
Engine software with any of their products. In addition, the Company has
licensed the Wink Engine software to certain set-top terminal manufacturers to
be incorporated into certain of their digital and advanced analog set-top
terminals. There can be no assurance, however, that the availability of
Wink-enabled televisions and set-top terminals will be sufficient to enable Wink
Enhanced Broadcasting to achieve market acceptance nor that these manufacturers
will devote sufficient manufacturing, distribution and marketing resources to
achieve this goal. Moreover, there can be no
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assurance that any of these agreements will not be terminated and, if
terminated, that the Company would be able to negotiate alternative
relationships on commercially acceptable terms, particularly given that over 85%
of all cable set-top terminals in the United States are produced by
manufacturers with which the Company has existing agreements. If one or more of
these manufacturers does not incorporate the Wink Engine software into its
products, the Wink programming enhancements may not be accessible to a
significant number of television viewers, in which case advertisers would be
less inclined to adopt Wink Enhanced Broadcasting, and the Company's business,
operating results and financial condition would be materially adversely
affected.
Dependence on Creation of High-Quality Content. The Company believes that
it must promote the development and integration of high-quality Wink Enhanced
Broadcasting content. The Company's success in promoting such development is
dependent on its ability to motivate advertisers, broadcast and cable networks
and cable system operators to create and support high-quality content that
viewers will find useful and compelling. In cases where networks do not own all
of the rights to a program, consent of third parties may be required to add Wink
enhancements. No assurance can be given that such consents will be given. The
Company's success will also be dependent, in part, on the Company's ability to
develop a Wink Enhanced Broadcasting viewer base sufficiently large to justify
investments in the development of such content. There can be no assurance that
the Company will be successful in any of these endeavors. See "Business --
Strategy."
LIMITED OPERATING HISTORY; NO ASSURANCE OF PROFITABILITY
The Company was incorporated in October 1994. Wink Enhanced Broadcasting
was launched in Japan in October 1996 and in the United States in one location
in June 1998. Accordingly, the Company has a very short operating history, which
makes the prediction of future results difficult. The Company has incurred
significant net losses since inception and, at March 31, 1998, had an
accumulated deficit of $19.9 million. To date, the Company has recognized
minimal revenue and its ability to generate significant revenue is subject to
significant uncertainty. In addition, the Company currently intends to incur
substantial additional capital expenditures and operating expenses in the future
in order to continue technological development, expand its research and
development organization, assist in the marketing and deployment of Wink
Enhanced Broadcasting by networks and cable and DBS system operators, increase
its other sales and marketing activities to establish and promote the Wink brand
and expand the Wink Response Network. As a result, the Company expects to incur
additional substantial operating and net losses for the foreseeable future. The
Company's prospects must be considered in light of the risks frequently
encountered by companies in an early stage of development, particularly
companies in new and evolving markets such as interactive television. The profit
potential of the Company's business model is unproven. Achieving and sustaining
profitability will require widespread adoption of Wink Enhanced Broadcasting by
multiple industry participants; the establishment of relationships with a
significant number of advertisers; an increase in the number and expansion of
the scope of its relationships with significant advertisers, broadcast and cable
networks, cable and DBS system operators and television and set-top terminal
manufacturers; the firm establishment of the Wink brand; continued strengthening
of the quality of its technology and operations; full implementation of the
transaction processing systems in the Wink Response Network; timely responses to
competitive developments; and the attraction, retention and motivation of
qualified employees. The failure of the Company to successfully meet any of
these challenges could have a material adverse effect on the Company's business,
operating results and financial condition. There can be no assurance that the
Company will ever achieve favorable operating results or profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."
FLUCTUATIONS IN FUTURE OPERATING RESULTS
The Company's future quarterly operating results may fluctuate
significantly due to a number of factors, many of which are outside the
Company's control. These factors include, but are not limited to, extremely
limited experience with viewer response activity; the timing and success of
deployment of Wink Enhanced Broadcasting by broadcast and cable networks, cable
and DBS system operators and television and set-top terminal manufacturers; the
timing and success of infrastructure upgrades necessary to support that
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deployment; the unproven nature of the Company's business model; the impact of
competitors' activities; whether enhanced broadcasting is adopted as a source of
information and commerce by consumers and advertisers; pricing changes in the
marketplace; the Company's ability to establish and maintain significant
transaction processing activity through the Wink Response Network; seasonality
of transaction processing activity, such as potentially reduced summertime
activity when television viewing declines; a limited operating history; the
emerging nature of the market in which the Company competes; technical
difficulties that could occur with the Company's technology and transaction
processing systems or those of market participants upon which Company is
dependent; the ability to manage rapid growth and deployment, including hiring,
training and retaining an adequate number of qualified personnel; timing of
various expenses and capital expenditures; the effects of existing or new
government regulations or legal conditions; and general economic conditions. The
Company's ability to forecast revenues is limited because of the Company's brief
operating history and the emerging nature of the market in which the Company
competes. Currently, the Company derives revenue from license fees and
engineering fees. In the future, however, it is anticipated that the Company's
revenues will depend substantially on the level of viewer response activity
which, in turn, is related to the amount of Wink-enhanced programming and
advertising available. The Company's experience with viewer responses is
limited. Accordingly, the Company's forecasts related to future revenues,
particularly those derived from viewer response activities, are subject to an
unusual degree of uncertainty. The Company's expense levels are based largely on
its operating plans, and estimates of future revenues and are to a large extent
fixed. The Company may be unable to adjust spending in a timely manner to
compensate for any unexpected shortfall in revenues. As a result, a shortfall in
actual revenues as compared to estimated revenues could have an immediate
material adverse effect on the Company's business, financial condition and
operating results. In addition, the Company plans to increase its operating
expenses and capital expenditures to fund additional technological development,
sales, marketing, transaction processing and general activities. To the extent
such expenses precede or are not subsequently followed by increases in revenues,
the Company's business, operating results and financial condition could be
materially adversely affected. Due to the foregoing factors, it is probable that
the Company's operating results in one or more future quarters will fail to meet
or exceed the expectations of securities analysts or investors. In such event,
the trading price of the Common Stock would likely be materially adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
NEED FOR ADDITIONAL CAPITAL
The Company requires substantial working capital to fund its business.
Since inception, the Company has experienced negative cash flow from operations
and expects to continue to experience significant negative cash flow from
operations for the foreseeable future. The Company currently anticipates that
its existing capital resources, together with the net proceeds of this offering,
will be sufficient to meet the Company's capital requirements through the next
12 months. Thereafter, the Company may be required to raise additional funds.
There can be no assurance that such financing will be available in sufficient
amounts or on terms acceptable to the Company, if at all. See "Use of Proceeds"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
COMPETITION
The interactive television field is new and characterized by changing
technology, an absence of industry standards, frequent new product and service
introductions and extensive capital requirements. Wink faces competition from a
number of companies, many of which have significantly greater financial,
technical, manufacturing and marketing resources than Wink and may be in a
better position to compete in the industry. In addition, with the advent of
digital broadcast technologies, the Company expects that competition will
intensify. Current and potential competitors in one or more aspects of the
Company's business include television and other system software companies,
interactive television system providers and multimedia authoring tool providers.
The Company also faces competition from other providers and companies operating
in the direct marketing business, especially operators of toll-free response
call centers. Many of the Company's competitors and potential competitors have
longer operating histories and substantially greater financial, technical,
marketing and personnel resources, as well as greater name recognition. Such
competitors may be
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able to undertake more extensive marketing campaigns, adopt more aggressive
pricing policies and devote substantially more resources to the development of
interactive television products and services. In addition, current and potential
competitors have established or may establish joint ventures or other corporate
relationships among themselves or directly with broadcasters, cable and DBS
system operators and manufacturers to create competitive enhanced broadcasting
systems. Accordingly, it is possible that new competitors or alliances among
competitors and industry participants may emerge and establish a new standard or
acquire market share. There can be no assurance that the Company will be able to
compete successfully against current or future competitors or that competitive
pressures will not materially adversely affect the Company's business, operating
results and financial condition. In addition, the Company may, at various times
in response to changes in the competitive environment, make certain pricing,
service or marketing decisions or enter into acquisitions or new ventures that
could have a material adverse effect on its business, operating results and
financial condition.
A number of companies are developing system software for the general
interactive television market, including Intel Corporation, Microsoft
Corporation, Oracle Corporation and its affiliate Network Computer Inc. ("NCI"),
Sun Microsystems, OpenTV and Canal Plus. In particular, OpenTV and Canal Plus
already offer certain very similar features for digital television, and Intel
and Microsoft have developed technology that enables interactivity over analog
or digital broadcasts. In addition, many of these competitors have the support
of or relationships with industry participants with which the Company also has
relationships, which could affect the extent of support these market
participants give to Wink Enhanced Broadcasting. Microsoft has acquired WebTV
Networks and has invested in Comcast and Time Warner's Road Runner cable modem
service. Microsoft's WebTV Plus service and Oracle's NCI offer certain features
similar to Wink Enhanced Broadcasting. There also are a number of interactive
system providers that have developed proprietary software and hardware for
adding interactivity to existing television technologies, including Gemstar
International Group Limited, Source Media, ACTV Inc., ICTV and GTE Mainstreet.
In addition, one or more of these entities might choose to pursue
hardware-independent, cross-platform opportunities directly competitive with
Wink Enhanced Broadcasting.
MANAGEMENT OF POTENTIAL GROWTH; DEPENDENCE ON KEY PERSONNEL
The Company's development activities and operations have expanded rapidly
since mid-1997, and significant further expansion will be necessary to meet
growing demands and to take advantage of market opportunities. Expansion has
placed and will likely continue to place substantial strain on the Company's
managerial, operational and financial resources and systems. Many of the
Company's senior management and key personnel have been with the Company for
less than two years, and additional key personnel may join the organization in
the future. To manage its growth, the Company must successfully implement,
improve and effectively utilize its operational and financial systems while
aggressively expanding its workforce. The Company must also maintain and
strengthen the breadth and depth of current strategic relationships while
rapidly developing new relationships. There can be no assurance that the
Company's existing or anticipated operational and financial systems will be
sufficient to support the Company's growth nor that management will be able to
effectively identify, manage and exploit existing and emerging market
opportunities. If potential growth is not adequately managed, the Company's
business, operating results and financial condition would be materially
adversely affected.
The Company's future success and performance is substantially dependent on
the continued services and performance of its senior management and other key
personnel. The Company's performance also depends on the Company's ability to
retain and motivate its officers and key employees. The loss of the services of
any of its executive officers or other key employees could have a material
adverse effect on the Company's business, operating results and financial
condition. The Company does not have long-term employment agreements with any of
its key personnel. The Company's future success also depends on its ability to
identify, attract, hire, train, retain and motivate other highly qualified
technical, managerial, sales, marketing and customer service personnel.
Competition for such personnel is intense, and there can be no assurance that
the Company will be able to successfully attract, assimilate or retain
sufficiently qualified personnel. The failure to retain and attract
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the necessary technical, managerial, sales, marketing and customer service
personnel could have a material adverse effect on the Company's business,
operating results and financial condition.
RISKS ASSOCIATED WITH THE WINK RESPONSE NETWORK
An essential part of the Company's strategy is the generation of high
volumes of commercial transaction traffic through its Wink Response Network in
conjunction with related systems at broadcast and cable networks, cable and DBS
system operators and advertisers. Consequently, the effective and reliable
performance of the Wink Response Network systems and infrastructure is vital to
the Company's ability to attract and retain strategic partners, initiate viewer
response transactions, increase the number of response transactions among
television viewers and maintain satisfactory levels of customer service. The
Wink Response Network has been developed, but has not been activated due to the
need for infrastructure upgrades by cable system operators. Inability to
successfully implement the required transaction-processing systems and
associated infrastructure for the Wink Response Network by the Company or its
strategic partners, or the subsequent occurrence of significant system
interruptions or errors could materially adversely affect the Company's
business, operating results and financial condition. The Company may also be
required to change or upgrade the Wink Response Network in order to respond to
changes in the information systems used by advertisers, networks or cable
operators. Moreover, there can be no assurance that the Company will be able to
accurately predict the timing or rate of volume increases, if any, or that it
will be able to effectively implement system changes expansion and upgrades in a
timely manner.
In addition, the ability to successfully process and route transactions
depends largely on reliable and efficient operation of a complex network of
computers and communications systems. The Wink Response Network is operated and
maintained by General Electric Information Services ("GEIS") at a data center
located in Rockville, Maryland and with a back-up center in Brookpark, Ohio.
Although GEIS takes protective measures, it is still possible that damage,
disruption or destruction could occur from fires, natural disasters, power
losses, telecommunication failures, viruses, break-ins or other problems. In
addition, disruption of data communications with other market participants could
cause significant interruptions in transaction-processing and response-routing
services. Furthermore, transmission of Wink Enhanced Broadcasting responses and
purchase requests for cable subscribers is dependent on the deployment of
enhanced store-and-forward or other return-path technology by cable system
operators. Although the Company's commercial success will be affected by the
successful and timely completion of these infrastructure upgrades, cable and DBS
systems operators are under no obligation to the Company to undertake these
deployments. Many of these upgrades may be subject to change, delay or
cancellation. Each of the foregoing factors could have a materially adverse
effect on the Company's business, operating results and financial condition. See
"Business -- Components of Wink Enhanced Broadcasting."
DEPENDENCE ON ESTABLISHMENT OF THE WINK BRAND
The Company believes that establishing and maintaining a strong brand are
critical to attracting and retaining key strategic relationships with market
participants. In addition, the Company believes that a strong brand is necessary
for the generation of consumer awareness and, in the future, interactive
responses and transactions. Promotion of the Wink brand will depend in large
part on the success of the Company, as well as industry participants, in
providing a compelling enhanced broadcasting experience that is attractive to
viewers. As a result, success of the Wink brand depends to a significant extent
on efforts outside of the Company's control. In addition, to attract viewers and
to promote the Wink brand, the Company will need to increase its marketing
activities substantially. Failure to establish and maintain the Wink brand may
have a material adverse effect on the Company's business, operating results and
financial condition. See "Business -- Strategy."
DEPENDENCE ON SIGNAL TRANSMISSION
The Company is dependent on broadcast and cable networks for the
transmission of Wink programming enhancements to viewers along with the related
television programming. Such enhancements are embedded within television signals
transmitted by broadcast and cable networks, satellite program services and
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over-the-air broadcast television stations. Cable and DBS system operators who
choose not to offer Wink Enhanced Broadcasting could attempt to remove the
portion of the television signal containing the Wink enhancements, thus
preventing viewers from receiving these enhancements. Any increased costs or
delays associated with finding alternative means to distribute the Company's
products and services to a potentially large number of customers could have a
material adverse effect on the Company's business, operating results and
financial condition.
RISKS OF TECHNOLOGICAL CHANGE
The interactive television field is still emerging and may never be adopted
or may be adopted with standards that are not compatible with the Wink Enhanced
Broadcasting technology. The emerging nature of interactive television will
require that the Company continually improve the performance, features and
reliability of Wink Enhanced Broadcasting, particularly in response to
competitive offerings. There can be no assurance that the Company will be
successful in responding quickly, cost effectively and adequately to these
developments. The introduction of new technologies could render Wink Enhanced
Broadcasting obsolete or unmarketable. There can be no assurance that the
Company will be successful in achieving widespread acceptance of Wink Enhanced
Broadcasting before competitors offer products, services, and/or concepts with
attributes similar or superior to the Company's current offerings. In addition,
the widespread adoption of new television technologies or standards, cable-based
or otherwise, could require substantial expenditures by the Company to modify or
adapt its technology, products, services, network or business model. Such events
could also fundamentally affect the character, viability and frequency of
enhanced programming. In the event a competing technology is adopted as a
standard for enhanced broadcasting or interactive television in general and the
Company fails to adopt to that technology, the business, operating results and
financial condition of the Company would be materially adversely affected.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
A key component of the Company's strategy is expansion into international
markets. To date, the Company has developed relationships with industry
participants in the United States, Japan and Europe. In Japan and continental
Europe, the Company has chosen to license its technology to third parties and,
to a great extent, to rely on these third parties for marketing, deployment and
potential acceptance of Wink Enhanced Broadcasting in such areas. The Company
has no direct control over these third parties, and there can be no assurance
that the Company will be successful in such activities or that Wink Enhanced
Broadcasting will be successful in foreign markets in general. In addition to
the uncertainty regarding the Company's ability to generate revenues from
foreign operations and expand its international presence, there are certain
risks inherent in doing business internationally, such as regulatory
requirements, legal uncertainty regarding liability for information retrieved
and replicated in foreign jurisdictions, export and import restrictions, tariffs
and other trade barriers, difficulties in staffing and managing foreign
operations, longer payment cycles, problems in collecting accounts receivable,
political instability, fluctuations in currency exchange rates, seasonal
reductions in business activity during the summer months in Europe and certain
other parts of the world, and potentially adverse tax consequences. There can be
no assurance that one or more of these factors will not have a material adverse
effect on the Company's future international operations and, consequently, on
the Company's business, operating results and financial condition. See
"Business -- Strategy."
INTELLECTUAL PROPERTY; LITIGATION
The Company's ability to compete is dependent in part upon its internally
developed, proprietary intellectual property. The Company relies on patents,
trademark, trade secret and copyright law, as well as confidentiality procedures
and licensing arrangements to establish and protect its rights in its
technology. There can be no assurance that others will not develop technologies
that are similar or superior to the Company's technology. The Company typically
enters into confidentiality or license agreements with its employees,
consultants, customers, strategic partners and vendors, and typically controls
access to and distribution of its software, documentation and other proprietary
information. Despite these precautions, it
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may be possible for a third party to copy or otherwise obtain and use the
Company's products or technology without authorization, or to develop similar
technology independently through reverse engineering or other means. Policing
unauthorized use of the Company's products is difficult. There can be no
assurance that the steps taken by the Company will prevent misappropriation of
its technology or that such agreements will be enforceable. In addition,
effective patents, copyright and trade secret protection may be unavailable or
limited in certain foreign countries. Litigation may be necessary in the future
to enforce the Company's intellectual property rights, to protect the Company's
trade secrets, to determine the validity and scope of the proprietary rights of
others or to defend against claims of infringement or invalidity. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on the Company's business, operating
results and financial condition.
In the future, the Company may receive notices of claims of infringement of
other parties' proprietary rights. Although the Company does not believe that
its products infringe the proprietary rights of third parties, there can be no
assurance that infringement or invalidity claims (or claims for indemnification
resulting from infringement claims) will not be asserted or prosecuted against
the Company or that any such assertions or prosecutions will not materially
adversely affect the Company's business, operating results or financial
condition. Irrespective of the validity or the successful assertion of such
claims, the Company would incur significant costs and diversion of resources
with respect to the defense of any claims brought, which could have a material
adverse effect on the Company's business, operating results and financial
condition. In addition, the assertion of such infringement claims could result
in injunctions preventing the Company from distributing certain products, which
could have a material adverse effect on the Company's business, operating
results and financial condition. If any claims or actions are asserted against
the Company, the Company may seek to obtain a license under a third party's
intellectual property rights. There can be no assurance, however, that under
such circumstances, a license would be available on reasonable terms, if at all.
The Company's Wink Response Network is designed to collect and utilize data
derived from viewer responses to Wink-enhanced programming. This data can be
used for several purposes, including product inquiry, order fulfillment,
advertising impact research and polling. Although the Company believes it has a
right to use and compile such data, there can be no assurance that any
copyright, trade secret or other protection will be available for such data and
information or that others will not claim rights to it. The Company is also
obligated to keep certain information regarding networks' and cable systems'
programming services and system technology confidential.
The Company has licensed in the past and expects that it may license in the
future elements of its technology and trademarks to third parties in the United
States, Japan and Europe. The Company attempts to ensure that the quality of its
brand is maintained by such business partners; there can be no assurance,
however, that such partners will not take actions that could adversely affect
the value of the Company's proprietary rights or reputation.
YEAR 2000 COMPLIANCE
Many existing electronic devices, systems and applications use only two
digits to identify a year in the date field, without considering the impact of
the upcoming change in the century. As a result, such devices, systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000 and beyond. The Company relies on
certain devices, systems and applications in operating and monitoring all major
aspects of its business, including financial systems (such as general ledger,
accounts payable and payroll), customer services, infrastructure, networks and
telecommunications equipment. The Company also relies, directly and indirectly,
on external systems of business enterprises, both domestic and international,
for accurate exchange of data. The Company's current estimate is that the costs
associated with the year 2000 issue, and the consequences of incomplete or
untimely resolution of the year 2000 issue, will not have a material adverse
effect on the results of operations or financial position of the Company in any
given year. In addition, even if the internal systems of the Company are not
materially affected by the year 2000 issue, the Company could be affected
through disruption in the operations of the enterprises with which the Company
interacts. Furthermore, although the Company's products comply with such year
2000 requirements, the Company believes that the purchasing patterns of
customers and potential
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customers may be affected by year 2000 issues, as companies expend significant
resources to correct or patch their current software systems to comply with year
2000 requirements. These expenditures may result in reduced funds available to
purchase or deploy products and systems such as those offered by the Company,
which could have a material adverse effect on the Company's business, operating
results and financial condition.
POTENTIAL IMPACT OF PRIVACY CONCERNS
In order to facilitate and process transactions and responses to
Wink-enhanced programming, the Company intends to develop and maintain data
regarding the purchase and response habits of television viewers. Although the
privacy restrictions adopted by Wink are designed to prevent the distribution of
any individual viewer data to unauthorized persons or entities, privacy concerns
may nevertheless cause viewers to be reluctant to use the response and
purchasing features of Wink Enhanced Broadcasting. Moreover, even the perception
by industry participants of substantial privacy concerns on the part of viewers,
whether or not valid, may inhibit market acceptance of Wink Enhanced
Broadcasting. Such concerns may be heightened by potential legislative or
regulatory requirements. For example, legislation could be enacted to require
notification to users that captured data may be used by marketing entities to
target product promotion and advertising to that user. There can be no assurance
that legislation or regulatory requirements will not be adopted in connection
with enhanced broadcasting. If any of these privacy concerns are not adequately
addressed, the Company's business, operating results and financial condition
could be materially adversely affected.
SECURITY RISKS
A significant barrier to communications and commerce through Wink Enhanced
Broadcasting is the need for secure transmission of confidential information,
such as credit card numbers, over public networks. A party who is able to
circumvent the Company's security measures could misappropriate proprietary
information or cause interruptions in the Company's operations. The Company may
be required to expend significant capital and other resources to protect against
such security breaches or to alleviate problems caused by such breaches. The
Company intends to rely on third parties for call center operators and data
center processing under confidentiality agreements, and has no direct control
over confidentiality or security practices of these parties. There can be no
assurance that negligent or hostile actions by third parties or other events or
developments will not result in a compromise or breach of the Company's current
or future systems designed to protect customer transaction data. Any such
compromise of the Company's security could have a material adverse effect on the
Company's reputation, business, operating results and financial condition and
expose the Company to a risk of loss or litigation and potential liability.
Moreover, concerns over the security of communications and commerce through
enhanced broadcasting may inhibit the growth of enhanced broadcasting,
especially as a means of conducting commercial transactions.
GOVERNMENT REGULATORY EFFECTS
The telecommunications, media, broadcast and cable television industries
are subject to extensive regulation by federal, state and local governmental
agencies. Federal, state and local governmental agencies continue to oversee and
adopt legislation and regulation over these industries, which may affect the
activities of the Company, market participants with which the Company has
relationships or the acceptance of Wink Enhanced Broadcasting in general.
Existing regulations were substantially affected by the passage of The
Telecommunications Act of 1996. The outcome of pending federal and state
administrative proceedings may also affect the nature and extent of competition
that will be encountered by the Company. In addition, future regulations may
prevent the Company from generating revenues from sales of database information
about consumers obtained by the Company through the Wink Response Network. Any
of these developments, as well as other regulatory requirements relating to
privacy issues, may have a material adverse effect on the Company's business,
operating results and financial condition.
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CONCENTRATION OF STOCK OWNERSHIP; ANTITAKEOVER PROVISIONS
Upon completion of this offering, the current directors, executive officers
and principal stockholders of the Company and their affiliates will beneficially
own approximately % of the outstanding Common Stock of the Company ( % if the
over-allotment option is exercised in full), based on shares outstanding as of
May 31, 1998. As a result of their ownership, the directors, executive officers
and principal stockholders will be able to control all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. Such concentration of ownership may also
have the effect of delaying or preventing a change in control of the Company.
See "Principal Stockholders" and "Description of Capital Stock."
Certain provisions of the Company's charter documents, including the
elimination of stockholders' ability to take actions by written consent and
limitations on stockholders' ability to raise matters at a meeting of
stockholders without giving advance notice, may have the effect of delaying or
preventing a change in control or management of the Company, which could have an
adverse effect on the market price of the Company's Common Stock. In addition,
the Company's Certificate of Incorporation authorizes the Board of Directors to
issue up to 5 million shares of preferred stock and to fix the designations,
rights, preferences, privileges and restrictions, including voting rights, of
these shares without any further vote or action by the stockholders. The
issuance of preferred stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, thereby delaying, deferring or
preventing a change in control of the Company. Furthermore, such preferred stock
may have other rights, including economic rights senior to the Common Stock,
and, as a result, the issuance of such preferred stock could have a material
adverse effect on the market value of the Common Stock. See "Description of
Capital Stock -- Antitakeover Effects of Delaware Law and Certain Provisions of
the Company's Certificate of Incorporation and Bylaws."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market following this offering could adversely affect the market price of the
Company's Common Stock. The number of shares of Common Stock available for sale
in the public market is limited by restrictions under the Securities Act of
1933, as amended (the "Securities Act"), and lock-up agreements under which the
Company (subject to certain exceptions) and all directors and executive officers
and certain other stockholders of the Company have agreed not to sell or
otherwise dispose of any of such securities for a period of 180 days after the
date of this Prospectus without the prior written consent of BancAmerica
Robertson Stephens. BancAmerica Robertson Stephens may, however, in its sole
discretion and at any time without notice, release all or any portion of the
securities subject to lock-up agreements prior to the expiration of the lock-up
period. As a result of these restrictions and based on shares outstanding as of
May 31, 1998, on the date of this Prospectus, shares, in addition to the
shares offered hereby, will be eligible for sale in the public market
immediately on and after the date of this Prospectus; an additional shares
will be eligible for sale in the public market beginning 90 days after the date
of this Prospectus, subject in certain cases to compliance with the provisions
of Rule 144 and Rule 701 promulgated under the Securities Act; and additional
shares will become eligible for sale in the public market beginning 180 days
after expiration of lock-up agreements and subject in certain cases to
compliance with the provisions of Rule 144 or Rule 701. In addition, at various
times after 180 days after the date of this Prospectus, following the expiration
of applicable one-year holding periods, an additional shares will become
eligible for sale in the public market subject to certain volume and resale
restrictions set forth in Rule 144. The Company also expects to file a
registration statement on Form S-8 with the Securities and Exchange Commission
(the "Commission") shortly after the date of this Prospectus. Following this
offering and expiration of the lock-up agreements, the holders of shares will
have certain rights to require the Company to register those shares under the
Securities Act. If such holders, by exercising their demand registration rights,
cause a large number of shares to be registered and sold in the public market,
such sales could have an adverse effect on the market price for the Company's
Common Stock. Moreover, if the Company were required to include shares held by
such holders in a Company-initiated registration, pursuant to the exercise of
their registration rights, such sales could have an adverse effect on the
Company's ability to
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raise needed capital. See "Shares Eligible for Future Sale," "Description of
Capital Stock -- Registration Rights" and "Underwriting."
BROAD MANAGEMENT DISCRETION OVER USE OF PROCEEDS
The Company currently has no specific plan for using substantially all of
the proceeds of this offering. The Company intends to use a significant portion
of the net proceeds for general corporate purposes, including working capital
needs and potential strategic investments to be determined in the future.
Accordingly, management will have significant discretion in applying the net
proceeds of this offering. See "Use of Proceeds."
IMMEDIATE AND SUBSTANTIAL DILUTION.
Purchasers of the Common Stock offered hereby will incur immediate and
substantial dilution in pro forma net tangible book value of the Common Stock of
$ per share. To the extent that outstanding options and warrants to purchase
the Company's Common Stock are exercised, there will be further dilution. See
"Dilution."
NO PRIOR MARKET FOR COMMON STOCK; LIKELY VOLATILITY OF STOCK PRICE
Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market will
develop or be sustained after this offering. The initial public offering price
will be determined by negotiations between the Company and the representatives
of the Underwriters based on several factors and may not be indicative of the
market price of the Common Stock after this offering. The market price of the
shares of the Company's Common Stock is likely to be highly volatile and may be
significantly affected by a number of factors, such as actual or anticipated
fluctuations in the Company's operating results, announcement of agreements with
and by industry participants, announcement of technological innovations or new
product introductions by the Company or its competitors, changes in estimates of
the Company's future operating results by securities analysts, developments with
respect to intellectual or proprietary rights, general market and economic
conditions and other factors. In addition, the stock market in recent years has
experienced significant price and volume fluctuations, which have affected the
market price of equity securities of many companies and which have often been
unrelated or disproportionate to the operating performance of these companies.
Broad market fluctuations, as well as analysts' recommendations and projections
and general economic conditions, may adversely affect the market price for the
Company's Common Stock. In the past, following periods of volatility in the
market price of a particular company's securities, securities class action
litigation has often been brought against that company. There can be no
assurance that such litigation will not occur in the future with respect to the
Company. Such litigation could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse effect
upon the Company's business, operating results and financial condition. See
"Underwriting."
18
<PAGE> 20
USE OF PROCEEDS
The net proceeds from the sale of the shares of Common Stock offered
hereby are estimated to be approximately $ million ($ million if the
Underwriters' over-allotment option is exercised in full), after deducting
estimated underwriting discounts and commissions and estimated offering expenses
payable by the Company. The primary purposes of this offering are to increase
the Company's equity capital, to create a public market for the Company's Common
Stock, to facilitate future access to public markets, to provide liquidity to
existing stockholders and to enhance the Company's visibility in the
marketplace.
The Company intends to use the net proceeds of this offering for working
capital and other general corporate purposes including expansion of the
Company's sales and marketing, research and development activities and expansion
of the Wink Response Network. The amounts actually expended by the Company for
these purposes will depend upon a number of factors, including future revenue
growth, the amount of cash generated by the Company's operations and the
progress of the Company's efforts to establish Wink Enhanced Broadcasting as a
television standard. The Company may also use a portion of the proceeds to
acquire or invest in businesses, products or technologies that are complementary
to those of the Company, although there are no current commitments regarding any
such acquisitions or investments.
Pending such uses, the Company intends to invest the net proceeds from this
offering in investment grade, interest-bearing securities.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock. The Company does not currently anticipate paying any cash dividends on
its Common Stock in the foreseeable future and intends to retain any future
earnings for use in the expansion of its business and for general corporate
purposes.
19
<PAGE> 21
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1998 (i) on an actual basis, (ii) on a pro forma basis, after giving
effect to the conversion of all outstanding shares of Preferred Stock into
Common Stock and certain amendments to the Company's Certificate of
Incorporation to be effected prior to the offering, and (iii) on an as adjusted
basis, to reflect the sale of shares of Common Stock offered hereby at an
assumed initial public offering price of $ per share and the application of the
net proceeds therefrom:
<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------------
AS
ACTUAL(1) PRO FORMA ADJUSTED
--------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital lease obligations, less current portion............ $ 672 $ 672 $ 672
-------- -------- --------
Stockholders' equity
Convertible Preferred Stock, $.001 par value: issuable in
series; 6,001,250 shares authorized actual, 5,000,000
pro forma and as adjusted; 5,924,750 shares issued and
outstanding actual, none pro forma or as adjusted..... 6 -- --
Common Stock, $.001 par value: 21,038,200 shares
authorized actual, 100,000,000 pro forma and as
adjusted; 9,974,311 shares issued and outstanding
actual, 15,899,061 pro forma, as adjusted (1)....... 10 16
Additional paid-in capital............................... 33,750 33,750
Stockholder notes receivable............................. (1,084) (1,084) (1,084)
Unearned compensation.................................... (977) (977) (977)
Accumulated deficit...................................... (19,879) (19,879) (19,879)
-------- -------- --------
Total stockholders' equity............................ 11,826 11,826
-------- -------- --------
Total capitalization............................. $ 12,498 $ 12,498 $
======== ======== ========
</TABLE>
- - ---------------
(1) Excludes (i) 2,461,410 shares of Common Stock issuable upon exercise of
outstanding options at March 31, 1998, at a weighted average exercise price
of $1.81 per share, (ii) 2,800,000 shares reserved for future issuance under
the Company's employee stock plans as of the date of this offering, and
(iii) an aggregate of 1,580,700 shares of Common Stock subject to
outstanding warrants at March 31, 1998, at a weighted average exercise price
of $6.66 per share, of which warrants to purchase 917,500 shares of Common
Stock are expected to remain outstanding after the offering. Warrants to
purchase the remaining 663,200 shares of Common Stock, at a weighted average
exercise price of $4.90 per share, will expire if not exercised prior to the
completion of the offering. Subsequent to March 31, 1998, options to
purchase 67,292 shares of Common Stock were exercised at a weighted average
exercise price of $0.36 per share (through May 31, 1998), and the Company
granted additional options to purchase an aggregate of 231,500 shares of
Common Stock under the 1994 Stock Plan (net of cancellations) at a weighted
average exercise price of $6.00 per share. See "Management -- Employee
Benefit Plans" and Notes 2, 7, 8 and 9 of Notes to Consolidated Financial
Statements.
20
<PAGE> 22
DILUTION
The pro forma net tangible book value of the Company as of March 31, 1998,
was $11,826, or $0.74 per share. Pro forma net tangible book value per share
represents the amount of total tangible assets of the Company reduced by the
amount of its total liabilities divided by the pro forma number of shares of
Common Stock outstanding after giving effect to the conversion of all
outstanding Preferred Stock into 5,924,750 shares of Common Stock upon the
completion of the offering. After giving effect to the issuance and sale of the
shares of Common Stock offered hereby at an assumed initial public offering
price of $ per share (after deducting underwriting discounts and commissions
and estimated offering expenses payable by the Company), the Company's adjusted
pro forma net tangible book value as of March 31, 1998, would have been $ or
$ per share. This represents an immediate increase in the pro forma net
tangible book value of $ per share to existing stockholders and an immediate
dilution of $ per share to new investors. The following table illustrates the
per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.......... $
Pro forma net tangible book value per share
before the offering............................... $ 0.74
Increase in pro forma net tangible book value per
share attributable to new investors...............
-------
Adjusted pro forma net tangible book value per share
after the offering.....................................
-------
Dilution per share to new investors...................... $
=======
</TABLE>
The following table summarizes, as of March 31, 1998, the difference
between the existing stockholders and the purchasers of shares of Common Stock
in this offering (at an assumed initial public offering price of $ per share)
with respect to the number of shares of Common Stock purchased from the Company,
the total consideration paid and the average price paid per share.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 15,899,061 % $30,621,000 % $1.93
New investors................
---------- ----- ----------- -----
Total.............. 100.0% $ 100.0%
========== ===== =========== =====
</TABLE>
The foregoing discussion and tables assume no exercise of any stock options
outstanding as of March 31, 1998 or of certain warrants that will remain
outstanding after the offering. As of March 31, 1998, (i) 2,461,410 shares of
Common Stock were issuable upon exercise of outstanding options at a weighted
average exercise price of $1.81 per share and (ii) an aggregate of 1,580,700
shares of Common Stock were issuable upon exercise of warrants at a weighted
average exercise price of $6.66 per share, of which warrants to purchase 917,500
shares of Common Stock are expected to remain outstanding after the offering.
The remaining warrants to purchase 663,200 shares of Common Stock, at a weighted
average exercise price of $4.90 per share, will expire if not exercised prior to
the completion of the offering. In addition, 2,800,000 additional shares were
reserved for future issuance under the Company's employee stock plans as of the
date of this offering. To the extent that any of these options or warrants are
exercised, there will be further dilution to new investors.
Subsequent to March 31, 1998, options to purchase 67,292 shares of Common
Stock were exercised at a weighted average exercise price of $0.36 per share
(through May 31, 1998), and the Company granted additional options to purchase
an aggregate of 231,500 shares of Common Stock under the 1994 Stock Plan (net of
cancellations) at a weighted average exercise price of $6.00 per share. See
"Management -- Employee Benefit Plans" and Notes 2, 7, 8 and 9 of Notes to
Consolidated Financial Statements.
21
<PAGE> 23
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data of the Company should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Consolidated Financial Statements and
notes thereto and other financial information included elsewhere in this
Prospectus. The consolidated statement of operations data set forth below for
the years ended December 31, 1995, 1996 and 1997 and the consolidated balance
sheet data as of December 31, 1996 and 1997 are derived from, and are qualified
by reference to, the Company's consolidated financial statements audited by
Price Waterhouse LLP, independent accountants, which are included elsewhere in
this Prospectus. The consolidated statement of operations data for the period
from October 7, 1994 (inception) through December 31, 1994 and the consolidated
balance sheet data as of December 31, 1994 and 1995 are derived from
consolidated financial statements audited by Price Waterhouse LLP which are not
included in this Prospectus. The consolidated statement of operations data for
the three months ended March 31, 1997 and 1998 and the consolidated balance
sheet data as of March 31, 1998 are derived from unaudited consolidated
financial statements included in this Prospectus, which have been prepared on
the same basis as the audited consolidated financial statements and, in the
opinion of management, include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of such information. Historical
results are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
OCTOBER 7,
1994 THREE MONTHS
(INCEPTION) ENDED
THROUGH YEAR ENDED DECEMBER 31, MARCH 31,
DECEMBER 31, --------------------------- ------------------
1994 1995 1996 1997 1997 1998
------------ ------- ------- ------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
Licenses -- related parties............................ $ -- $ -- $ -- $ 384 $ -- $ 40
Licenses -- third parties.............................. -- -- -- -- -- 2
Services -- related parties............................ -- 100 155 148 48 --
Services -- third parties.............................. -- -- 193 87 39 99
------ ------- ------- ------- -------- -------
Total revenues................................... -- 100 348 619 87 141
------ ------- ------- ------- -------- -------
Costs and expenses:
Cost of services -- related parties.................... -- 98 323 162 80 36
Cost of services -- third parties...................... -- -- 235 376 108 34
Research and development............................... 4 851 2,595 4,384 673 1,332
Sales and marketing.................................... 10 899 2,263 3,510 636 1,165
General and administrative............................. 11 472 1,068 1,843 428 409
------ ------- ------- ------- -------- -------
Total costs and expenses(1)...................... 25 2,320 6,484 10,275 1,925 2,976
------ ------- ------- ------- -------- -------
Loss from operations..................................... (25) (2,220) (6,136) (9,656) (1,838) (2,835)
Interest and other income................................ -- 72 279 684 61 219
Interest expense......................................... -- -- (27) (194) (52) (40)
------ ------- ------- ------- -------- -------
Net loss................................................. $ (25) $(2,148) $(5,884) $(9,166) $ (1,829) $(2,656)
====== ======= ======= ======= ======== =======
Net loss per share:
Basic and diluted(2)................................... $(0.01) $ (0.37) $ (0.91) $ (1.25) $ (0.27) $ (0.33)
====== ======= ======= ======= ======== =======
Weighted average shares(2)............................. 5,100 5,860 6,432 7,337 6,802 8,031
====== ======= ======= ======= ======== =======
Pro forma net loss per share:
Basic and diluted(2)................................... $ (0.75) $ (0.19)
======= =======
Weighted average shares(2)............................. 12,210 13,942
======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------ MARCH 31,
1994 1995 1996 1997 1998
------------ ------- ------- ------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 184 $ 2,909 $ 4,157 $ 8,530 $ 7,965
Short-term investments................................... -- -- -- 5,452 5,452
Working capital.......................................... (83) 2,218 2,886 11,367 10,920
Total assets............................................. 260 3,317 5,642 15,629 15,494
Long-term obligations (less current portion)............. -- -- 1,114 767 672
Stockholders' equity..................................... (9) 2,530 3,135 11,925 11,826
</TABLE>
- - ---------------
(1) Operating expenses include non-cash charges for stock compensation and
warrant amortization totaling $283,000, $4,000 and $455,000 for the years
ended December 31, 1995, 1996 and 1997, respectively, and $ 0 and $530,000
for the three months ended March 31, 1997 and 1998, respectively. See Notes
7, 8 and 9 of Notes to Consolidated Financial Statements.
(2) See Note 2 of Notes to Consolidated Financial Statements for a discussion of
the computation of basic and diluted net loss per share and weighted average
shares outstanding. Share information for all periods presented has been
retroactively adjusted to reflect a
10-for-1 split of Common Stock and Preferred Stock in June 1995.
22
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements relating to
future events and the future financial performance of the Company, each of which
involves risks and uncertainties. These events and the Company's actual results
could differ materially from those described in these forward-looking statements
as a result of certain factors, including, but not limited to, those set forth
under "Risk Factors." "Business" and elsewhere in this Prospectus.
OVERVIEW
Wink Communications offers a simple-to-use, low-cost enhanced television
broadcasting system, Wink Enhanced Broadcasting, that adds interactivity and
electronic commerce opportunities to traditional television programming and
advertising. Wink Enhanced Broadcasting allows broadcast and cable networks and
advertisers to create interactive programming and commercials to which viewers
can respond by requesting information or ordering products through a remote
control. The Company's Wink Response Network is designed to aggregate these
responses and forward them to advertisers. The Company's business plan is to
derive the primary portion of its revenues through the Wink Response Network by
charging transaction fees to advertisers for each information request or
purchase order obtained from viewers. To encourage broad adoption of Wink
Enhanced Broadcasting, the Company seeks to provide benefits to multiple
participants in the television industry, including viewers, advertisers,
broadcast and cable networks, cable and DBS system operators and television and
set-top terminal manufacturers. In order to increase the presence of Wink in
television households, the Company has formed strategic relationships with a
number of cable system operators, such as Century Communications, Charter
Communications, Intermedia and Jones Programming Services, and television and
set-top terminal manufacturers, such as General Instrument, Pioneer, Scientific-
Atlanta and Toshiba. The Company has also formed strategic relationships with a
number of broadcast and cable networks, such as CNN, ESPN, NBC and The Weather
Channel, in order to promote the development of Wink-enhanced programming. Wink
Enhanced Broadcasting has been deployed in Japan since October 1996, and was
initially deployed in the United States in June 1998 in Kingsport, Tennessee on
an Intermedia cable system.
The Company was founded in October 1994, and its activities to date have
consisted of developing and porting its Wink Engine software for incorporation
into television sets and advanced analog and digital set-top terminals;
developing its Wink Studio authoring tool software and licensing the software to
major broadcast and cable networks, third-party developers and advertisers to
enable them to develop Wink programming enhancements; developing and licensing
its Wink Server software to broadcast and cable networks and cable system
operators to incorporate Wink enhancements into their television programming;
developing the Wink Response Network for collecting and managing responses to
Wink-enhanced programming; and marketing the concept of Wink Enhanced
Broadcasting and establishing the Wink brand.
In 1995, the Company entered into an agreement to develop the Company's
Wink Engine software for incorporation into certain set-top terminals
manufactured by General Instrument. The Company has since entered into similar
agreements to port its Wink Engine software to set-top terminals manufactured by
Scientific Atlanta and Pioneer. In addition, in 1997, the Company entered into
development agreements with Toshiba and Matsushita to port the Wink Engine
software to certain of their television sets. Since the beginning of 1997, the
Company has signed agreements for Wink-enhanced programming to be broadcast on
CNN, CNN Headline News, Court TV, ESPN, ESPN 2, The Nashville Network, NBC, Nick
at Nite, Showtime, TBS, TNT, VH-1, and The Weather Channel. The Company has also
signed agreements with Century Communications, Charter Communications,
Intermedia Partners, Jones Intercable and 21st Century that establish pricing
and a framework for deployment of Wink Enhanced Broadcasting on certain of their
local cable systems. Wink Enhanced Broadcasting was first launched in Japan in
October 1996. As of March 31, 1998, approximately 100,000 Wink-enabled
televisions have been shipped in Japan. The Company does not receive any
transaction-related revenue from the operation of Wink Enhanced Broadcasting in
Japan. The initial U.S. deployment of Wink Enhanced Broadcasting occurred in
June 1998 in Kingsport, Tennessee on an Intermedia cable system.
23
<PAGE> 25
Through March 31, 1998, the Company's revenues have been derived from
license fees relating to royalties earned from the Wink Engine software,
non-recurring engineering fees under agreements to port the Wink Engine software
to various televisions and set-top terminals and service fees relating to
software installation and post-contract customer support. The Company recognizes
software license revenues relating to the Wink Engine on a "sell-through" basis
upon notification of shipment of Wink-enabled products by the original equipment
manufacturer. Non-recurring engineering fees are recognized under the
percentage-of-completion method, using labor hours as a measure of progress
towards completion. Fees from installation services are recognized as services
are provided, and post-contract customer support fees are recognized ratably
over the term of the support agreement. Fees received in advance of revenue
recognition are included on the balance sheet as deferred revenue.
The Company's business plan is to derive the primary portion of its
revenues from the Wink Response Network by charging transaction fees to
advertisers and other creators of Wink-enhanced programming for each information
request or purchase order obtained from viewers who respond to Wink Enhanced
Broadcasting. As a result, the Company does not expect that non-recurring
engineering services will represent a significant component of future revenues.
The Company believes that its success is largely dependent on its ability to
execute its business model, which allows other television industry participants
supporting Wink-enabled programming to benefit economically from Wink Enhanced
Broadcasting. In this regard, Wink has entered into a number of agreements with
cable system operators and certain other market participants to share with these
entities a portion of revenues, if any, the Company generates from viewer
responses to Wink Enhanced Broadcasting. The Wink Response Network has been
developed but is not expected to be activated until the second half of 1998.
Accordingly, no transaction fee revenue has been recognized to date. Any amounts
payable to third parties in future periods resulting from fee sharing will be
included in cost of revenues.
License revenues in future periods are also expected to be derived from
Wink server and authoring software applications. The Wink Broadcast Server
application is being offered to customers under monthly license fee arrangements
with terms ranging from one to five years, with periodic fee increases based
upon changes in the Consumer Price Index and other contract provisions. Revenues
derived from such arrangements will be recognized monthly based upon the
applicable subscription fee. License revenues relating to Wink authoring
software applications will be recognized upon software delivery, provided that
there is a signed agreement evidencing a fixed and determinable fee and a
determination that collection of the fee is probable.
The Company has incurred net losses since inception and, at March 31, 1998,
had an accumulated deficit of approximately $19.9 million. The Company's
prospects must be considered in light of the risks frequently encountered by
companies in an early stage of development, particularly companies in new and
evolving markets such as interactive television. The profit potential of the
Company's business model is unproven. Achieving and sustaining profitability
will require widespread adoption of Wink Enhanced Broadcasting by all industry
participants; the establishment of relationships with multiple significant
advertisers; an increase in the number and expansion of the scope of its
relationships with significant broadcast and cable networks, and local cable and
DBS system operators and television and set-top terminal manufacturers; the firm
establishment of the Wink brand; continued strengthening of the quality of its
technology and operations; full implementation of the transaction processing
systems in the Wink Response Network; timely responses to competitive
developments; and the attraction, retention and motivation of qualified
employees. The failure of the Company to successfully meet any of these
challenges could have a material adverse effect on the Company's business,
operating results and financial condition. There can be no assurance that the
Company will ever achieve favorable operating results or profitability. See
"Risk Factors -- Limited Operating History; No Assurance of Profitability."
RESULTS OF OPERATIONS
Revenues
Total revenues increased 62% to $141,000 for the three months ended March
31, 1998, compared to $87,000 for the three months ended March 31, 1997. The
increase was related primarily to Wink Engine
24
<PAGE> 26
royalties earned on shipments by Toshiba of Wink-enabled television sets as well
as to installation fees. Total revenues increased 78% to $619,000 for the year
ended December 31, 1997, compared to $348,000 for the year ended December 31,
1996. The increase was related primarily to Wink Engine royalties earned on
shipments by Toshiba of Wink-enabled television sets, offset in part by a
decline in non-recurring engineering fees, as certain development agreements
neared completion. During fiscal 1997, transactions with Toshiba, Scientific-
Atlanta and General Instrument each accounted for at least 10% of the Company's
total revenues. Total revenues increased 248% to $348,000 for the year ended
December 31, 1996, compared to $100,000 for the year ended December 31, 1995.
Revenues in 1996 were derived primarily from three development agreements with
Scientific-Atlanta, Pioneer and Matsushita to port the Wink Engine software to
their respective set-top terminals or television sets. During fiscal 1996,
transactions with Scientific-Atlanta, Matsushita, Pioneer and General Instrument
each accounted for at least 10% of the Company's total revenues. In 1995, the
Company's revenues were derived entirely from a development agreement to port
the Wink Engine software to General Instrument's set-top terminals.
Costs and Expenses
Total costs and expenses were $3.0 million and $1.9 million for the three
months ended March 31, 1998 and 1997, respectively. Total costs and expenses
were $10.3 million, $6.5 million and $2.3 million for the years ended December
31, 1997, 1996 and 1995, respectively. The increase of 55% from the three months
ended March 31, 1997 to the three months ended March 31, 1998 and the increases
of 58% from the year ended December 31, 1996 to the year ended December 31, 1997
and 179% from the year ended December 31, 1995 to the year ended December 31,
1996 were primarily a result of additional operating costs associated with the
development, testing and deployment of the Wink Engine software, the Wink
Broadcast Server software and the Wink Response Network, as well as substantial
sales and marketing expenses. The Company believes that continued expansion of
its operations and its sales and marketing efforts is critical to the
achievement of its goals, and believes that costs and expenses will continue to
increase to support the establishment of Wink Enhanced Broadcasting as a
television industry standard.
Cost of Services. Cost of services is composed primarily of direct
engineering labor and materials associated with the Company's arrangements to
provide non-recurring engineering services. In future periods, cost of services
is also expected to include costs of deployment, the portion of transaction fees
shared with third parties and the costs of operating the Wink Response Network,
including processing and telecommunication costs.
Cost of services decreased 63% to $70,000 for the three months ended March
31, 1998, compared to $188,000 for the three months ended March 31, 1997,
reflecting the completion of various engineering projects during 1997. Cost of
services decreased 4% to $538,000 for the year ended December 31, 1997, compared
to $558,000 for the year ended December 31, 1996, as engineering projects
initiated by the Company in 1996 and 1995 neared completion. Cost of services
increased 469% to $558,000 for the year ended December 31, 1996, compared to
$98,000 for the year ended December 31, 1995, as a result of an increased number
of engineering projects.
Research and Development. Research and development expense includes costs
associated with the Company's engineering and operations departments, including
personnel costs, allocated facilities-related expenses and payments to
third-party consultants.
Research and development expenses increased 98% to $1.3 million for the
three months ended March 31, 1998 from $673,000 for the three months ended March
31, 1997, as additional engineering and operations personnel costs were incurred
to support increased product deployment activities. Research and development
expenses increased 69% to $4.4 million for the year ended December 31, 1997
compared to $2.6 million for the year ended December 31, 1996, as a result of
increased personnel costs associated with the Company's expanded operations.
Research and development expenses increased 205% to $2.6 million for the year
ended December 31, 1996 from $851,000 for the year ended December 31, 1995,
primarily as a result of increased personnel costs and increased
facilities-related expenses.
25
<PAGE> 27
Sales and Marketing. Sales and marketing expense includes salaries,
consulting fees, travel-related costs and advertising expenses associated with
the Company's cable sales, consumer marketing and content departments. In future
periods, sales and marketing expense is expected to increase significantly and
to include costs of the Company's customer service center to register and field
inquiries from Wink television viewers, costs of marketing materials, commercial
spots and training for the launch of Wink Enhanced Broadcasting in each new
cable system deployment, as well as costs of sales performance incentives to
various consumer electronics retailers to encourage them to register their
customers as Wink users.
Sales and marketing expense increased 83% to $1.2 million for the three
months ended March 31, 1998 from $636,000 for the three months ended March 31,
1997, primarily as a result of resources expended to support the anticipated
initial deployment of Wink Enhanced Broadcasting in mid-1998, including $300,000
related to warrants issued to a broadcasting company (see "Stock-based Costs and
Expenses"). Sales and marketing expense increased 55% to $3.5 million for the
year ended December 31, 1997 compared to $2.3 million for the year ended
December 31, 1996, primarily as a result of increased personnel and travel-
related costs and $240,000 related to the issuance of warrants to a broadcasting
company in June 1997 (see "Stock-based Costs and Expenses"). The headcount in
the Company's cable sales, consumer marketing and content departments increased
to a total of 23 full-time equivalent employees at December 31, 1997, compared
to 20 at December 31, 1996. Sales and marketing expense increased 152% to $2.3
million for the year ended December 31, 1996 from $899,000 for the year ended
December 31, 1995, due primarily to increased personnel costs and costs
associated with the Company's Japanese subsidiary.
General and Administrative. General and administrative expense includes
administrative and executive personnel costs, unallocated facilities-related
expenses and other miscellaneous administrative costs. The Company expects
general and administrative expense to increase in the future as additional
personnel are hired to support anticipated growth.
General and administrative expense decreased 4% to $409,000 for the three
months ended March 31, 1998 from $428,000 for the three months ended March 31,
1997, due primarily to relocation expenses paid in 1997. General and
administrative expense was $1.8 million, $1.1 million and $472,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. The year-to-year increases
of 73% and 126%, respectively, resulted from the growth of the Company and the
hiring of administrative and executive personnel to begin to position the
Company to achieve its long-term goals.
Stock-based Costs and Expenses. During the year ended December 31, 1997 and
the three months ended March 31, 1998, the Company recognized unearned
compensation totaling $700,000 and $600,000, respectively, with respect to
certain stock option grants and sales of restricted stock to employees.
Subsequent to March 31, 1998, the Company granted additional options to purchase
an aggregate of 231,500 shares of Common Stock at a weighted average exercise
price of $6.00 per share. In connection with those option grants, the Company
recognized additional unearned compensation totaling $750,000. Amortization of
unearned compensation totaled $215,000 for the year ended December 31, 1997 and
$117,000 for the three months ended March 31, 1998, and has been allocated to
operating cost and expense categories based upon the primary activity of the
applicable employees. The remaining unearned compensation at March 31, 1998,
totaling approximately $977,000, and unearned compensation recognized subsequent
to March 31, 1998, will be amortized over the respective stock and option
vesting periods.
In June 1997, the Company granted warrants to purchase 375,000 shares of
Common Stock to a broadcasting company that agreed to use its reasonable efforts
to air a specified number of hours of Wink Enhanced Broadcasting. Warrants to
purchase 75,000 shares of Common Stock were exercisable on the grant date and
had an estimated fair value of $40,000 which was immediately charged to sales
and marketing expense. Vesting of the remaining warrants to purchase 300,000
shares was originally contingent upon specified future performance criteria over
an 18-month period. At December 31, 1997, the warrants had an estimated fair
value at the prospective vesting date of $500,000, of which $200,000 was
recognized as sales and marketing expense during 1997. Effective February 1,
1998, the agreement with the broadcasting company was amended to remove all
remaining performance vesting criteria, and the warrants became fully
exercisable.
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<PAGE> 28
The $300,000 difference between the February 1, 1998 estimated fair value of
$500,000 and the previously recognized expense is included in sales and
marketing expense in the three months ended March 31, 1998.
Interest and Other Income, Net of Interest Expense. Net interest and other
income was $179,000 and $9,000 for the three months ended March 31, 1998 and
1997, respectively. Net interest and other income was $490,000, $252,000 and
$72,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
These increases were due to increases in the average cash and investment
balances in later years as a result of the receipt of the proceeds from sales of
Preferred Stock, partially offset by an increase in interest expense associated
with borrowings under the Company's lease financing facility.
Income Taxes. The Company has not generated taxable income since inception
and, as a result, the provision for income taxes consists solely of the
California minimum franchise tax of approximately $1,000 per year, which is
included in general and administrative expenses. At March 31, 1998, the Company
had federal and state net operating loss carryforwards of approximately $16.5
million available to reduce future taxable income. Due to a cumulative change of
ownership of greater than 50 percent in June 1997, the amount of loss
carryforwards that can be utilized to reduce future taxable income for federal
and state income tax purposes will be limited to approximately $6.7 million per
year.
Net Loss. The Company has incurred net losses since inception, including
net losses of $2.7 million, $9.2 million, $5.9 million and $2.1 million for the
three months ended March 31, 1998, and the years ended December 31, 1997, 1996,
and 1995, respectively. The increase in losses was due primarily to significant
increases in expenses as a result of additional business activities, partially
offset by a small increase in revenue over the same period.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company's future quarterly operating results may fluctuate
significantly due to a number of factors, many of which are outside the
Company's control. These factors include, but are not limited to, extremely
limited experience with viewer response activity; the timing and success of
deployment of Wink Enhanced Broadcasting by broadcast and cable networks, cable
and DBS system operators and television and set-top terminal manufacturers; the
timing and success of infrastructure upgrades, necessary to support that
deployment; the unproven nature of the Company's business model; the impact of
competitors' activities; whether enhanced broadcasting is adopted as a source of
information and commerce by consumers and advertisers; the Company's ability to
establish and maintain significant transaction processing activity through the
Wink Response Network; seasonality of transaction processing activity, such as
potentially reduced summertime activity when television viewing declines; a
limited operating history; the emerging nature of the market in which the
Company competes; technical difficulties that could occur with the Company's
technology and transaction processing systems or those of market participants
upon which Company is dependent; the ability to manage rapid growth and
deployment, including hiring, training and retaining an adequate number of
qualified personnel; timing of various expenses and capital expenditures; the
effects of existing or new government regulations or legal conditions; and
general economic conditions. The Company's ability to forecast revenues is
limited because of the Company's brief operating history and the emerging nature
of the market in which the Company competes. Currently, the Company derives
revenue from license fees and engineering fees. In the future, however, it is
anticipated that the Company's revenues will depend substantially on the level
of viewer response activity which, in turn, is related to the amount of
Wink-enhanced programming and advertising available. The Company's experience
with viewer responses is limited. Accordingly, the Company's forecasts related
to future revenues, particularly those derived from viewer response activities,
are subject to an unusual degree of uncertainty. The Company's expense levels
are based largely on its operating plans, and estimates of future revenues and
are to a large extent fixed. The Company may be unable to adjust spending in a
timely manner to compensate for any unexpected shortfall in revenues. As a
result, a shortfall in actual revenue as compared to estimated revenue could
have an immediate material adverse effect on the Company's business, financial
condition and operating results. In addition, the Company plans to increase its
operating expenses and capital expenditures to fund additional technological
development, sales, marketing, transaction processing and general activities. To
the extent such expenses precede or are not subsequently followed by increases
in revenues, the Company's business, operating results and financial
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<PAGE> 29
condition could be materially adversely affected. Due to the foregoing factors,
it is probable that the Company's operating results in one or more future
quarters will fail to meet or exceed the expectations of securities analysts or
investors. In such event, the trading price of the Common Stock would likely be
materially adversely affected.
YEAR 2000 COMPLIANCE
Many existing electronic devices, systems and applications use only two
digits to identify a year in the date field, without considering the impact of
the upcoming change in the century. As a result, such devices, systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000 and beyond. The Company relies on
certain devices, systems and applications in operating and monitoring all major
aspects of its business, including financial systems (such as general ledger,
accounts payable and payroll), customer services, infrastructure, networks and
telecommunications equipment. The Company also relies, directly and indirectly,
on external systems of business enterprises, both domestic and international,
for accurate exchange of data. The Company's current estimate is that the costs
associated with the year 2000 issue, and the consequences of incomplete or
untimely resolution of the year 2000 issue, will not have a material adverse
effect on the results of operations or financial position of the Company in any
given year. In addition, even if the internal systems of the Company are not
materially affected by the year 2000 issue, the Company could be affected
through disruption in the operation of the enterprises with which the Company
interacts. Furthermore, although the Company's products comply with such year
2000 requirements, the Company believes that the purchasing patterns of
customers and potential customers may be affected by year 2000 issues, as
companies expend significant resources to correct or patch their current
software systems to comply with year 2000 requirements. These expenditures may
result in reduced funds available to purchase or deploy products and systems
such as those offered by the Company, which could have a material adverse effect
on the Company's business, operating results and financial condition.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." Under SFAS No. 130, companies are
required to report in the financial statements, in addition to net income,
comprehensive income including, as applicable, foreign currency items, minimum
pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. For the three months ended March 31,
1998, comprehensive net loss, as determined under SFAS No. 130, was the same as
the Company's net loss. Under SFAS No. 131, companies are required to separately
report certain financial and descriptive information about operating segments.
The Company will adopt the provisions of SFAS No. 131 in connection with its
financial statements for the year ending December 31, 1998, and does not expect
adoption to have a material impact on such financial statements.
In March 1998, the American Institute of Certified Public Accountants (the
"AICPA") issued SoP No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SoP No. 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. The Company does
not expect that adoption of SoP 98-1 will have a material impact on its
financial statements.
Effective January 1, 1998, the Company adopted SoP No. 97-2, "Software
Revenue Recognition." As the Company's historical revenues have been derived
primarily from services that are recognized on a percentage-of-completion basis,
adoption of SoP No. 97-2 did not have a significant impact on the Company's
revenue recognition policy. In March 1998, the AICPA issued SoP No. 98-4, which
deferred for one year certain provisions of SoP No. 97-2 relating to the
determination of fair value of multiple elements included in a software
arrangement. While the ultimate resolution of the guidance deferred by SoP 98-4
cannot be determined, based on its existing and expected future licensing
practices, the Company does not expect such resolution will have a significant
impact on its revenue recognition policy.
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<PAGE> 30
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its activities largely through
the private sale of equity securities and through proceeds from capital lease
financing. At March 31, 1998, the Company's principal source of liquidity was
from $13.4 million of cash, cash equivalents and short-term investments.
Net cash used in operating activities totaled $2.1 million, $7.0 million,
$5.3 million and $1.4 million for the three months ended March 31, 1998, and the
years ended December 31, 1997, 1996 and 1995, respectively, primarily as a
result of the Company's net losses.
Net cash used in investing activities, primarily for property and equipment
purchases, totaled $396,000 for the three months ended March 31, 1998. Net cash
used in investing activities was $5.8 million for the year ended December 31,
1997, attributable primarily to the purchase of short-term investments. Net cash
used in investing activities was $1.3 million for the year ended December 31,
1996, attributable to the acquisition of property and equipment. Net cash used
in investing activities was $323,000 for the year ended December 31, 1995, again
attributable to property and equipment purchases. The Company anticipates that
capital expenditures for the remainder of 1998 will not be significant and will
be financed with existing cash and cash equivalents, short-term investments or
with the proceeds of this offering.
Net cash provided by financing activities was $1.9 million and $17.2
million in the three months ended March 31, 1998 and the year ended December 31,
1997, respectively, consisting primarily of net proceeds from sales of Series C
Preferred Stock in each period. Net cash provided by financing activities was
$7.9 million for the year ended December 31, 1996, due to $6.5 million received
as net proceeds from sales of Series B Preferred Stock and $1.4 million in
proceeds from lease financing transactions. Net cash provided by financing
activities was $4.4 million for the year ended December 31, 1995, resulting
primarily from sales of Series A and Series B Preferred Stock.
The Company believes that its existing cash, cash equivalents and
short-term investments, together with the net proceeds from this offering, will
be sufficient to meet its currently anticipated business requirements, including
capital expenditures and strategic operating programs, for at least the next 12
months. Thereafter, if cash generated by operations is insufficient to satisfy
the Company's liquidity requirements, the Company may need to sell additional
equity or debt securities or obtain additional credit facilities. The sale of
additional equity or convertible debt securities may result in additional
dilution to the Company's stockholders. There can be no assurance that the
Company will be able to raise any such capital on terms acceptable to the
Company, if at all.
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<PAGE> 31
BUSINESS
The following discussion of the Company's business contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including, but not limited to, those
set forth under "Risk Factors" and elsewhere in this Prospectus.
OVERVIEW
Wink Communications offers a simple-to-use, low-cost enhanced television
broadcasting system, Wink Enhanced Broadcasting, that adds interactivity and
electronic commerce opportunities to traditional television programming and
advertising. Wink Enhanced Broadcasting allows broadcast and cable networks and
advertisers to create interactive programming and commercials to which viewers
can respond by requesting information or ordering products through a remote
control. The Company's Wink Response Network is designed to aggregate these
responses and forward them to advertisers. The Company's business plan is to
derive the primary portion of its revenues through the Wink Response Network by
charging transaction fees to advertisers for each information request or
purchase order obtained from viewers. To encourage broad adoption of Wink
Enhanced Broadcasting, the Company seeks to provide benefits to multiple
participants in the television industry, including viewers, advertisers,
broadcast and cable networks, cable and DBS system operators and television and
set-top terminal manufacturers. In order to increase the presence of Wink in
television households, the Company has formed strategic relationships with a
number of cable system operators, such as Century Communications, Charter
Communications, Intermedia and Jones Programming Services, and television and
set-top terminal manufacturers, such as General Instrument, Pioneer, Scientific-
Atlanta and Toshiba. The Company has also formed strategic relationships with a
number of broadcast and cable networks, such as CNN, ESPN, NBC and The Weather
Channel, in order to promote the development of Wink-enhanced programming. Wink
Enhanced Broadcasting has been deployed in Japan since October 1996, was
initially deployed in the United States in June 1998 in Kingsport, Tennessee on
an Intermedia cable system.
INDUSTRY BACKGROUND
Television is one of the most pervasive communications media in society
today. According to Nielsen Media Research, there were 98 million television
households in the United States in January 1998. According to Veronis Suhler,
the average person in the United States watched approximately 1,600 hours of
television (approximately 4.3 hours per day) in 1997. In addition, according to
TV Digest, over 24.5 million television sets were sold in the U.S. in 1997, and
Paul Kagan* projects that 100 million additional televisions will be sold
through 2002. According to Paul Kagan, approximately 66% of U.S. households were
receiving their television signal through cable in March 1998, and cable service
is available to substantially all U.S. households. With recent advances in
television and set-top terminal technology, new television sets and advanced
analog and digital set-top terminals can provide a platform for interactive
television. According to Paul Kagan, in 1997 there were approximately 30 million
set-top terminals in use, of which 4.2 million were advanced analog or digital
set-top terminals. By 2002, Paul Kagan expects that the number of advanced
analog and digital terminals in use will increase to 21 million.
Television advertising is considered to be one of the most effective
methods of building brand recognition and general consumer awareness of products
and services. The total amount spent on television advertising in the United
States in 1995 was approximately $36 billion, according to the Direct Marketing
Association. Despite the fact that neither traditional television broadcasting
nor standard cable television systems provide an integrated means for viewers to
respond to programs and advertisements, an increasing amount of revenues are
generated annually on direct marketing over television. According to Veronis
Suhler, in 1997, approximately $15 billion was spent on direct response
television advertising, and that amount is expected to grow to $23 billion in
2002. In fact, dedicated television networks, such as the Home Shopping Network
and QVC
- - ---------------
*Paul Kagan of Paul Kagan Associates is a holder of 2,500 shares of Common
Stock of the Company.
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have been created to sell directly to viewers. Today, most direct response
television purchases and requests for information require a telephone call. The
Company believes that television viewers will respond favorably to a simple,
immediate, inexpensive and automated method for them to respond to television
commerce. For example, according to Paul Kagan, certain cable systems that have
enabled viewers to order pay-per-view programs through remote control have
registered an 89% increase in orders over systems where viewers were required to
place their orders by phone.
Previous attempts at television interactivity have not been widely
successful. Due to the bandwidth and technology constraints of standard
televisions, many interactive television systems have required extensive
equipment and infrastructure upgrades at a price too high to permit mass-market
acceptance. Other interactive television ventures have not been simple to use or
easily understood by viewers. In addition, many of these systems have required
viewers to switch to a separate interactivity channel and away from the
television programs they are watching. For these and other reasons, the Company
believes that a significant market opportunity exists for the deployment of
enhanced television broadcasting that is compelling, economical and easy to use,
while offering strategic and financial benefits to advertisers, broadcast and
cable networks, cable and DBS system operators, television and set-top terminal
manufacturers and others that participate in the television industry.
THE WINK SOLUTION
Wink Communications offers a simple-to-use, low-cost enhanced television
broadcasting system, Wink Enhanced Broadcasting that adds interactivity and
electronic commerce opportunities to traditional television programming and
advertising. Wink Enhanced Broadcasting is designed to benefit multiple
participants in the television industry: viewers, advertisers, networks, cable
and DBS system operators and television and set-top terminal manufacturers. To
access a Wink enhancement on regular programming or on a commercial, a
television viewer simply clicks the remote control of a Wink-enabled television
or set-top terminal when the Wink icon appears on the screen. When the icon
appears during programming, the enhancement can provide additional information
relevant to that programming or related information of particular interest. More
advanced enhancements offer the viewer a menu of several informational choices,
which the viewer can access through additional clicks of the remote. When the
icon appears during a commercial or other advertising, the enhancement can
provide additional information about the advertised product and allow the viewer
to request further information about the product. If the viewer registers a
credit card with the Wink Response Network, the enhancement will enable the
viewer to purchase products. In either case, the viewer can order the additional
information or the product itself simply by clicking the remote, with no further
action required. Examples of how Wink Enhanced Broadcasting enhancements appear
on the viewer's television screen are illustrated on the inside front cover of
this Prospectus.
Wink Enhanced Broadcasting can be used to enhance a variety of programming.
For example, viewers watching CNN Headline News can click on the Wink icon to
obtain additional information about a specific national or local news story, or
viewers of The Weather Channel can obtain their local weather forecasts.
Likewise, a sports fan watching ESPN can obtain game scores. Wink applications
can also be used to enhance advertising. For instance, product vendors can use
Wink enhancements to offer viewers the opportunity to request information or to
sample or purchase the product, as well as to prompt viewers to provide survey
data regarding brand usage. Telecommunications companies could offer viewers the
option to switch to their telephone service or to select a new rate plan simply
by clicking their remote control. Similarly, Showtime intends to offer viewers
the opportunity to subscribe to the channel through Wink Enhanced Broadcasting.
Wink Enhanced Broadcasting is an end-to-end enhanced television system
delivered through a combination of client software, intelligent server software
and authoring software. The Wink Engine, the Company's client software, can be
pre-installed directly into television sets and set-top terminals or downloaded
by cable and DBS system operators into certain advanced analog and digital cable
set-top terminals. The Wink Studio authoring software enables programming
creators and advertisers to create Wink programming enhancements. The Wink
Broadcast Server software enables broadcast and cable networks and cable and DBS
system operators to integrate Wink applications with particular programming or
advertisements to create Wink-enhanced programming. Finally, the Company's Wink
Response Network is designed to enable the collection
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and aggregation of viewer responses, requests for information and purchase
orders for transmission to and use by advertisers, broadcast and cable networks
and cable and DBS system operators. Wink Enhanced Broadcasting is currently
deployed in Japan on the TV-Tokyo, TV-Osaka, TV-Aichi and Wowow broadcast
networks, and Wink's initial U.S. deployment occurred in June 1998 in Kingsport,
Tennessee on an Intermedia cable system. Although the Wink Response Network has
been developed, it is not expected to be activated until the second half of
1998.
The Company believes that Wink Enhanced Broadcasting will offer distinct
benefits to all participants in the television industry, as follows:
Viewers. Wink Enhanced Broadcasting offers viewers an easy-to-use, enhanced
television viewing experience. The Company anticipates that Wink Enhanced
Broadcasting will be offered to viewers for free. Wink Enhanced Broadcasting
allows viewers to obtain a variety of additional content related to the
programming they watch and to request information about or purchase advertised
products. The viewer controls access to these broadcast enhancements or
electronic commerce opportunities through simple use of the viewer's remote
control.
Advertisers. Wink Enhanced Broadcasting is designed to give advertisers the
ability to provide additional information to viewers, generate sales leads, sell
products directly to viewers and collect detailed market information. In
addition, advertisers can promote their brands by sponsoring Wink programming
enhancements.
Broadcast and Cable Networks. The Company believes that Wink Enhanced
Broadcasting offers networks a new approach to increasing both the number of
viewers and viewer loyalty. As a result, the value of network advertising space
may be increased, allowing networks to charge premiums for airing Wink-enhanced
commercials. The Wink graphical overlays may also provide opportunities for
selling additional advertising space. In addition, networks can use Wink
Enhanced Broadcasting to offer merchandise to viewers and to promote other
programming on their channels. Moreover, information obtained through the Wink
Response Network can be used by networks to offer advertisers targeted audience
information.
Cable and Direct Broadcast Satellite System Operators. Wink Enhanced
Broadcasting is designed to offer cable and DBS system operators an expanded
menu of services to provide to their subscribers, thus helping to attract new
subscribers, maintain current subscribers and encourage all subscribers to
upgrade to premium services and purchase pay-per-view programming. In addition,
in order to encourage cable and DBS system operators to offer Wink Enhanced
Broadcasting, the Company offers to share a portion of any revenues generated by
Wink from their subscribers' responses to Wink-enhanced programming and
advertising and has already entered into agreements with a number of cable
system operators.
Television and Set-top Terminal Manufacturers. Wink Enhanced Broadcasting
is designed to offer television and set-top terminal manufacturers an
opportunity to enhance their products with increased functionality and to extend
their product lines at a relatively low incremental cost. The Company believes
Wink Enhanced Broadcasting can assist manufacturers in inducing consumers and
cable system operators to upgrade to higher performance devices. In addition, in
order to encourage television manufacturers to incorporate Wink Enhanced
Broadcasting into their products, the Company has agreed to share with
television manufacturers a portion of any revenues generated by Wink from
responses to Wink-enhanced programming and advertising from users of their
devices.
STRATEGY
The Company's objective is to capitalize on the pervasiveness and
popularity of television to create a mass market medium for interactivity and
commerce. The Company's strategy to achieve this objective includes the
following key elements:
Increase the Presence of Wink in Television Households. The Company intends
to aggressively promote deployment of Wink Enhanced Broadcasting in as many
households as possible, through mass market television sets and set-top
terminals. To this end, the Company has targeted and will continue to target
licensing relationships with leading manufacturers of television sets and
set-top terminals. The Company is
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also working with certain large cable and DBS system operators to encourage the
deployment of Wink-enabled set-top terminals in each of their systems.
Promote Development of Wink-Enhanced Programming. The Company believes that
increased development and broadcasting of Wink-enhanced programming is critical
to attracting viewers to Wink Enhanced Broadcasting. Consequently, the Company
has entered into a number of strategic relationships with broadcast and cable
networks to air Wink enhancements that offer viewers an entertaining and
informative interactive television experience. The Company also intends to enter
into relationships with advertisers to create Wink enhancements that offer
viewers the ability to request product information, coupons, samples and other
offers and to purchase products and services.
Penetrate Direct Response Television Advertising Market. The Company
believes that Wink Enhanced Broadcasting and specifically, the Wink Response
Network, provide an opportunity to penetrate the direct response television
advertising market. The Company believes that the simplicity and convenience of
the Wink transaction response mechanism will encourage viewers to respond to
Wink-enhanced advertising and promotions. The Company believes that increased
viewer responses to Wink-enhanced advertising will encourage advertisers to
shift their advertising dollars to Wink-enhanced advertising, away from direct
response television advertising that relies on traditional toll-free
telemarketing services.
Benefit Multiple Participants in the Television Industry. The Company
believes that generating economic value for broadcast and cable networks, cable
and DBS system operators, television and set-top terminal manufacturers and
advertisers is critical to the success of Wink Enhanced Broadcasting. The
Company's business model has been designed to deliver new opportunities for
generating revenue or cost savings directly to multiple industry participants.
Leverage Industry Relationships. The Company has formed strategic
relationships with key participants in the television industry. The Company
believes that its relationships with broadcast and cable networks, including
CNN, ESPN, NBC and The Weather Channel, and with cable system operators,
including Charter Communications, Century Communications, Intermedia and Jones
Programming Services, will enable it to attract significant interest from
advertisers. The Company currently also has relationships with General
Instrument, Pioneer and Scientific-Atlanta, three of the leading set-top
terminal manufacturers, to include Wink Engines in their set-top terminals. The
Company believes its relationships with these manufacturers will encourage cable
operators to adopt Wink Enhanced Broadcasting. In addition, the Company has
relationships with Toshiba to install Wink Engines in new television models in
the United States starting in late 1998. The Company intends to seek additional
relationships and believes that increasing the breadth and depth of these
relationships will facilitate its ability to develop additional relationships.
Promote the Wink Brand. The Company believes that developing and
maintaining a strong brand identity is critical to its ability to attract
viewers and obtain and retain key strategic relationships with industry
participants. The Company's goal is to make the Wink brand and the Wink icon
synonymous with interactive enhanced programming that is appealing to viewers
and easy to use. In addition to encouraging content providers, broadcast and
cable networks and advertisers to produce compelling Wink-enhanced programming,
the Company intends to build brand recognition through a variety of marketing
and promotional activities, including promotion of high visibility of the Wink
icon, targeted pre-deployment televised advertising campaigns to generate a high
level of initial interest, cooperative promotional programming with cable
operators, and advertising campaigns following deployment in selected regions
across a variety of media, including through Wink-enhanced programming itself.
Expand International Presence. The Company plans to selectively expand its
international operations indirectly by establishing and developing strategic
relationships with certain leading industry participants in Europe and Japan. In
the Japanese market, Wink has entered into relationships with Toshiba and
Matsushita, to incorporate the Wink Engine software into certain of their
television sets in the Japanese market. In the European market, the Company has
entered into a strategic relationship with TAK Interactive S.A., a subsidiary of
Thomson Multimedia S.A., as part of TAK's deployment of an interactive
television system in Europe. The agreement grants TAK an exclusive license to
deploy an end-to-end interactive system offering
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Wink Enhanced Broadcasting in 43 European countries (except Great Britain). The
Company is also in discussions with broadcast networks and cable and DBS system
operators who operate in Great Britain.
STRATEGIC RELATIONSHIPS
The Company believes that development of strategic relationships with
multiple significant television industry participants is critical to the
acceptance of Wink Enhanced Broadcasting, the promotion of the Wink brand and
ultimately the success of the Company's business model. The Company is currently
focused on developing strategic relationships in each sector of the television
industry, including advertisers and advertising agencies, broadcast and cable
networks, cable and DBS system operators and television and set-top terminal
manufacturers. The Company initially targets larger, established participants in
each sector.
Advertisers. The Company is targeting large, influential advertisers of
major product and service categories such as telecommunications, automotive,
retail, consumer durables, packaged goods, financial services and
pharmaceuticals.
Broadcast and Cable Networks. The Company has contracts with several
targeted leading networks in prime time entertainment, news, sports, weather,
movies and music programming for networks to develop Wink-enhanced programming
for a broad range of programming types. The Company is also encouraging networks
to create Wink-enhanced promotions for their own programming. The Company has
signed agreements to air enhanced programming on the following broadcast and
cable networks:
<TABLE>
<CAPTION>
TYPES OF TYPICAL
NETWORK* PROGRAMMING ENHANCEMENTS
-------- ----------- ------------
<S> <C> <C>
CNN News/Talk Shows Show Facts
CNN Headline News News News Headlines
Court TV Trials Trial Facts
ESPN Sports Sports Scoreboards
ESPN 2 Sports Sports Scoreboards
NBC Entertainment/Sports/Talk Shows Show Facts, Sports
Scoreboards
Nick at Nite Entertainment Show Facts, Trivia
Showtime Entertainment Polls, Show Facts,
Subscriptions
The Nashville Network Entertainment Music, News, Trivia
TBS Entertainment Games, Show Facts,
Trivia
TNT Entertainment Games, Show Facts,
Trivia
VH-1 Entertainment/Music CD Purchases, Games
The Weather Channel News Weather Forecasts
</TABLE>
- - ---------------
* Network airings of U.S. Wink programming enhancements are available only to
viewers who have a Wink-enabled set-top terminal connected to a cable or DBS
system on which Wink Enhanced Broadcasting has been deployed or, in the
future, through a Wink-enabled television set.
CNN, CNN Headline News, ESPN, NBC, The Nashville Network, TNT, TBS and The
Weather Channel are currently airing Wink-enhanced programming. Other networks
above are scheduled, but are not committed, to commence airing Wink-enhanced
programming at various times over the next 12 months. There can be no assurance
that any such network will meet this schedule. CNN Headline News, Court TV and
The Weather Channel have committed to air Wink programming enhancements
continuously with their regular programming. Other networks identified above
have signed agreements indicating an intention to air Wink-enhanced programming
for five to ten hours per week, although a Wink programming enhancement may not
be available at all times during such programming. The terms of these
commitments are generally one year from first air date, with some commitments
for up to three years, although some agreements may terminate earlier upon
certain events, including failure to meet certain performance criteria.
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Cable System Operators. The Company focuses on establishing relationships
with national cable system operators and with cable operators at the local level
in order to transmit the Wink-enhanced broadcasting signal to viewers. The cable
system operators with which the Company has entered into strategic relationships
include Century Communications, Corp., Charter Communications, Inc., Intermedia,
Jones Programming Services Inc., and 21st Century Cable TV, Inc. Agreements with
cable system operators generally provide a framework and pricing for deployment
of Wink Enhanced Broadcasting by the operators' local systems, although actual
deployments may require the Company to negotiate and enter into additional
agreements with each local system.
The Intermedia deployment in Kingsport, Tennessee was launched in June
1998, although the Wink Response Network is not expected to be activated in
connection with this deployment until the second half of 1998. There can be no
assurance that any other deployments will be launched on schedule, if at all. In
addition, all types of Wink enhancements and potential viewer responses may not
be available at the time of any launch.
Television Manufacturers. The Company is developing strategic relationships
with leading worldwide television manufacturers, including with Toshiba,
Matsushita and Thomson. Toshiba has committed to use reasonable efforts to
incorporate Wink Engine software into certain of its U.S. television models.
Matsushita and Toshiba have incorporated the Wink Engine software in televisions
currently marketed in Japan. Thomson, through its TAK subsidiary, has agreed to
use its reasonable best efforts to incorporate the Wink Engine software into
televisions anticipated to be marketed in Europe in 1999.
Cable Set-Top Terminal Manufacturers. The Company has licensed its Wink
Engine software to General Instrument, Pioneer and Scientific-Atlanta, three of
the leading U.S. cable set-top terminal manufacturers. While the Company intends
to license its software to other equipment manufacturers, the Company believes
its relationships with these three companies are critical to its success in the
cable business. General Instrument has licensed the Wink Engine for
incorporation into certain of its set-top terminals. As the first licensee of
Wink's technology, General Instrument has already begun shipments of certain
digital and advanced analog set-top products. In addition, the Company is
scheduled to deliver Wink Engines ported to advanced analog cable set-top
terminals manufactured by Scientific-Atlanta and Pioneer.
Strategic Relationships for Japan. The Company has targeted television set
manufacturers in Japan, because the Japanese cable television infrastructure is
not as widespread as that in the United States. As of March 31, 1998,
approximately 100,000 Wink-enabled television sets and set-top terminals have
been shipped for distribution in Japan under the brand names of Toshiba, Sony,
JVC and Panasonic. The Company utilizes Toshiba's broadcast equipment sales team
to sell Wink server and authoring tool products to Japanese networks and
satellite broadcast operators. The Company has server development and royalty
agreements directly with Toshiba for these products.
Wink Enhanced Broadcasting service was launched in the fourth quarter of
1996 in collaboration with the Intertext ITVision Promotion Consortium, a
consortium of 45 companies that has been formed to establish interactive
television in Japan. The Consortium includes companies such as Toshiba,
Matsushita, Sony, Pioneer, NTT and Dentsu, Japan's largest advertising agency.
Several Japanese broadcasters are currently using Wink technology to enhance
their programming up to seven days per week, including TV-Tokyo, TV-Osaka,
TV-Aichi and Wowow. Mitsui, Toshiba, Matsushita, NTT, Dentsu, Sony and other
companies have established MediaServe, a data center that collects responses
from Wink-enabled televisions through the Japanese public phone system. Viewers
have used Wink Enhanced Broadcasting to purchase women's apparel and to order
groceries and other products. The Company also has produced and licensed
versions of its software localized for Japan. The Wink programming enhancements
currently aired in Japan are similar to those being aired in the United States.
The Company does not receive any transaction fee revenue from responses to Wink
Enhanced Broadcasting in Japan.
Strategic Relationship for Continental Europe. The Company has entered into
a development and license agreement with TAK in April 1998, pursuant to which
the Company has agreed to provide its enhanced broadcasting software to TAK for
integration into a comprehensive interactive television system which TAK is
currently planning to deploy in France in the second half of 1999 and in Italy
and Spain in 2000.
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The agreement grants TAK an exclusive license to deploy a full end-to-end
interactive system offering Wink Enhanced Broadcasting in 43 European countries
(excluding Great Britain). The agreement provides for Wink to receive a per-unit
royalty for each Wink-enabled device actually connected to TAK's interactive
television system and a portion of TAK's aggregate net revenues, as defined in
the agreement. In addition, Wink has licensed to TAK other Wink products,
including Wink Studio software and Wink Broadcast Server software. The agreement
has a term of ten years, with TAK having the option to extend the term for an
additional five-year period thereafter.
The failure of a significant number of industry participants to adopt Wink
Enhanced Broadcasting would materially adversely affect the Company's business,
operating results and financial condition and could prevent the Company from
becoming a financially viable operation. Moreover, because of the complex
interrelationships among industry participants, failure to adopt Wink Enhanced
Broadcasting by a significant industry participant or group of participants
could deter or preclude adoption by other industry participants. See "Risk
Factors -- Unproven Enhanced Broadcasting Concept."
COMPONENTS OF WINK ENHANCED BROADCASTING
Wink Enhanced Broadcasting provides an end-to-end solution for sending
interactive applications along with broadcast video to viewers' televisions.
This system is composed of core, proprietary technologies developed by the
Company as well as off-the-shelf electronic commerce and database solutions.
Wink Enhanced Broadcasting consists of (i) the Wink Studio and Wink Server
Studio authoring tools that allow networks, advertisers and cable operators to
design interactive Wink applications; (ii) the Wink Broadcast Server that
manages the delivery of those applications; (iii) the Wink Engine client
software that executes applications; and (iv) the Wink Response Server and Wink
Response Network that are designed to efficiently process viewer responses to
applications. The diagram below illustrates the functional components of Wink
Enhanced Broadcasting.
[BLOCK FLOW CHART DIAGRAM OF MARKET PARTICIPANTS AND COMPANY PRODUCTS USED BY
EACH AS PART OF WINK ENHANCED BROADCASTING]
WINK STUDIO AND WINK SERVER STUDIO
Wink Studio is a high-level authoring tool that allows non-technical
designers to create enhanced programming applications. Wink Studio is
Windows-based, graphically oriented, and enables the creation of simple
interactive applications. A designer simply drags objects from an object palette
onto forms. More complex applications can be created by fully utilizing the Wink
Basic scripting language to control the behavior of objects and forms. The Wink
Server Studio is a high-level authoring tool for server modules that manage the
interleaving of live data updates to Wink applications. In particular, Wink
Server Studio is designed to make it easy to re-purpose data from websites for
broadcast updates.
WINK BROADCAST SERVER
The Wink Broadcast Server manages the scheduling and insertion of
applications designed with Wink Studio into television programming. The Wink
Broadcast Server is designed to integrate with station management equipment
such, as commercial insertion systems, to enable broadcast and cable networks to
schedule the delivery of interactive enhancements to programs and
advertisements. Local network affiliates and cable operators can also add
interactivity on a local level using the Wink Broadcast Server.
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WINK ENGINE
A Wink Engine is the client software in televisions and set-top terminals
that executes Wink applications. Wink Engines execute a generic, compact
representation of an interactive graphical application, automatically adapting
the application to the user interface and graphics capabilities of the receiving
device.
WINK RESPONSE SERVER
The Wink Response Server collects response packets generated by Wink
applications. Response packets are retrieved directly from televisions via phone
dial-up or through cable head-end systems using store-and-forward polling
technology. The Wink Response Server aggregates response packets and delivers
them to the Wink Response Network.
WINK RESPONSE NETWORK
Each Wink application is issued a unique number called a "UIC." When a
designer creates an application using Wink Studio he links to the Wink UIC
registry Website to obtain a UIC, and to provide reporting, routing and protect
information to process consumers' responses. When a consumer responds to a Wink
application and orders a product, a response packet is generated by the Wink
Engine in the television or set-top terminal. A response packet contains three
pieces of information: (i) the ID or serial number of the Wink enabled device
(television or set-top); (ii) the UIC code for the application; and (iii)
application specific data such as the product ordered. The Wink Response Server
collects the response packets and routes the packets to the Wink Response
Network.
The Wink Response Network maintains two databases: one database correlates
device serial numbers to customer address and billing information, while the
second correlates UIC codes to routing instruction and product information.
Response packets are aggregated, converted into full electronic data interchange
("EDI") orders (name, address, and credit information, if appropriate), and
delivered to the advertiser or network. The device ID database also maintains
information needed by Wink for revenue sharing. In the case of set-top
terminals, the customer database is maintained by the cable operator's billing
service, and Wink links to this database. The Wink Response Network is operated
by GEIS at a data center located in Rockville, Maryland and with a backup in
Brookpark, Ohio. The Wink Response Network has been developed but is not
expected to be activated until the second half of 1998 in connection with the
Company's first launch of Wink Enhanced Broadcasting in Kingsport, Tennessee.
In addition to aggregating and delivering responses, Wink can provide other
industry participants with additional reporting. For example, networks can
obtain aggregated information regarding all Wink applications that run on their
networks. Cable and DBS system operators can obtain cross network information
regarding all applications that run on their systems. Advertisers can obtain
information regarding how their ads perform across all networks. The Wink
Response Network combines custom data processing solutions developed by Wink
with off-the-shelf electronic commerce systems to provide a complete end-to-end
solution for customers.
TECHNICAL SUPPORT AND CUSTOMER SERVICE
The Company believes that comprehensive, high-quality support is an
essential element of the Company's business approach. The Company provides users
of its software with installation services, training, documentation, technical
and network support, and system maintenance for all Wink server and authoring
software. Upon request and for an additional fee, the Company will provide
customized technical consulting and support for applications and server module
development. The Company provides telephone technical support for its products
24 hours a day, 7 days a week, providing services that include system
monitoring, problem resolution and preventive troubleshooting.
COMPETITION
The interactive television field is new and characterized by changing
technology, an absence of industry standards, frequent new product and service
introductions and extensive capital requirements. Wink faces
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competition from a number of companies, many of which have significantly greater
financial, technical, manufacturing and marketing resources than Wink and may be
in a better position to compete in the industry. In addition, with the advent of
digital broadcast technologies, the Company expects that competition will
intensify. Current and potential competitors in one or more aspects of the
Company's business include television and other system software companies,
interactive television system providers and multimedia authoring tool providers.
The Company also faces competition from other providers and companies operating
in the direct marketing business, especially operators of toll-free response
call centers. Many of the Company's competitors and potential competitors have
longer operating histories and substantially greater financial, technical,
marketing and personnel resources, as well as greater name recognition. Such
competitors may be able to undertake more extensive marketing campaigns, adopt
more aggressive pricing policies and devote substantially more resources to the
development of interactive television products and services. In addition,
current and potential competitors have established or may establish joint
ventures or other corporate relationships among themselves or directly with
broadcasters, cable and DBS system operators and manufacturers to create
competitive enhanced broadcasting systems. Accordingly, it is possible that new
competitors or alliances among competitors and industry participants may emerge
and establish a new standard or acquire market share. There can be no assurance
that the Company will be able to compete successfully against current or future
competitors or that competitive pressures will not materially adversely affect
the Company's business, operating results and financial condition. In addition,
the Company may, at various times in response to changes in the competitive
environment, make certain pricing, service or marketing decisions or enter into
acquisitions or new ventures that could have a material adverse effect on its
business, operating results and financial condition.
A number of companies are developing system software for the general
interactive television market, including Intel Corporation, Microsoft
Corporation, Oracle Corporation and its affiliate NCI, Sun Microsystems, OpenTV
and Canal Plus. In particular, OpenTV and Canal Plus already offer certain very
similar features for digital television, and Intel and Microsoft have developed
technology that enables interactivity over analog or digital broadcasts. In
addition, many of these competitors have the support of or relationships with
industry participants with which the Company also has relationships, which could
affect the extent of support these industry participants give to Wink Enhanced
Broadcasting. Microsoft has acquired WebTV Networks and has invested in Comcast
and Time Warner's Road Runner cable modem service. Microsoft's WebTV Plus
Service and Oracle's NCI offer certain features similar to Wink Enhanced
Broadcasting. There are also a number of interactive system providers that have
developed proprietary software and hardware for adding interactivity to existing
television technologies, including Gemstar International Group Limited, Source
Media, ACTV Inc., ICTV and GTE Mainstreet. In addition, one or more of these
entities might choose to pursue hardware-independent, cross-platform
opportunities directly competitive with Wink Enhanced Broadcasting.
INTELLECTUAL PROPERTY
The Company's ability to compete is dependent in part upon its internally
developed, proprietary intellectual property. While the Company relies on
patents, trademark, trade secret and copyright law, as well as confidentiality
procedures and licensing arrangements to establish and protect its rights in its
technology, the Company believes that factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements, brand recognition and reliable product support are more essential
to establishing and maintaining a technology leadership position. There can be
no assurance that others will not develop technologies that are similar or
superior to the Company's technology. The Company typically enters into
confidentiality or license agreements with its employees, consultants,
customers, strategic partners and vendors, and typically controls access to and
distribution of its software, documentation and other proprietary information.
Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use the Company's products or technology without
authorization, or to develop similar technology independently through reverse
engineering or other means. Policing unauthorized use of the Company's products
is difficult. There can be no assurance that the steps taken by the Company will
prevent misappropriation of its technology or that such agreements will be
enforceable. In addition, effective patents, copyright and trade secret
protection may be unavailable or limited in certain foreign countries.
Litigation may
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be necessary in the future to enforce the Company's intellectual property
rights, to protect the Company's trade secrets, to determine the validity and
scope of the proprietary rights of others, or to defend against claims of
infringement or invalidity. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on the
Company's business, operating results and financial condition.
In the future, the Company may receive notices of claims of infringement of
other parties' proprietary rights. Although the Company does not believe that
its products infringe the proprietary rights of third parties, there can be no
assurance that infringement or invalidity claims (or claims for indemnification
resulting from infringement claims) will not be asserted or prosecuted against
the Company or that any such assertions or prosecutions will not materially
adversely affect the Company's business, operating results or financial
condition. Irrespective of the validity or the successful assertion of such
claims, the Company would incur significant costs and diversion of resources
with respect to the defense of any claims brought, which could have a material
adverse effect on the Company's business, operating results and financial
condition. In addition, the assertion of such infringement claims could result
in injunctions preventing the Company from distributing certain products, which
could have a material adverse effect on the Company's business, operating
results and financial condition. If any claims or actions are asserted against
the Company, the Company may seek to obtain a license under a third party's
intellectual property rights. There can be no assurance, however, that under
such circumstances, a license would be available on reasonable terms, if at all.
The Company's Wink Response Network is designed to collect and utilize data
derived from viewer responses to Wink-enhanced programming. This data can be
used for several purposes, including product inquiry and order fulfillment,
advertising impact research and polling. Although the Company believes it has a
right to use and compile such data, there can be no assurance that any
copyright, trade secret or other protection will be available for such data and
information or that others will not claim rights to it. The Company is also
obligated to keep certain information regarding networks' and cable systems'
programming services and system technology confidential.
The Company has licensed in the past and expects that it may license in the
future elements of its technology and trademarks to third parties in the United
States, Japan and other countries. The Company attempts to ensure that the
quality of its brand is maintained by such business partners; there can be no
assurance, however, that such partners will not take actions that could
adversely affect the value of the Company's proprietary rights or the reputation
of its technologies.
EMPLOYEES
As of March 31, 1998, the Company employed 81 full-time equivalents,
excluding temporary personnel and consultants. Of the total number, 51 employees
were involved in product development, 21 in sales, marketing and customer
service (1 of whom serves the Japanese and European marketplaces and 20 of whom
serve the U.S. marketplace), and 9 in accounting, finance and administration.
The Company is not subject to any collective bargaining agreements and believes
its relationship with its employees is good. See "Risk Factors -- Management of
Growth and Expansion; Dependence on Key Personnel."
FACILITIES
The Company's corporate headquarters and executive offices are in Alameda,
California, where the Company leases approximately 38,000 square feet of space.
The lease on this facility expires in January 2000. The Company believes that
its current facility will be sufficient to meet its needs for at least the next
12 months.
LEGAL PROCEEDINGS
The Company is not currently subject to any material legal proceedings. The
Company may from time to time become a party to various legal proceedings
arising in the ordinary course of its business.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND OTHER OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information regarding the directors,
executive officers and other officers and key employees of the Company as of May
31, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
EXECUTIVE OFFICERS
Mary Agnes Wilderotter................. 43 Chief Executive Officer, President and Director
Brian P. Dougherty..................... 41 Chairman of the Board of Directors and Chief
Technical Officer
Paritosh K. Choksi..................... 45 Chief Financial Officer, Vice President and
Secretary
Allan C. Thygesen...................... 35 Senior Vice President, Programming and Advertising
Timothy V. Travaille................... 40 Senior Vice President, Operations and Deployment
Jeffrey H. Coats(1).................... 40 Director
Bruce W. Dunlevie(2)................... 41 Director
Michael Fuchs(1)....................... 52 Director
F. Philip Handy(2)..................... 54 Director
William Schleyer(2).................... 46 Director
Hidetaka Yamamoto(1)................... 55 Director
OTHER OFFICERS AND KEY EMPLOYEES
Gregory R. Clark....................... 40 Vice President, Wireless Sales
Rita C. Dettore........................ 47 Vice President, People Development
Gary L. Hammer......................... 37 Vice President, Business Development
Patrick Ransil......................... 42 Vice President, Engineering
Katherine Sullivan..................... 42 Vice President, Consumer and Transaction Marketing
Melinda White.......................... 38 Vice President, Cable Sales
</TABLE>
- - ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Mary Agnes Wilderotter has served as President and Chief Executive Officer
and a director of the Company since December 1996. From August 1995 to January
1997, Ms. Wilderotter was the Executive Vice President of National Operations
and Chief Executive Officer of the Aviation Communications Division of AT&T
Wireless Services, Inc. ("AT&T Wireless"), a provider of wireless communications
services in the United States and a wholly owned subsidiary of AT&T Corporation.
Prior to her tenure at AT&T Wireless, Ms. Wilderotter was Senior Vice President
of McCaw Cellular Communications, Inc. ("McCaw") from October 1991 to August
1995 and Regional President of the California/Nevada/Hawaii Region. McCaw became
AT&T Wireless upon McCaw's acquisition by AT&T. Prior to joining McCaw, Ms.
Wilderotter spent over 12 years in the cable industry. Ms. Wilderotter serves as
a director on the boards of Jacor Communications, Airborne Express, Gaylord
Entertainment and Electric Lightwave. Ms. Wilderotter received a B.A. degree in
Economics and Business Administration from the College of the Holy Cross.
Brian P. Dougherty co-founded the Company in October 1994 and served as
Chief Executive Officer of the Company from inception until December 1996. Mr.
Dougherty has also served as the Chairman of the Board of the Company since
inception. Mr. Dougherty also serves as Chief Technical Officer of the Company.
Prior to co-founding the Company, Mr. Dougherty founded Geoworks Corporation, a
software developer, in 1983 and served as its Chief Executive Officer from
September 1983 until February 1993 and as its Chairman from September 1983 until
May 1997. Mr. Dougherty serves as a director of Neomagic. Mr. Dougherty received
a B.S. degree in Electrical Engineering/Computer Science from the University of
California, Berkeley.
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Paritosh K. Choksi has served as the Company's Vice President, Chief
Financial Officer and Secretary since December 1997. From May 1977 to November
1997, Mr. Choksi was employed by Phoenix American, Inc. ("Phoenix"), a
diversified financial and management services company in the technology field,
most recently as Senior Vice President, Chief Financial Officer and Treasurer
and as a director of Phoenix and its affiliates. Mr. Choksi is a director of
Syntel, Inc. Mr. Choksi received a Bachelor of Technology degree in Mechanical
Engineering from the Indian Institute of Technology, Bombay and an M.B.A. degree
from the Haas School of Business at the University of California, Berkeley.
Allan C. Thygesen has served as the Company's Senior Vice President,
Programming and Advertising since March 1998, and served as Vice President,
Content, Tools and Development from July 1996 to March 1998. From November 1994
to July 1996, Mr. Thygesen served as Vice President and General Manager,
Consumer Products, of Gold Disk, Inc. ("Gold Disk"), a producer and publisher of
personal productivity software. From May 1993 to November 1994, Mr. Thygesen was
employed by Media Vision Technologies, Inc., a multimedia hardware manufacturer
and publisher of CD-ROM entertainment software, most recently as Vice President
and General Manager, Multimedia Publishing. Media Vision filed for bankruptcy in
March 1994. Mr. Thygesen received an MSc degree in Economics from the University
of Copenhagen and an M.B.A. degree from the Stanford Graduate School of
Business.
Timothy V. Travaille has served as the Company's Senior Vice President,
Operations and Deployments since March 1998 and served as Vice President,
Operations and Deployments since March 1997. From March 1994 to May 1997, Mr.
Travaille was employed by AT&T Wireless as Vice President, Chief Information
Officer. From December 1986 to February 1994, Mr. Travaille was employed by
Lamonts Apparel Inc., most recently as Vice President of Information Systems and
Merchandise Information Office. Mr. Travaille received B.S. degrees in
Accounting and Computer Science and an M.B.A. degree from the University of
Washington.
Jeffrey H. Coats has served as a director of the Company since June 1997.
Since April 1996, Mr. Coats has served as Managing Director of GE Equity Capital
Group, Inc., a wholly owned subsidiary of General Electric Capital Corporation.
From September 1991 to April 1993, Mr. Coats was also a Managing Director of GE
Capital Corporate Finance Group, Inc., a wholly owned subsidiary of General
Electric Capital Corporation. From February 1994 to April 1996, Mr. Coats served
as President of Maverick Capital Equity Partners, LLC, and from May 1993 to
January 1994, Mr. Coats was a Managing Director with Veritas Capital, Inc., both
of which are investment firms. Mr. Coats is the Chairman of the Board of The
Hastings Group, Inc., a clothing retailer, which filed for bankruptcy in October
1995. The Hastings Group, Inc. currently is in the process of formulating a plan
of liquidation. Mr. Coats is a director of Krause's Furniture, Inc. Mr. Coats
holds a B.B.A. in Finance from the University of Georgia and an M.A. in
International Management in Finance from the American Graduate School of
International Management.
Bruce W. Dunlevie has served as a director of the Company since March 1996.
In May 1995, Mr. Dunlevie founded Benchmark Capital LLC ("Benchmark"), a venture
capital firm, of which he is currently a Managing Member. From October 1989 to
the present, he has served as a General Partner of Merrill, Pickard, Anderson &
Eyre, a venture capital firm. Mr. Dunlevie is a director of Genesys
Telecommunications Laboratories, Rambus Inc., Geoworks Corporation and several
private companies. Mr. Dunlevie received a B.A. degree from Rice University and
an M.B.A. degree from the Stanford Graduate School of Business.
Michael Fuchs has served as a director of the Company since June 1998. Mr.
Fuchs is currently a consultant to the cable television industry. Mr. Fuchs was
Chairman and Chief Executive Officer of Home Box Office ("HBO"), from October
1984 until November 1995, and Chairman and Chief Executive Officer of Warner
Music Group from May 1995 to November 1995. Mr. Fuchs is a director of Marvel
Entertainment Group, an entertainment and publishing company, and IMAX Corp., an
entertainment film and technology company. In December 1996, Marvel
Entertainment Group filed a voluntary petition under Chapter 11 of the
Bankruptcy Code and is currently in the process of formulating its plan of
reorganization. Mr. Fuchs holds a B.A. degree from Union College and a J.D.
degree from the New York University School of Law.
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F. Philip Handy has served as a director of the Company since June 1997.
Mr. Handy has been Managing Director of EGI Corporate Investments, a diversified
management and investment business, since June 1997 and a Partner of Winter Park
Capital Company, a private investment firm from June 1980 until May 1997. Mr.
Handy is a director of Anixter International, Inc., Jacor Communications, Inc.
Chart House Enterprises, Inc., and Transmedia Network, Inc. Mr. Handy received
an A.B. degree in Economics from Princeton University and an M.B.A. degree from
Harvard Business School.
William T. Schleyer has served as a director of the Company since January
1998. Mr. Schleyer is currently serving as Chairman of the Open Cable
Initiative. From October 1997 to June 1998, Mr. Schleyer served as an advisor to
U S WEST Media Group. From November 1996 to October 1997, Mr. Schleyer served as
President and Chief Operating Officer of MediaOne, the broadband services arm of
U S WEST Media Group. From November 1994 to November 1996, Mr. Schleyer was
President and Chief Operating Officer of Continental Cablevision, Inc. before
the company's acquisition by U S WEST Media Group in November 1996. Continental
became MediaOne in May 1997. Mr. Schleyer served from January 1989 to November
1994, as one of Continental's Executive Vice Presidents, responsible for
operations in New England, California and the Chicago/St. Paul regions. Mr.
Schleyer serves on the board of directors and executive committee of Cable
Television Laboratories, Inc., a research and development consortium of cable
system operators. Mr. Schleyer received a B.S. degree in Mechanical Engineering
from Drexel University and an M.B.A. degree from Harvard Business School.
Hidetaka (Hank) Yamamoto has served as a director of the Company since
February 1995. Mr. Yamamoto has been employed by Toshiba Corporation since 1966,
most recently as a General Manager of Toshiba's ADI Business Group. Mr. Yamamoto
is a director of Smartdisk Corporation. Mr. Yamamoto received a Bachelor of
Economics degree from the University of Tokyo and an M.B.A. degree from the
Graduate School of Business at the University of Chicago.
BOARD OF DIRECTORS
The Company currently has authorized eight directors. At present, each
director holds office until the next annual meeting of the stockholders or until
his or her successor is duly elected and qualified. The Company's Amended and
Restated Certificate of Incorporation provides for the establishment of a
classified Board of Directors upon the date of this offering. In accordance with
the terms of the Amended and Restated Certificate of Incorporation, the Board of
Directors will be divided into three classes, the terms of which will expire at
different times. Class I consists of Mr. Dougherty and Mr. Dunlevie, who will
serve until the annual meeting of stockholders to be held in 1999. Class II
consists of Ms. Wilderotter, Mr. Schleyer and Mr. Fuchs, who will serve until
the annual meeting of stockholders to be held in 2000. Class III consists of Mr.
Coats, Mr. Handy and Mr. Yamamoto, who will serve until the annual meeting of
stockholders to be held in 2001. At each annual meeting of stockholders
beginning with the 1999 annual meeting, the successors to directors whose terms
will then expire will be elected to serve from the time of election and
qualification until the third annual meeting following election and until their
successors have been duly elected and qualified. Any additional directorships
resulting from an increase in the number of directors will be distributed among
the three classes such that, as nearly as possible, each class will consist of
an equal number of directors.
Board Committees. The Board of Directors has a Compensation Committee and
an Audit Committee.
The Audit Committee of the Board of Directors reviews and monitors the
corporate financial reporting and the internal and external audits of the
Company and its subsidiary, including, among other things, the Company's audit
and control functions, the results and scope of the annual audit and other
services provided by the Company's independent accountants and the Company's
compliance with legal matters that have a significant impact on the Company's
financial reports. The Audit Committee also consults with the Company's
management and the Company's independent accountants prior to the presentation
of financial statements to stockholders and, as appropriate, initiates inquiries
into aspects of the Company's financial affairs. In addition, the Audit
Committee has the responsibility to consider and recommend the appointment of,
and to review fee arrangements with, the Company's independent accountants. The
current members of the Audit Committee are Mr. Coats, Mr. Fuchs and Mr.
Yamamoto.
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The Compensation Committee of the Board of Directors reviews and makes
recommendations to the Board regarding all forms of compensation provided to the
executive officers and directors of the Company and its subsidiary, including
stock compensation and loans. In addition, the Compensation Committee reviews
and makes recommendations on bonus and stock compensation arrangements for all
employees of the Company. As part of the foregoing, the Compensation Committee
also administers the Company's 1994 Stock Plan, 1998 Stock Plan and, within the
authority delegated by the Board of Directors, 1998 Employee Stock Purchase
Plan. The current members of the Compensation Committee are Mr. Schleyer, Mr.
Dunlevie and Mr. Handy.
DIRECTOR COMPENSATION AND OTHER ARRANGEMENTS
Except for reimbursements received by non-employee directors for expenses
incurred in attending board meetings, directors of the Company do not receive
compensation for their services as directors.
Under the Company's 1998 Director Option Plan, each new non-employee
director of the Company who joins the Company after this offering is entitled to
receive an option to purchase 40,000 shares of Common Stock of the Company. In
addition, each current and future non-employee director is entitled to receive
an additional option to purchase 40,000 shares of Common Stock four years after
the grant of such person's last option, provided that he or she has served on
the Board continuously during such period. All options granted under the 1998
Director Option Plan will become exercisable over a four-year period at the rate
of 25% per year. The exercise price per share for all options granted under the
1998 Director Option Plan will be equal to the market price of the Common Stock
on the date of grant. See "Management -- Employee Benefit Plans."
In 1998, the Company granted options under its 1994 Stock Plan to certain
non-employee directors. See "Certain Transactions -- Certain Sales and Option
Grants to Executive Officers and Directors."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to establishing the Compensation Committee, the Board of Directors
determined compensation for the Company's executive officers. No interlocking
relationship exists between the Company's Board of Directors and the board of
directors or compensation committee of any other company, nor has any such
interlocking relationship existed in the past.
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<PAGE> 45
EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain information concerning total
compensation received by the Company's Chief Executive Officer and each of the
Company's other executive officers who served in such positions during the last
fiscal year and whose aggregate salary and bonus for such year exceeded $100,000
(collectively, the "Named Executive Officers") for services rendered to the
Company in all capacities during the fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
----------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) AWARDS(#) OPTIONS(#) COMPENSATION($)
- - --------------------------- --------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Mary Agnes Wilderotter.... $200,000 $25,000(1) 25,000(1)(2) 100,000(1) $303,517(3)
President and Chief
Executive Officer
Brian P. Dougherty........ 90,082 50,000(1) -- -- --
Chairman of the Board and
Chief Technical Officer
Allan C. Thygesen......... 112,985 35,000(1)(4) 40,000 --
Senior Vice President,
Programming and
Advertising
Timothy V. Travaille...... 87,994 30,000(1)(4) 100,000 --
Senior Vice President,
Operations and Deployment
</TABLE>
- - ---------------
(1) Indicates bonuses, restricted stock awards and option grants paid or granted
in 1998 with respect to fiscal 1997.
(2) See "Certain Transactions -- Sales and Option Grants to Executive Officers
and Directors" for additional information regarding Ms. Wilderotter's
restricted stock award.
(3) Represents reimbursement of relocation expenses.
(4) Represents dollar value of stock bonuses issued in lieu of cash bonuses.
Such shares had a fair market value of $4.00 per share as of the date of
issuance, as determined by the Board of Directors, and were fully vested
when issued.
OPTION GRANTS IN FISCAL 1997
The following table sets forth, as to the Named Executive Officers,
information concerning stock options granted during the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(4)
OPTIONS IN FISCAL PRICE PER EXPIRATION -------------------------
NAME GRANTED(#)(1) YEAR(%)(2) SHARE($) DATE(3) 5%($) 10%($)
---- ------------- ------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mary Agnes
Wilderotter......... -- -- -- -- -- --
Allan C. Thygesen..... 40,000 3.6% $1.00 05/27/07 $ $
Brian P. Dougherty.... -- -- -- -- -- --
Timothy V.
Travaille........... 100,000 9.1% $0.80 04/08/07
</TABLE>
44
<PAGE> 46
- - ---------------
(1) The options in this table are incentive stock options or nonqualified stock
options granted under the 1994 Stock Plan and have exercise prices equal to
the fair market value of the Company's Common Stock on the date of grant, as
determined by the Board of Directors on the date of grant. All such options
have ten-year terms and vest over a period of four years at a rate of 1/4 of
the shares after the first year (except for Mr. Travaille's option, which
vests at the rate of 1/48 per month during such first year) and 1/48 of the
shares per month thereafter.
(2) The Company granted options to purchase 1,099,500 shares of Common Stock to
employees in fiscal 1997.
(3) The options in this table may terminate before their expiration upon the
termination of optionee's status as an employee or consultant or upon the
optionee's disability or death.
(4) Under rules promulgated by the Securities and Exchange Commission, the
amounts in these two columns represent the hypothetical gain or "option
spread" that would exist for the options in this table based on assumed
stock price appreciation from the date of grant until the end of such
options' ten-year term at assumed annual rates of 5% and 10% increases over
the assumed initial public offering price of $ per share. The 5% and
10% assumed annual rates of appreciation are specified in Commission rules
and do not represent the Company's estimate or projection of future stock
price growth. The Company does not necessarily agree that this method can
properly determine the value of an option. Actual gains, if any, on stock
option exercises depend on numerous factors, including the future
performance of the Company, overall market conditions and the option
holder's continued employment with the Company throughout the entire vesting
period and option term, which factors are not reflected in this table.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND DECEMBER 31, 1997 OPTION VALUES
The following table sets forth, as to the Named Executive Officers, certain
information concerning stock option activity during the last fiscal year and the
number of shares subject to both exercisable and unexercisable stock options as
of December 31, 1997. Also reported are values for "in-the-money" options, which
values represent the positive spread between the respective exercise prices of
outstanding stock options and the assumed initial public offering price of
$ per share.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY
1997 OPTIONS($)
SHARES ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mary Agnes Wilderotter.... -- -- -- -- -- --
Allan C. Thygesen......... -- -- 35,417 104,583 (1) (1)
Brian P. Dougherty........ -- -- -- -- -- --
Timothy V. Travaille...... -- -- 18,750 81,250 (2) (2)
</TABLE>
- - ---------------
(1) Represents the difference between the assumed initial public offering price
of the Common Stock ($ per share) less the exercise price of such
options ($0.40 per share).
(2) Represents the difference between the assumed initial public offering price
of the Common Stock ($ per share) less the exercise price of such
options ($0.80 per share).
EMPLOYEE BENEFIT PLANS
1998 Stock Plan. The Company's 1998 Stock Plan (the "1998 Plan") was
approved by the Board of Directors in June 1998 and will be submitted to the
stockholders for their approval prior to the date of this offering, to become
effective on the date of this offering. The 1998 Plan provides for the grant to
employees of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986 as amended (the "Code") and for the grant to
employees, directors and consultants of nonstatutory stock options and stock
purchase rights ("SPRs"). Unless terminated sooner, the 1998 Plan will terminate
automatically in 2008. A total of 2.5 million shares of Common Stock are
currently reserved for issuance pursuant to the 1998
45
<PAGE> 47
Plan. The amount reserved under the 1998 Plan will automatically increase at the
end of each fiscal year by the lesser of (i) 1 million shares, (ii) 4% of
outstanding shares on such date or (iii) a lesser amount determined by the
Board.
The 1998 Plan may be administered by the Board of Directors or a committee
of the Board (as applicable, the "Administrator"), which committee must, in the
case of options intended to qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Code, consist of two or more "outside
directors" within the meaning of Section 162(m). The Administrator has the power
to determine the terms of the options or SPRs granted, including the exercise
price, the number of shares subject to each option or SPR, the exercisability
thereof, and the form of consideration payable upon such exercise. In addition,
the Administrator has the authority to amend, suspend or terminate the 1998
Plan, provided that no such action may affect any share of Common Stock
previously issued and sold or any option previously granted under the 1998 Plan.
Options and SPRs granted under the 1998 Plan are not generally transferable
by the optionee, and each option and SPR is exercisable during the lifetime of
the optionee only by such optionee. Options granted under the 1998 Plan must
generally be exercised within three months after the end of optionee's status as
an employee or consultant of the Company, or within twelve months after such
termination by reason of death or disability, but in no event later than the
expiration of the option's ten year term. Options generally vest over a
four-year period at a rate of 1/4 of the shares subject to the option after the
first year and 1/48 of the shares per month thereafter. In the case of SPRs,
unless the Administrator determines otherwise, the restricted stock purchase
agreement entered into at the time an SPR is exercised grants the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment or consulting relationship with the Company for any
reason (including death or disability). The purchase price for shares
repurchased pursuant to the restricted stock purchase agreement is the original
price paid by the purchaser and may be paid by cancellation of any indebtedness
of the purchaser to the Company. The repurchase option lapses at a rate
determined by the Administrator.
The exercise price of all incentive stock options granted under the 1998
Plan must be at least equal to the fair market value of the Common Stock on the
date of grant. The exercise price of nonstatutory stock options and SPRs granted
under the 1998 Plan is determined by the Administrator, but, with respect to
nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price must at least be equal to the fair market value of the Common Stock on the
date of grant. With respect to any participant who owns stock possessing more
than 10% of the voting power of all classes of the Company's outstanding capital
stock, the exercise price of any incentive stock option granted to such person
must equal at least 110% of the fair market value on the grant date, and the
term of such incentive stock option must not exceed five years. The term of all
other options granted under the 1998 Plan may not exceed ten years.
The 1998 Plan provides that in the event of a merger of the Company with or
into another corporation, a sale of substantially all of the Company's assets or
a like transaction involving the Company, each option or right will be assumed
or an equivalent option or right substituted by the successor corporation. If
the outstanding options or rights are not assumed or substituted, all
unexercised options or SPRs will terminate upon the consummation of such
transaction.
1998 Employee Stock Purchase Plan. The Company's 1998 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors in
June 1998 and will be submitted to the stockholders for their approval prior to
the date of this offering, to become effective on the date of this offering. A
total of 150,000 shares of Common Stock, has been reserved for issuance under
the Purchase Plan. The amount reserved under the Purchase Plan will be increased
automatically at the end of each fiscal year in the amount of the lesser of (i)
75,000 shares, (ii) 0.3% of the outstanding shares on such date or (iii) a
lesser amount determined by the Board.
The Purchase Plan, which is intended to qualify under Section 423 of the
Code, contains successive six-month offering periods. The offering periods
generally start on the first trading day on or after February 1 and
46
<PAGE> 48
August 1 of each year, except for the first such offering period, which
commences on the date of this offering and ends on the last trading day on or
before January 31, 1999.
Employees are eligible to participate in the Purchase Plan if they are
customarily employed by the Company or any participating subsidiary for at least
20 hours per week and more than five months in any calendar year, although any
employee who would own stock possessing 5% or more of the total combined voting
power or value of all classes of the capital stock of the Company may not
participate in the Purchase Plan. The Purchase Plan permits participants to
purchase Common Stock through payroll deductions of up to 15% of the
participant's "compensation," up to a maximum aggregate deduction of $21,250 for
all offering periods ending within any calendar year. Compensation is defined as
the participant's base straight time gross earnings, commissions, payments for
overtime, profit sharing payments, shift premium payments, incentive
compensation, incentive payments and bonuses.
Amounts deducted and accumulated under the Purchase Plan are used to
purchase shares of Common Stock at the end of each offering period. The price of
stock purchased under the Purchase Plan is 85% of the lower of the fair market
value of the Common Stock at the beginning of the offering period (or, in the
case of the offering period commencing on the date of this offering, the price
to public of the shares offered in this offering) or end of the offering period.
Participants may end their participation at any time during an offering period
and will be paid their payroll deductions to date. Participation ends
automatically upon termination of employment with the Company.
Rights granted under the Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution, or as
otherwise provided under the Purchase Plan. The Purchase Plan provides that, in
the event of a merger of the Company with or into another corporation or a sale
of substantially all of the Company's assets, each outstanding right to purchase
shares under the Purchase Plan during the offering period then in progress may
be assumed or substituted for by the successor corporation. If the successor
corporation refuses such assumption or substitution, the offering period then in
progress will be shortened and a new purchase date will be set at or prior to
the closing of such transaction after which time the Purchase Plan will
terminate. Otherwise, the Purchase Plan will terminate in 2008. The Board of
Directors has the authority to amend or terminate the Purchase Plan, except that
no such action may adversely affect any outstanding rights to purchase stock
under the Purchase Plan.
1998 Director Option Plan. All non-employee directors are entitled to
participate in the 1998 Director Option Plan (the "Director Plan"). The Director
Plan was adopted by the Board of Directors in June 1998 and will be submitted to
the stockholders for their approval prior to the date of this offering, to
become effective on the date of this offering. The Director Plan has a term of
ten years, unless terminated sooner by the Board of Directors. A total of
150,000 shares of Common Stock have been reserved for issuance under the
Director Plan.
The Director Plan provides for the automatic grant of a nonstatutory option
to purchase 40,000 shares of Common Stock (the "First Option") to each new
non-employee director who becomes a director after the date of this offering on
the date such person becomes a director. Each current and future non-employee
director will automatically be granted an additional nonstatutory option to
purchase 40,000 shares (a "Subsequent Option") on the fourth anniversary of the
date of grant of his or her last option if he or she has served on the Board
continuously during such period. Each First Option and each Subsequent Option
will have a term of ten years, and will vest as to 25% of the shares subject to
the option on each anniversary of the date of grant. The exercise price of each
option granted under the Director Plan will be 100% of the fair market value per
share of the Common Stock on the date of grant. Options granted under the
Director Plan must be exercised within three months of the end of the optionee's
tenure as a director of the Company, or within twelve months after such
termination by reason of death or disability, but in no event later than the
expiration of the option's ten-year term. No option granted under the Director
Plan is transferable by the optionee other than by will or the laws of descent
and distribution, and each option is exercisable, during such lifetime of the
optionee, only by such optionee.
The Director Plan provides that in the event of a merger of the Company
with or into another corporation, a sale of substantially all of the Company's
assets or a like transaction involving the Company,
47
<PAGE> 49
each option or right will be assumed or an equivalent option or right
substituted by the successor corporation. If the outstanding options or rights
are not assumed or substituted, the Administrator will provide for each optionee
to have the right to exercise the option as to all of the currently vested
stock, plus 50% of shares as to which such options would not otherwise be
exercisable for a period of fifteen days from the date of such notice, and all
unexercised options will terminate upon the expiration of such period.
1994 Stock Plan. The Company's 1994 Stock Plan (the "1994 Plan") provides
for the grant to employees of incentive stock options, and for the grant to
employees, consultants and directors of nonstatutory stock options. As of March
31, 1998, options to purchase an aggregate of 2,461,410 shares of Common Stock
were outstanding under the 1994 Plan, with a weighted average exercise price of
$1.81. Subsequent to March 31, 1998, the Board of Directors granted options to
purchase 231,500 shares of Common Stock under the 1994 Plan. The Board of
Directors has determined that no further options will be granted under the 1994
Plan after the completion of this offering. Terms of options issued under the
1994 Plan are substantially similar to those described for the 1998 Plan. The
1994 Plan provides that in the event of a merger of the Company with or into
another corporation, or a sale of substantially all of the Company's assets,
each outstanding option or stock purchase right will be assumed or substituted
for by the successor corporation. If the successor corporation refuses to assume
or substitute for the option or stock purchase right, the option or stock
purchase right will terminate as of the closing of such transaction.
401(k) Plan. The Company's 401(k) Profit Sharing Plan (the "401(k) Plan")
was adopted in 1996. The 401(k) Plan is designed to enable eligible employees to
save for retirement and is for the exclusive benefit of eligible employees and
their beneficiaries. All employees who have completed six months of service with
the Company and have attained the age of 21 are eligible to participate in the
401(k) Plan.
The 401(k) Plan permits the Company to make contributions to the plan which
match employees' eligible contributions, subject to a maximum. To date, the
Company has not made any such matching contributions. The trustees under the
401(k) Plan invest the assets of the 401(k) Plan, at the direction of each
participating employee, in any of several investment options. The 401(k) Plan is
intended to qualify under Section 401 of the Code, so that contributions by
employees to the 401(k) Plan, and income earned on plan contributions, are not
taxable to employees until withdrawn, and so that any matching contributions by
the Company will be deductible by the Company when and if made.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation limits the
liability of its directors for monetary damages arising from a breach of their
fiduciary duty as directors, except to the extent otherwise required by the
General Corporation Law of Delaware. Such limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission. The Company's Bylaws provide that the Company shall indemnify its
directors and officers, and may indemnify its other employees and agents, to the
fullest extent permitted by Delaware law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. The Company
intends to enter into indemnification agreements with each of its officers and
directors containing provisions that requires the Company to, among other
things, indemnify such officers and directors against certain liabilities that
may arise by reason of their status or service as directors or officers (other
than liabilities arising from willful misconduct of a culpable nature), to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified and to cover its directors and officers under
any Company liability insurance policies applicable to its directors and
officers. The Company also intends to obtain director and officer insurance.
At present, there is no pending litigation or proceeding involving any
director, officer, employee benefit plan fiduciary, employee or agent of the
Company where indemnification will be required or permitted.
CERTAIN TRANSACTIONS
The following sets forth certain transactions between the Company and its
directors, executive officers and 5% stockholders and their affiliates. The
Company believes that each of the transactions described below
48
<PAGE> 50
was on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and any
director or executive officer will be subject to approval by a majority of the
disinterested members of the Board.
SERIES B PREFERRED STOCK AND SERIES C PREFERRED STOCK FINANCINGS
Between December 21, 1995 and March 29, 1996, the Company sold an aggregate
of 2,233,750 shares of Series B Preferred Stock at a price of $4.00 per share.
Between April 17, 1997 and January 6, 1998, the Company sold an aggregate of
2,441,000 shares of Series C Preferred Stock at a price per share of $8.00, and,
in connection with such sales, issued certain warrants to purchase an aggregate
of 1,025,000 shares of Common Stock at exercise prices ranging from $0.80 to
$8.00 per share. The purchasers of Series B Preferred, Series C Preferred Stock
and warrants included, among others, the following entities affiliated with
directors and holders of more than five percent of the Company's voting
securities:
<TABLE>
<CAPTION>
SHARES OF SHARES OF WARRANTS TO
SERIES B SERIES C PURCHASE
PREFERRED PREFERRED COMMON STOCK
--------- --------- ------------
<S> <C> <C> <C>
ENTITIES AFFILIATED WITH DIRECTORS
Venture capital funds affiliated with Benchmark Capital
(Bruce Dunlevie).......................................... 375,000 62,500 500,000(1)
Venture capital funds affiliated with EGI-Wink Investors,
L.L.C.
(F. Philip Handy)......................................... -- 625,000 125,000(2)
GE Capital Corporation
(Jeffrey Coats)........................................... -- 625,000 525,000(3)
NBC Multimedia, Inc.
(Jeffrey Coats)........................................... -- -- 375,000(3)
Toshiba Corporation (Hidetaka Yamamoto)..................... 2,500(4) 250,000 --
OTHER 5% STOCKHOLDERS
General Instrument Corporation.............................. 600,000 62,500 --
</TABLE>
- - ---------------
(1) Warrants expire on the closing of this offering, unless previously
exercised. Warrant exercise price is $6.00 per share and may be exercised on
a "net" basis.
(2) Warrants expire on the closing of this offering, unless previously
exercised. Warrant exercise price is $0.80 per share and may be exercised on
a "net" basis.
(3) Warrants expires in June 2009. Warrant exercise price is $8.00 per share and
may be exercised on a "net" basis. Warrants underlying 300,000 shares of
Common Stock were amended in February 1998 to accelerate their
exercisability to become fully exercisable.
(4) Shares purchased by Mr. Yamamoto personally.
Simultaneously with the completion of this offering, all shares of
Preferred Stock will be converted into shares of Common Stock. Holders of
Preferred Stock are entitled to certain registration rights with respect to the
Common Stock issued or issuable upon conversion thereof. See "Description of
Capital Stock -- Registration Rights of Certain Holders." The Company believes
that the shares issued in these transactions were sold at the then fair market
value and that the terms of these transactions were no less favorable than the
Company could have obtained from unaffiliated third parties.
COMMERCIAL RELATIONSHIPS AND AGREEMENTS WITH PRINCIPAL STOCKHOLDERS
In September 1997, the Company entered into with Toshiba Corporation (i) an
Application Server Agreement under which the Company agreed to develop for and
license to Toshiba certain of the Company's proprietary technology, (ii) a Wink
Engine License Agreement under which the Company granted Toshiba a worldwide,
non-exclusive, non-transferable right to incorporate the Wink Engine software
into certain Toshiba products, and (iii) a Wink Online Server for InterText
License Agreement under which the Company granted Toshiba the right to use and
distribute Wink's Online Server software. In addition, in October 1997, the
49
<PAGE> 51
Company entered into with Toshiba America Consumer Products, Inc. ("Toshiba
America"), a subsidiary of Toshiba, a Wink Engine License Agreement under which
the Company granted Toshiba America a non-exclusive, non-transferable license to
incorporate the Wink Engine software into certain Toshiba America products.
Since January 1, 1995, Toshiba and Toshiba, America have paid the Company
$474,000 in royalties, non-recurring engineering fees and other payments.
Toshiba is a holder of more than 5% of the Company's outstanding Common Stock.
Hidetaka Yamamoto, a director of the Company is General Manager of Toshiba's ADI
Business Group.
In June 1997, the Company entered into a contract with NBC Multimedia, Inc.
under which Wink licensed certain software and technology to NBC Multimedia in
return for certain programming commitments by NBC Multimedia. NBC Multimedia is
affiliated with General Electric Capital Corporation, and a holder of more than
5% of the Company's outstanding Common Stock. Jeffrey Coats, a director of the
Company, is the Managing Director of GE Equity Capital Group, Inc., a wholly
owned subsidiary of General Electric Capital Corporation, which is affiliated
with NBC Multimedia.
In June 1995, the Company entered into a Development and License Agreement
with General Instrument. Under this agreement, as amended, the Company agreed to
develop and license to General Instrument certain of the Company's proprietary
technology. Since January 1, 1995, General Instrument has paid the Company
$600,000 in royalties, non-recurring engineering fees and other payments. In
connection with this agreement, General Instrument purchased from the Company
550,000 shares of Common Stock at $0.01 per share giving effect to a 10-for-1
split of the Company's Common Stock in June 1995. General Instrument is a holder
of more than 5% of the Company's outstanding Common Stock.
CERTAIN SALES AND OPTION GRANTS TO EXECUTIVE OFFICERS AND DIRECTORS
On December 2, 1996, the Company sold 1,310,000 shares of Common Stock at a
price of $0.40 per share to Mary Agnes Wilderotter, the Company's President and
Chief Executive Officer and a director of the Company. Ms. Wilderotter paid for
such shares with a full-recourse, ten-year $524,000 promissory note, secured by
the purchased shares pursuant to a security agreement entered into on the same
date. The note bears interest at a rate of 6.4% per annum. The aggregate
outstanding principal and interest at December 31, 1997 and April 30, 1998 was
approximately $560,000 and approximately $572,000, respectively.
On January 15, 1998, the Board of Directors granted Ms. Wilderotter an
option to purchase 100,000 shares of Common Stock at an exercise price of $4.00
per share, as well as the right to purchase 25,000 shares of restricted Common
Stock, at $4.00 per share. Ms. Wilderotter paid for the 25,000 shares of
restricted stock with a full-recourse, ten-year $100,000 promissory note,
secured by the purchased shares pursuant to a security agreement entered into on
the same date. The note bears interest at a rate of 6.4% per annum. The
aggregate outstanding principal and interest at April 30, 1998 was approximately
$102,000.
On November 3, 1997, the Company sold 215,000 shares of Common Stock at a
price of $2.00 per share to Paritosh K. Choksi, the Company's Vice President,
Chief Financial Officer and Secretary. Mr. Choksi paid for such shares with a
full-recourse, ten-year $430,000 promissory note, secured by the purchased
shares pursuant to a security agreement entered into on the same date. The note
bears interest at a rate of 6.42% per annum. The aggregate outstanding principal
and interest at December 31, 1997 and April 30, 1998 was approximately $434,000
and approximately $444,000, respectively.
On January 15, 1998, the Board of Directors granted to each of F. Philip
Handy, Bruce Dunlevie, Jeffrey H. Coats and William Schleyer, directors of the
Company, options to purchase 40,000 shares of Common Stock at an exercise price
of $4.00 per share. On June 8, 1998, the Board of Directors granted Michael
Fuchs, a director of the Company, an option to purchase 40,000 shares of Common
Stock at an exercise price of $6.00 per share. All such options become
exercisable over a four-year period at the rate of 25% per year.
EMPLOYMENT OFFER LETTERS AND SEVERANCE ARRANGEMENTS
In October 1996, the Company and Ms. Wilderotter entered into an employment
offer letter under which, if she is terminated without cause, Ms. Wilderotter
will be entitled to severance compensation at a
50
<PAGE> 52
$300,000 annual salary level for one year or until Ms. Wilderotter finds new
employment. In addition, in the event the Company is acquired by or merged into
another company prior to Ms. Wilderotter's shares fully vesting and Ms.
Wilderotter is not employed by the acquiring company in a role acceptable to
her, the Company's repurchase right will lapse as to 50% of Ms. Wilderotter's
unvested shares.
In October 1997, the Company and Mr. Choksi entered into an employment
offer letter under which, if he is terminated without cause, Mr. Choksi is
entitled to six months of severance compensation equivalent to Mr. Choksi's base
salary, which salary is currently set at $175,000 per year. In addition, in the
event the Company is acquired by or merged into another company prior to Mr.
Choksi's shares fully vesting, the Company's repurchase right will lapse as to
50% of Mr. Choksi's unvested shares.
INDEMNIFICATION AGREEMENTS
The Company has entered into Indemnification Agreements with each of its
executive officers and directors. Such agreements require the Company to
indemnify such individuals to the fullest extent permitted by Delaware law. See
"Limitation of Liability and Indemnification Matters."
51
<PAGE> 53
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of May 31, 1998, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, by: (i) each
person or entity who is known by the Company to own beneficially five percent or
more of the Company's outstanding Common Stock, (ii) each of the Named Executive
Officers, (iii) each of the Company's current directors, and (iv) all directors
and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE OF SHARES
BENEFICIALLY BENEFICIALLY OWNED
OWNED --------------------
PRIOR TO BEFORE AFTER
NAME OFFERING(1) OFFERING OFFERING
---- ------------ -------- --------
<S> <C> <C> <C>
DIRECTORS, NAMED EXECUTIVE OFFICERS AND 5% STOCKHOLDERS:
Brian P. Dougherty(2)....................................... 4,562,500 28.6%
Entities associated with GE Capital Corporation(3).......... 1,525,000 9.0%
Jeffrey H. Coats
120 Long Ridge Road
Stamford, CT 06927
Toshiba Corporation(4)...................................... 1,502,500 9.4%
Hidetaka Yamamoto
1-1 Shibaura 1-Chome
Minato-ku
Tokyo, 105-01
Japan
Mary Agnes Wilderotter(5)................................... 1,335,000 8.4%
General Instrument Corporation.............................. 1,212,500 7.6%
101 Tournament Drive
Horsham, PA 19044
Entities associated with Benchmark Capital Partners(6)...... 1,204,167 7.3%
Bruce W. Dunlevie
2480 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Entities associated with EGI - Wink Investors L.L.C.(7)..... 750,000 4.7%
F. Philip Handy
Two N. Riverside Plaza
Chicago, IL 60606
Allan C. Thygesen(8)........................................ 54,583 *
Timothy V. Travaille(9)..................................... 30,833 *
Michael Fuchs............................................... -- *
William Schleyer............................................ -- *
All directors and executive officers as a group (11
persons)(10).............................................. 10,912,916 62.1%
</TABLE>
- - ---------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Applicable percentage ownership is based on 15,966,353 shares of Common
Stock and Preferred Stock (on an as-converted to Common Stock basis)
outstanding as of May 31, 1998, giving effect to the assumed exercise of
certain warrants immediately prior to the completion of this offering, and
shares of Common Stock outstanding immediately following the completion of
this offering (assuming no exercise of the Underwriters' over-allotment
option). The number and percentage of shares beneficially owned are
determined in accordance with Rule 13d-3 of the Securities Exchange Act of
1934, as amended, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Shares of Common Stock subject
to options or warrants that are currently exercisable, or exercisable within
60 days of May 31, 1998, are deemed to be beneficially owned by the person
holding such options or warrants for the purpose of computing the percentage
ownership of such person, but are not treated as outstanding for the purpose
of computing the percentage ownership of any other person. Unless otherwise
52
<PAGE> 54
indicated in the footnotes, each person or entity has sole voting and
investment power (or shares such powers with his or her spouse) with respect
to the shares shown as beneficially owned.
(2) Represents shares held of record in the name of Mr. Dougherty's family
trust. Includes 250,000 shares which are subject to an option granted by
Mr. Dougherty to Benchmark.
(3) Includes (i) 525,000 shares subject to a warrant held by GE Capital
Corporation exercisable within 60 days of May 31, 1998, and (ii) 375,000
shares subject to a warrant held by NBC Multimedia, Inc. exercisable within
60 days of May 31, 1998. Jeffrey Coats, a director of the Company, is the
Managing Director of GE Equity Capital Group, Inc., a wholly owned
subsidiary of General Electric Capital Corporation, which is affiliated
with NBC Multimedia, Inc., and may be deemed to have voting and investment
power with respect to such shares.
(4) Includes (i) 1,500,000 shares held by Toshiba Corporation, and (ii) 2,500
shares held by Hidetaka Yamamoto personally. Mr. Yamamoto, a director of
the Company, is the General Manager of ADI Business Group of Toshiba
Corporation and may be deemed to have voting and investment power with
respect to such shares.
(5) At May 31, 1998, 465,520 shares held by Ms. Wilderotter were vested, and
869,480 shares were unvested and subject to a right of repurchase in favor
of the Company, which right lapses over time. Includes 16,667 shares which
are subject to the terms of a Loan and Pledge Agreement between Ms.
Wilderotter and Benchmark Capital Partners, L.P. and Benchmark Founders'
Fund (collectively "Benchmark"), pursuant to which Ms. Wilderotter has an
option to require Benchmark to purchase such shares and Benchmark has an
option to purchase such shares from Ms. Wilderotter.
(6) Represents (i) 390,716 shares held by Benchmark Capital Partners, L.P.,
(ii) 46,784 shares held by Benchmark Founders' Fund, L.P., (iii) 441,257
shares subject to a warrant held by Benchmark Capital Partners, L.P.
exercisable within 60 days of May 31, 1998, and (iv) 58,743 shares subject
to a warrant held by Benchmark Founders' Fund, L.P. exercisable within 60
days of May 31, 1998. Each of the foregoing warrants is expected to be
exercised prior to the closing of this offering. Also includes 266,667
shares which Benchmark has the right to acquire within 60 days of May 31,
1998 upon exercise of options granted by Mary Agnes Wilderotter and Brian
P. Dougherty. Bruce M. Dunlevie, a director of the Company, is a managing
member of Benchmark Capital Management Co., L.L.C., which is the general
partner of both Benchmark Capital Partners, L.P. and Benchmark Founders'
Fund, L.P., and may be deemed to have voting and investment power with
respect to such shares.
(7) Represents (i) 375,000 shares held by WC Investors, L.L.C., (ii) 250,000
shares held by EGI-Wink Investors, L.L.C., (iii) 75,000 shares subject to a
warrant held by WC Investors, L.L.C. exercisable within 60 days of May 31,
1998, and (iv) 50,000 shares subject to a warrant held by EGI-Wink
Investors, L.L.C. exercisable within 60 days of May 31, 1998. Each of the
foregoing warrants is expected to be exercised prior to the closing of this
offering. Also includes 266,667 shares which Benchmark has the right to
acquire within 60 days of May 31, 1998 upon exercise of options granted by
Mary Agnes Wilderotter and Brian P. Dougherty. F. Philip Handy, a director
of the Company, is the Managing Director of EGI-Wink Investors, L.L.C. and
may be deemed to have voting and investment power with respect to such
shares.
(8) Includes 45,833 shares subject to stock options exercisable within 60 days
of May 31, 1998.
(9) Includes 23,333 shares subject to stock options exercisable within 60 days
of May 31, 1998.
(10) Includes (i) 82,083 shares issuable upon the exercise of stock options
exercisable within 60 days of May 31, 1998, and (ii) 1,525,000 shares
subject to warrants held by entities affiliated with certain directors of
the Company exercisable within 60 days of May 31, 1998.
53
<PAGE> 55
DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, the authorized capital stock of the
Company will consist of 100,000,000 shares of Common Stock, $0.001 par value per
share, and 5,000,000 shares of Preferred Stock, $0.001 par value per share.
COMMON STOCK
As of May 31, 1998, there were 15,966,353 shares of Common Stock
outstanding (treating all Preferred Stock as if converted to Common Stock), held
of record by approximately 225 stockholders. There will be shares of Common
Stock outstanding (assuming no exercise of the Underwriters' over-allotment
option and no exercise of outstanding options) after giving effect to the sale
of Common Stock offered to the public hereby. The holders of Common Stock are
entitled to one vote per share on all matters to be voted upon by the
stockholders. Holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board out of funds legally available
therefor, subject to any preferences that may be applicable to any outstanding
preferred stock. See "Dividend Policy." In the event of liquidation, dissolution
or winding up of the Company, holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to any
prior liquidation rights of any outstanding preferred stock. The Common Stock
has no preemptive, subscription or conversion rights, and there are no
redemption or sinking fund provisions applicable to the Common Stock. All the
outstanding shares of Common Stock are, and the shares of Common Stock offered
hereby will be, when issued, fully paid and nonassessable.
PREFERRED STOCK
Effective upon the completion of this offering, 5,000,000 shares of
Preferred Stock will be authorized, and no shares will be outstanding. The Board
has the authority, without any further vote or action by the stockholders, to
issue such shares of Preferred Stock in one or more series and to fix the price,
powers, designations, preferences and relative, participating, optional or other
rights thereof, including dividend rights, conversion rights, voting rights,
redemption terms, liquidation preferences and the number of shares constituting
any series and the designations of such series. The issuance of Preferred Stock
in certain circumstances may have the effect of delaying, deferring or
preventing a change of control of the Company without further action by the
stockholders, may discourage bids for the Company's Common Stock at a premium
over the market price of the Common Stock and may adversely affect the market
price of, and the voting and other rights of, the holders of Common Stock. The
Company has no current plans to issue any shares of Preferred Stock.
ANTITAKEOVER EFFECTS OF DELAWARE LAW AND CERTAIN PROVISIONS OF THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BYLAWS
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder; (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding certain shares for purposes of determining the
number of shares outstanding; or (iii) on or subsequent to such date, the
business combination is approved by the board of directors and authorized at an
annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition involving the interested stockholder
of 10% or more of the assets of the corporation; (iii) subject to certain
exceptions, any
54
<PAGE> 56
transaction that results in the issuance or transfer by the corporation of any
stock of the corporation to the interested stockholder; (iv) any transaction
involving the corporation that has the effect of increasing the proportionate
share of the stock of any class or series of the corporation beneficially owned
by the interested stockholder; or (v) the receipt by the interested stockholder
of the benefit of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation. In general, Section 203 defines
an interested stockholder as any entity or person beneficially owning 15% or
more of the outstanding voting stock of the corporation and any entity or person
affiliated with or controlling or controlled by such entity or person.
The Company's Amended and Restated Certificate of Incorporation provides
that, upon the effective date of this offering, the Company's Board of Directors
will be classified into three classes of directors. See "Management -- Board of
Directors." In addition, the Company's Bylaws do not permit stockholders of the
Company to call a special meeting of stockholders. Only the Company's Board of
Directors, Chairman or President may call a special meeting of stockholders.
These provisions are designed to discourage certain types of coercive
takeover practices and encourage persons seeking to acquire control of the
Company to first negotiate with the Company. However, these and other provisions
could have the effect of making it more difficult to acquire the Company by
means of a tender offer, proxy contest or otherwise or to remove the incumbent
officers and directors of the Company. See "Risk Factors -- Concentration of
Stock Ownership; Antitakeover Provisions."
REGISTRATION RIGHTS OF CERTAIN HOLDERS
Upon the completion of this offering, the holders of shares of
Common Stock (including shares issuable upon exercise of certain warrants) will
be entitled to certain rights with respect to the registration of such shares
under the Securities Act. Under the terms of the agreement between the Company
and the holders of such registrable securities, if the Company proposes to
register any of its securities under the Securities Act, either for its own
account or for the account of other securities holders exercising registration
rights, such holders are entitled to notice of such registration and to include
shares of such Common Stock therein. Holders of registration rights may also
require the Company to file a registration statement under the Securities Act at
the Company's expense with respect to their shares of Common Stock, and the
Company is required to use its best efforts to effect such registration.
Further, holders may require the Company to file registration statements on Form
S-3 at the Company's expense when such form becomes available for use by the
Company. All such registration rights are subject to certain conditions and
limitations, including the right of the underwriters of an offering to limit the
number of registrable securities included in such registration.
WARRANTS
Immediately following the closing of this offering, there will be
outstanding warrants to purchase an aggregate of 917,500 shares of Common Stock
of the Company at a weighted average exercise price of $7.92 per share. Of such
warrants, warrants to purchase 17,500 shares expire in September 2002, and
warrants to purchase 900,000 shares expire in June 2009. All warrants may be
exercised on a "net" basis.
In addition to the foregoing warrants, the Company also has outstanding
warrants to purchase an aggregate of 663,200 shares of Common Stock, at a
weighted average exercise price of $4.90 per share. Such warrants expire on the
completion of this offering, and are expected to be exercised prior thereto.
Such warrants may be exercised on a "net" basis.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services. Its address is 235 Montgomery Street, 23rd Floor, San
Francisco, California 94109, and its telephone number at this location is (415)
743-1444.
55
<PAGE> 57
LISTING
The Company has applied to have its Common Stock approved for quotation on
the Nasdaq National Market under the trading symbol "WINK."
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for the Common Stock of
the Company. Future sales of substantial amounts of Common Stock in the public
market could adversely affect prevailing market prices from time to time.
Furthermore, since only a limited number of shares will be available for sale
shortly after this offering, because of certain contractual and legal
restrictions on resale (as described below), sales of substantial amounts of
Common Stock of the Company in the public market after the restrictions lapse
could adversely affect the prevailing market price and the ability of the
Company to raise equity capital in the future.
Upon completion of this offering (based on shares outstanding at May 31,
1998), the Company will have outstanding an aggregate of shares of Common
Stock, assuming no exercise of the Underwriters' over-allotment option and no
exercise of outstanding options or warrants. Of these shares, the shares sold
in this offering will be freely tradeable without restriction or further
registration under the Securities Act, unless such shares are purchased by an
existing "affiliate' of the Company as that term is defined in Rule 144 under
the Securities Act (an "Affiliate"). The remaining 15,966,353 shares of Common
Stock held by existing stockholders are "restricted securities" as that term is
defined in Rule 144 under the Securities Act ("Restricted Shares"). Restricted
Shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rules 144, 144(k) or 701 promulgated
under the Securities Act, which rules are summarized below. As a result of the
contractual restrictions described below and the provisions of Rules 144, 144(k)
and 701, additional shares will be available for sale in the public market as
follows: (i) shares will be eligible for immediate sale on the date of this
Prospectus, (ii) shares will be eligible for sale 90 days after the date of
this Prospectus, (iii) shares will be eligible for sale 180 days after the
date of this Prospectus, and (iv) shares will be eligible for sale at various
times thereafter upon expiration of their respective one-year holding periods.
All officers and directors and certain stockholders and option and warrant
holders of the Company have agreed not to offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer,
lend or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock for a
period of 180 days after the date of this Prospectus, without the prior written
consent of BancAmerica Robertson Stephens, subject to certain limited
exceptions. BancAmerica Robertson Stephens currently has no plans to release any
portion of the securities subject to lock-up agreements, although it may do so,
in its discretion, at any time.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Shares for at least one year (including
the holding period of any prior owner except an Affiliate) will be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of (i) one percent of the number of shares of Common Stock then
outstanding (which will equal approximately shares immediately after this
offering); or (ii) the average weekly trading volume of the Common Stock on the
Nasdaq National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an Affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years (including the holding period of any
prior owner except an Affiliate), is entitled to sell such shares without
complying with the manner of sale, public information, volume limitation or
notice requirements of Rule 144. Accordingly, unless otherwise restricted,
"144(k) shares" may be sold immediately upon completion of this offering.
56
<PAGE> 58
Any employee or consultant to the Company who purchased his or her shares
pursuant to a written compensatory plan or contract is entitled to rely on the
resale provisions of Rule 701, which permits nonaffiliates to sell their Rule
701 shares without having to comply with the public information, holding period,
volume limitation or notice provisions of Rule 144 and permits affiliates to
sell their Rule 701 shares without having to comply with the Rule 144 holding
period restrictions, in each case commencing 90 days after the date of this
Prospectus.
The Company has agreed not to offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer, lend or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or enter into
any swap or similar agreement that transfers, in whole or in part, the economic
risk of ownership of the Common Stock, for a period of 180 days after the date
of this Prospectus, without the prior written consent of BancAmerica Robertson
Stephens, subject to certain limited exceptions.
Following the offering, the Company intends to file a registration
statement on Form S-8 covering approximately 5,425,618 shares of Common Stock
subject to outstanding options or reserved for issuance under the Company's
employee stock plans (based on options outstanding as of May 31, 1998). See
"Management -- Employee Benefit Plans." Shares registered under such
registration statement will, subject to Rule 144 volume limitations applicable
to Affiliates, be available for sale in the open market, except to the extent
that such shares are subject to vesting restrictions with the Company or the
contractual restrictions described above.
57
<PAGE> 59
UNDERWRITING
The Underwriters named below, acting through their representatives,
BancAmerica Robertson Stephens, Hambrecht & Quist LLC and NationsBanc Montgomery
Securities LLC (the "Representatives"), have severally agreed with the Company,
subject to the terms and conditions of the Underwriting Agreement, to purchase
the number of shares of Common Stock set forth opposite their respective names
below. The Underwriters are committed to purchase and pay for all such shares if
any are purchased.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
---- ---------
<S> <C>
BancAmerica Robertson Stephens..............................
Hambrecht & Quist LLC.......................................
NationsBanc Montgomery Securities LLC.......................
---------
Total.............................................
=========
</TABLE>
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public at the initial public offering
price to the public set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession of not more than $ per share,
of which $ may be reallowed to other dealers. After the initial public
offering, the public offering price, concession and reallowance to dealers may
be reduced by the Representatives. No such reduction shall change the amount of
proceeds to be received by the Company as set forth on the cover page of this
Prospectus.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to an
aggregate of additional shares of Common Stock at the same price per share as
the Company will receive for the shares that the Underwriters have agreed to
purchase. To the extent that the Underwriters exercise such option, each of the
Underwriters will have a firm commitment to purchase approximately the same
percentage of such additional shares that the number of shares of Common Stock
to be purchased by it shown in the above table represents as a percentage of the
shares offered hereby. If purchased, such additional shares will be sold
by the Underwriters on the same terms as those on which the shares are being
sold.
The Underwriting Agreement contains covenants of indemnity among the
Underwriters and the Company against certain civil liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
representations and warranties contained in the Underwriting Agreement.
Pursuant to the terms of lock-up agreements, the holders of shares of the
Company's Common Stock have agreed, for a period of up to 180 days after the
date of this Prospectus, that, subject to certain exceptions, they will not
contract to sell or otherwise dispose of any shares of Common Stock, any options
or warrants to purchase shares of Common Stock or any securities convertible
into, or exchangeable for, shares of Common Stock, owned directly by such
holders or with respect to which they have the power of disposition, without the
prior written consent of BancAmerica Robertson Stephens. BancAmerica Robertson
Stephens may, in its sole discretion, and at any time without notice, release
all or any portion of the securities subject to the lock-up agreements. All of
the shares of Common Stock subject to the lock-up agreements will be eligible
for sale in the public market upon the expiration of the lock-up agreements,
subject in the case of any restricted shares to Rule 144.
In addition, the Company has agreed that until 180 days after the date of
this Prospectus, the Company will not, without prior written consent of
BancAmerica Robertson Stephens, subject to certain exceptions, offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock, any options
or warrants to purchase any shares of Common Stock or any securities convertible
into, exercisable for or exchangeable for shares of Common Stock, other than the
Company's sale of shares in this offering, the issuance of shares of Common
Stock upon the exercise of outstanding options and warrants and the conversion
of shares of
58
<PAGE> 60
Preferred Stock and the grant of options to purchase shares of Common Stock
under existing employee stock plans. See "Shares Eligible for Future Sale."
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock offered hereby will be determined through negotiations among the
Company and the Representatives. Among the factors to be considered in such
negotiations are prevailing market conditions, certain financial information of
the Company, market valuations of other companies that the Company and the
Representatives believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant.
The Underwriters have advised the Company that they do not intend to
confirm sales to any accounts over which they exercise discretionary authority.
The Underwriters have advised the Company that, pursuant to Regulation M
under the Securities Act, certain persons participating in the offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Common Stock at a level above
that which might otherwise prevail in the open market. A "stabilizing bid" is a
bid for the purchase of the Common Stock on behalf of the Underwriters for the
purpose of fixing or maintaining the price of the Common Stock. A "syndicate
covering transaction" is the bid for or the purchase of the Common Stock on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting the Representatives to reclaim the selling concession otherwise
accruing to an Underwriter or syndicate member in connection with the offering
if the Common Stock originally sold by such Underwriter or syndicate member is
purchased by the Representatives in a syndicate covering transaction and has
therefore not been effectively placed by such Underwriter or syndicate member.
The Representatives have advised the Company that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Cooley Godward, LLP, San Francisco, California, is acting as
counsel for the Underwriters in connection with certain legal matters relating
to the shares of Common Stock offered hereby. Certain members of Wilson Sonsini
Goodrich & Rosati and investment partnerships with which they are affiliated
beneficially own an aggregate of 8,750 shares of Common Stock.
EXPERTS
The consolidated financial statements as of December 31, 1996 and 1997 and
for each of the three years in the period ended December 31, 1997 included in
this Prospectus have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1 under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock, reference is made to the Registration Statement and the exhibits
and schedules filed as a part thereof. Statements contained in this Prospectus
as to the contents of any contract or any other document referred to are not
necessarily complete. In each instance, reference is made to the copy of such
contract or document filed as an exhibit to the
59
<PAGE> 61
Registration Statement, and each such statement is qualified in all respects by
such reference. The Registration Statement, including exhibits and schedules
thereto, may be inspected without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Northwestern Atrium Center, 500
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Information
concerning the Company is also available for inspection at the offices of the
Nasdaq National Market, Reports Section, 1735 K Street, N.W., Washington, D.C.
20006. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's Web site is
http://www.sec.gov.
60
<PAGE> 62
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheet.................................. F-3
Consolidated Statement of Operations........................ F-4
Consolidated Statement of Stockholders' Equity.............. F-5
Consolidated Statement of Cash Flows........................ F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 63
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Wink Communications, Inc.
The Delaware reincorporation described in Note 1 to the consolidated
financial statements has not been consummated at June 16, 1998. When it has been
consummated, we will be in a position to furnish the following report:
"In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders' equity and
of cash flows present fairly, in all material respects, the financial
position of Wink Communications, Inc. and its subsidiary at December 31,
1996 and 1997, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above."
PRICE WATERHOUSE LLP
San Jose, California
March 11, 1998
F-2
<PAGE> 64
WINK COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1998
------------------ ----------------------
1996 1997 HISTORICAL PRO FORMA
------- -------- ---------- ---------
<S> <C> <C> <C> <C>
(NOTE 2)
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 4,157 $ 8,530 $ 7,965 $ 7,965
Short-term investments............................ -- 5,452 5,452 5,452
Accounts receivable -- related parties............ 50 128 128 128
Accounts receivable -- third parties.............. -- -- 171 171
Other current assets.............................. 72 194 200 200
------- -------- -------- --------
Total current assets...................... 4,279 14,304 13,916 13,916
Property and equipment, net......................... 1,265 1,103 1,342 1,342
Other assets........................................ 98 222 236 236
------- -------- -------- --------
$ 5,642 $ 15,629 $ 15,494 $ 15,494
======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 78 $ 286 $ 616 $ 616
Accrued expenses.................................. 233 663 287 287
Deferred revenue -- related parties............... 570 650 665 665
Deferred revenue -- third parties................. 213 991 1,068 1,068
Capital lease obligations, current portion........ 299 347 360 360
------- -------- -------- --------
Total current liabilities................. 1,393 2,937 2,996 2,996
------- -------- -------- --------
Capital lease obligations, less current portion..... 1,114 767 672 672
------- -------- -------- --------
Commitments (Note 6)
Stockholders' equity:
Convertible Preferred Stock,
$0.001 par value, issuable in series; aggregate
liquidation amount $30,464; 6,001 shares
authorized; 3,484, 5,675 and 5,925 shares
issued and outstanding; no shares issued and
outstanding pro forma.......................... 4 6 6 --
Common Stock,
$0.001 par value; 21,038 shares authorized;
9,340, 9,816 and 9,974 shares issued and
outstanding; 15,899 shares issued and
outstanding pro forma.......................... 9 10 10 16
Additional paid-in capital........................ 11,742 30,610 33,750 33,750
Stockholder notes receivable...................... (554) (984) (1,084) (1,084)
Unearned compensation............................. (9) (494) (977) (977)
Accumulated deficit............................... (8,057) (17,223) (19,879) (19,879)
------- -------- -------- --------
Total stockholders' equity................ 3,135 11,925 11,826 11,826
------- -------- -------- --------
$ 5,642 $ 15,629 $ 15,494 $ 15,494
======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 65
WINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- -------------------
1995 1996 1997 1997 1998
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Licenses -- related parties............... $ -- $ -- $ 384 $ -- $ 40
Licenses -- third parties................. -- -- -- -- 2
Services -- related parties............... 100 155 148 48 --
Services -- third parties................. -- 193 87 39 99
------- ------- ------- ------- -------
Total revenues.................... 100 348 619 87 141
------- ------- ------- ------- -------
Costs and expenses:
Cost of services -- related parties....... 98 323 162 80 36
Cost of services -- third parties......... -- 235 376 108 34
Research and development.................. 851 2,595 4,384 673 1,332
Sales and marketing....................... 899 2,263 3,510 636 1,165
General and administrative................ 472 1,068 1,843 428 409
------- ------- ------- ------- -------
Total costs and expenses.......... 2,320 6,484 10,275 1,925 2,976
------- ------- ------- ------- -------
Loss from operations........................ (2,220) (6,136) (9,656) (1,838) (2,835)
Interest and other income................... 72 279 684 61 219
Interest expense............................ -- (27) (194) (52) (40)
------- ------- ------- ------- -------
Net loss.................................... $(2,148) $(5,884) $(9,166) $(1,829) $(2,656)
======= ======= ======= ======= =======
Net loss per share:
Basic and diluted......................... $ (0.37) $ (0.91) $ (1.25) $ (0.27) $ (0.33)
======= ======= ======= ======= =======
Weighted average shares outstanding....... 5,860 6,432 7,337 6,802 8,031
======= ======= ======= ======= =======
Pro forma net loss per share (Unaudited):
Basic and diluted......................... $ (0.75) $ (0.19)
======= =======
Weighted average shares outstanding....... 12,210 13,942
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 66
WINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL STOCKHOLDER
--------------- --------------- PAID-IN NOTES UNEARNED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE COMPENSATION
------ ------ ------ ------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994................ -- $-- 7,450 $ 7 $ 68 $ (41) $ (18)
Issuance of Series A Preferred Stock, net... 1,250 1 -- -- 1,978 -- --
Issuance of Series B Preferred Stock, net... 600 1 -- -- 2,378 -- --
Issuance of Common Stock for equipment...... -- -- 500 1 4 -- --
Noncash contribution by principal
stockholder............................... -- -- -- -- 275 -- --
Issuance of Common Stock for services....... -- -- 66 -- 3 -- --
Payment of stockholder note................. -- -- -- -- -- 41 --
Amortization of unearned compensation....... -- -- -- -- -- -- 5
Net loss.................................... -- -- -- -- -- -- --
----- --- ----- --- ------- ------- -----
BALANCE AT DECEMBER 31, 1995................ 1,850 2 8,016 8 4,706 -- (13)
Issuance of Series B Preferred Stock, net... 1,634 2 -- -- 6,512 (30) --
Exercise of Common Stock options............ -- -- 14 -- 1 -- --
Issuance of Common Stock for stockholder
note...................................... -- -- 1,310 1 523 (524) --
Amortization of unearned compensation....... -- -- -- -- -- -- 4
Net loss.................................... -- -- -- -- -- -- --
----- --- ----- --- ------- ------- -----
BALANCE AT DECEMBER 31, 1996................ 3,484 4 9,340 9 11,742 (554) (9)
Issuance of Series C Preferred Stock, net... 2,191 2 -- -- 17,436 -- --
Exercise of Common Stock options............ -- -- 537 1 64 -- --
Issuance of Common Stock for stockholder
note...................................... -- -- 215 -- 430 (430) --
Repurchase of Common Stock.................. -- -- (277) -- (3) -- --
Issuance of Common Stock warrants for
services.................................. -- -- -- -- 240 -- --
Issuance of Common Stock for services....... -- -- 1 -- 1 -- --
Unearned compensation....................... -- -- -- -- 700 -- (700)
Amortization of unearned compensation....... -- -- -- -- -- -- 215
Net loss.................................... -- -- -- -- -- -- --
----- --- ----- --- ------- ------- -----
BALANCE AT DECEMBER 31, 1997................ 5,675 6 9,816 10 30,610 (984) (494)
Issuance of Series C Preferred Stock, net
(Unaudited)............................... 250 -- -- -- 1,990 -- --
Exercise of Common Stock options
(Unaudited)............................... -- -- 105 -- 37 -- --
Issuance of Common Stock to employees
(Unaudited)............................... -- -- 28 -- 113 -- --
Issuance of Common Stock for stockholder
note (Unaudited).......................... -- -- 25 -- 100 (100) --
Unearned compensation (Unaudited)........... -- -- -- -- 600 -- (600)
Amortization of unearned compensation
(Unaudited)............................... -- -- -- -- -- -- 117
Issuance of Common Stock warrants for
services (Unaudited)...................... -- -- -- -- 300 -- --
Net loss (Unaudited)........................ -- -- -- -- -- -- --
----- --- ----- --- ------- ------- -----
BALANCE AT MARCH 31, 1998 (UNAUDITED)....... 5,925 $ 6 9,974 $10 $33,750 $(1,084) $(977)
===== === ===== === ======= ======= =====
<CAPTION>
TOTAL
ACCUMULATED STOCKHOLDERS'
DEFICIT EQUITY
----------- -------------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1994................ $ (25) $ (9)
Issuance of Series A Preferred Stock, net... -- 1,979
Issuance of Series B Preferred Stock, net... -- 2,379
Issuance of Common Stock for equipment...... -- 5
Noncash contribution by principal
stockholder............................... -- 275
Issuance of Common Stock for services....... -- 3
Payment of stockholder note................. -- 41
Amortization of unearned compensation....... -- 5
Net loss.................................... (2,148) (2,148)
-------- -------
BALANCE AT DECEMBER 31, 1995................ (2,173) 2,530
Issuance of Series B Preferred Stock, net... -- 6,484
Exercise of Common Stock options............ -- 1
Issuance of Common Stock for stockholder
note...................................... -- --
Amortization of unearned compensation....... -- 4
Net loss.................................... (5,884) (5,884)
-------- -------
BALANCE AT DECEMBER 31, 1996................ (8,057) 3,135
Issuance of Series C Preferred Stock, net... -- 17,438
Exercise of Common Stock options............ -- 65
Issuance of Common Stock for stockholder
note...................................... -- --
Repurchase of Common Stock.................. -- (3)
Issuance of Common Stock warrants for
services.................................. -- 240
Issuance of Common Stock for services....... -- 1
Unearned compensation....................... -- --
Amortization of unearned compensation....... -- 215
Net loss.................................... (9,166) (9,166)
-------- -------
BALANCE AT DECEMBER 31, 1997................ (17,223) 11,925
Issuance of Series C Preferred Stock, net
(Unaudited)............................... -- 1,990
Exercise of Common Stock options
(Unaudited)............................... -- 37
Issuance of Common Stock to employees
(Unaudited)............................... -- 113
Issuance of Common Stock for stockholder
note (Unaudited).......................... -- --
Unearned compensation (Unaudited)........... -- --
Amortization of unearned compensation
(Unaudited)............................... -- 117
Issuance of Common Stock warrants for
services (Unaudited)...................... -- 300
Net loss (Unaudited)........................ (2,656) (2,656)
-------- -------
BALANCE AT MARCH 31, 1998 (UNAUDITED)....... $(19,879) $11,826
======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 67
WINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ------------------
1995 1996 1997 1997 1998
------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................. $(2,148) $(5,884) $ (9,166) $(1,829) $(2,656)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization...... 88 360 543 126 157
Stock-based costs and expenses..... 283 4 455 -- 530
Changes in assets and liabilities:
Accounts receivable -- related
parties....................... (50) -- (78) 23 --
Accounts receivable -- third
parties....................... -- -- -- -- (171)
Other current assets............. (44) (26) (122) 5 (6)
Other assets..................... 2 (90) (124) (95) (14)
Accounts payable................. 62 -- 208 63 330
Accrued expenses................. 56 174 430 17 (376)
Deferred revenues -- related
parties....................... 400 (80) 80 (20) 15
Deferred revenues -- third
parties....................... -- 213 778 261 77
------- ------- -------- ------- -------
Net cash used in operating activities... (1,351) (5,329) (6,996) (1,449) (2,114)
------- ------- -------- ------- -------
Cash flows from investing activities:
Purchase of short-term investments.... -- -- (10,205) -- --
Sale of short-term investments........ -- -- 4,753 -- --
Property and equipment purchases...... (323) (1,321) (381) (41) (396)
------- ------- -------- ------- -------
Net cash used in investing activities... (323) (1,321) (5,833) (41) (396)
------- ------- -------- ------- -------
Cash flows from financing activities:
Preferred Stock proceeds, net......... 4,358 6,484 17,438 1,958 1,990
Common Stock proceeds................. -- 1 65 21 37
Stockholder note receivable
proceeds........................... 41 -- -- -- --
Lease financing proceeds.............. -- 1,421 -- -- --
Principal payments on capital
leases............................. -- (8) (298) (71) (82)
Repurchase of Common Stock............ -- -- (3) -- --
------- ------- -------- ------- -------
Net cash provided by financing
activities............................ 4,399 7,898 17,202 1,908 1,945
------- ------- -------- ------- -------
Net increase (decrease) in cash
and cash equivalents.................. 2,725 1,248 4,373 418 (565)
Cash and cash equivalents at
beginning of period................... 184 2,909 4,157 4,157 8,530
------- ------- -------- ------- -------
Cash and cash equivalents at end of
period................................ $ 2,909 $ 4,157 $ 8,530 $ 4,575 $ 7,965
======= ======= ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 68
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 1 -- THE COMPANY
Wink Communications, Inc. (the "Company") was incorporated in California on
October 7, 1994 and offers a simple-to-use, low-cost enhanced television
broadcasting system that adds interactivity and electronic commerce
opportunities to traditional television programming and advertising.
Delaware Reincorporation
Prior to the effectiveness of the Company's initial public offering, the
Company intends to reincorporate in Delaware. In connection with the
reincorporation, the Company will authorize 105,000 shares of capital stock,
consisting of 100,000 shares of Common Stock, $0.001 par value, and 5,000 shares
of undesignated Preferred Stock, $0.001 par value.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Wink Japan, Inc. All significant
intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Short-term Investments
Short-term investments consist of commercial paper obligations with
original maturities at date of purchase ranging between three and 12 months. The
Company classifies these investments as available-for-sale and records the
instruments at amortized cost, which approximates fair value due to the short
maturities.
Fair Value of Financial Instruments
The Company's financial instruments, including cash and cash equivalents,
short-term investments, accounts receivable, deposits, accounts payable and
capital lease obligations, are carried at cost, which approximates fair value
because of the short-term maturity of those instruments.
Property and Equipment
Property and equipment and leasehold improvements are stated at cost less
accumulated depreciation and amortization. Depreciation is provided on a
straight-line basis over the estimated useful lives of the assets, which range
from three to five years. Amortization of leasehold improvements is computed
using the straight-line method over the shorter of the remaining lease term or
the estimated useful life of the related asset, typically three years.
F-7
<PAGE> 69
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenue Recognition
Through March 31, 1998, the Company's revenues have been derived from
license fees relating to royalties earned from the Wink Engine software,
non-recurring engineering fees under agreements to port the Wink Engine software
to various televisions and set-top terminals, and service fees relating to
software installation and post-contract customer support. The Company recognizes
software license revenues relating to the Wink Engine on a "sell-through" basis
upon notification of shipment of Wink-enabled products by the original equipment
manufacturer. Non-recurring engineering fees are recognized using the
percentage-of-completion method, using labor hours as a measure of progress
towards completion. Fees from installation services are recognized as services
are provided, and post-contract customer support fees are recognized ratably
over the term of the support agreement. Fees received in advance of revenue
recognition are included in the balance sheet as deferred revenue.
The Company's long-term business plan is to derive the primary portion of
its revenues through the Wink Response Network by charging transaction fees to
advertisers for each information request or purchase order obtained from
viewers. As a result, the Company does not expect that non-recurring engineering
services will represent a significant component of future revenues. The Company
believes that its success is largely dependent on its business model, which
allows other television industry participants supporting Wink-enabled
programming to benefit economically from Wink Enhanced Broadcasting. In this
regard, Wink has entered into a number of agreements with cable system operators
and certain other market participants to share with these entities a portion of
revenues, if any, the Company generates from viewer responses to Wink Enhanced
Broadcasting. To date, no transaction fee revenue has been recognized from the
Wink Response Network. Any amounts payable to third parties in future periods
resulting from fee sharing will be included in cost of revenues.
License revenues in future periods are also expected to be derived from
Wink server and authoring software applications. The Wink Broadcast Server
application is being offered to customers under monthly license fee arrangements
with terms ranging from one to five years, with periodic fee increases based
upon changes in the Consumer Price Index or other contract provisions. Revenues
derived from such arrangements will be recognized monthly based upon the
applicable subscription fee. License revenues relating to Wink authoring
software applications will be recognized upon software delivery, provided that
there is a signed agreement evidencing a fixed and determinable fee and a
determination that collection of the fee is probable.
Sales to Significant Customers
During the years ended December 31, 1995, 1996 and 1997, sales to customers
representing 10 percent or more of the Company's total revenues for the periods
indicated were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
CUSTOMER
A................................................... 100% 10% --
B................................................... -- 34% 21%
C................................................... -- -- 62%
D................................................... -- 32% 14%
E................................................... -- 24% --
</TABLE>
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents,
short-term investments and trade accounts receivable, which
F-8
<PAGE> 70
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
are not collateralized. The Company limits its exposure to credit loss by
placing its cash and cash equivalents with high credit quality financial
institutions and by placing its short-term investments in high credit quality
commercial paper. Concentrations of credit risk with respect to trade accounts
receivable are considered to be limited due to the credit quality of the
customers comprising the Company's customer base. The Company performs ongoing
credit evaluations of its customers' financial condition to determine the need
for an allowance for doubtful accounts. The Company has not experienced
significant credit losses to date and no allowance has been established for
doubtful accounts. At December 31, 1996, one customer accounted for the entire
accounts receivable balance. At December 31, 1997, a different customer
accounted for the entire accounts receivable balance.
Research and Development
Costs incurred in the research and development of new products and
enhancements to existing products are charged to expense as incurred until the
technological feasibility of the product or enhancement has been established
through the development of a working model. After establishing technological
feasibility, additional development costs incurred through the date the product
is available for general release would be capitalized and amortized over the
estimated product life. No costs have been capitalized to date as the effect on
the financial statements for all periods presented is immaterial.
Advertising Costs
Advertising costs are expensed as incurred in accordance with Statement of
Position ("SoP") No. 93-7, "Reporting on Advertising Costs." Advertising costs
for the years ended December 31, 1995, 1996 and 1997 and for the three months
ended March 31, 1997 and 1998 totaled $134, $210, $147, $43 and $43,
respectively.
Stock-based Costs and Expenses
The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," ("APB No. 25") and complies with the
disclosure provisions of Statement of Financial Accounting Standards ("SFAS No.
123"), "Accounting for Stock-Based Compensation." Under APB No. 25, compensation
cost is recognized based on the difference, if any, on the date of grant between
the fair value of the Company's stock and the amount an employee must pay to
acquire the stock.
The Company accounts for equity instruments issued in exchange for the
receipt of goods or services from other than employees in accordance with SFAS
No. 123 and the consensuses reached by the Emerging Issues Task Force in Issue
No. 96-18, "Accounting for Equity Instruments with Variable Terms That Are
Issued for Consideration Other Than Employee Services." Costs are measured at
the fair market value of the consideration received or the fair value of the
equity instruments issued, whichever is more reliably measurable. The value of
equity instruments issued for consideration other than employee services is
determined on the date on which there first exists a firm commitment for
performance by the provider of goods or services.
Income Taxes
Income taxes are accounted for using an asset and liability approach, which
requires the recognition of taxes payable or refundable for the current year and
deferred tax liabilities and assets for the future tax consequences of events
that have been recognized in the Company's financial statements or tax returns.
The measurement of current and deferred tax liabilities and assets are based on
provisions of the enacted tax law; the effects of future changes in tax laws or
rates are not anticipated. The measurement of deferred tax assets is
F-9
<PAGE> 71
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
reduced, if necessary, by the amount of any tax benefits that, based on
available evidence, are not expected to be realized.
Net Loss Per Share
Basic net loss per share is computed using the weighted average number of
common shares outstanding. Diluted net loss per share is computed using the
weighted average number of common and common equivalent shares outstanding.
Common equivalent shares consist of Convertible Preferred Stock (using the if-
converted method), restricted Common Stock and stock options and warrants (using
the treasury stock method). Common equivalent shares are excluded from the
computation if their effect is anti-dilutive. Net loss per share computations
are in accordance with SFAS No. 128, "Earnings Per Share," and Staff Accounting
Bulletin ("SAB") No. 98.
Pro Forma Net Loss Per Share (Unaudited)
Pro forma basic net loss per share is computed using the weighted average
number of common shares outstanding considering the pro forma effects of the
automatic conversion of the Company's Convertible Preferred Stock into shares of
the Company's Common Stock effective upon the closing of this offering as if
such conversion occurred on January 1, 1997, or at date of original issuance, if
later. Pro forma diluted net loss per share is computed using the pro forma
weighted average number of common and common equivalent shares outstanding. Pro
forma common equivalent shares consist of restricted Common Stock and stock
options and warrants (using the treasury stock method). Pro forma common
equivalent shares are excluded from the computation if their effect is
antidilutive.
Pro Forma Stockholders' Equity (Unaudited)
Effective upon the closing of this offering, the outstanding shares of
Series A, Series B and Series C Convertible Preferred Stock will automatically
convert into 1,250, 2,234 and 2,441 shares, respectively, of Common Stock. In
addition, warrants to purchase 18 shares of Series B Convertible Preferred Stock
will convert into warrants to purchase 18 shares of Common Stock. The pro forma
effects of these transactions are unaudited and have been reflected in the
accompanying pro forma balance sheet at March 31, 1998.
Interim Financial Information (Unaudited)
The accompanying interim consolidated financial statements as of March 31,
1998 and for the three months ended March 31, 1997 and 1998 are unaudited. The
unaudited interim financial statements have been prepared on the same basis as
the annual financial statements and, in the opinion of management, reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly the results of the Company's operations and its cash flows for
the three months ended March 31, 1997 and 1998. The financial data and other
information disclosed in these notes to consolidated financial statements
related to these periods are unaudited. The results for the three months ended
March 31, 1998, are not necessarily indicative of the results to be expected for
the year ending December 31, 1998.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." Under SFAS No. 130, companies are
required to report in the financial statements, in addition to net income,
comprehensive income including, as applicable, foreign currency items, minimum
pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. For the three months ended March 31,
1998, comprehensive net loss, as determined under SFAS No. 130, was the same as
F-10
<PAGE> 72
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
the Company's net loss. Under SFAS No. 131, companies are required to separately
report certain financial and descriptive information about operating segments.
The Company will adopt the provisions of SFAS No. 131 in connection with its
financial statements for the year ending December 31, 1998, and does not expect
adoption to have a material impact on such financial statements.
In March 1998, the American Institute of Certified Public Accountants (the
"AICPA") issued SoP No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SoP No. 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. The Company does
not expect that adoption of SoP 98-1 will have a material impact on its
financial statements.
Effective January 1, 1998, the Company adopted SoP No. 97-2, "Software
Revenue Recognition." As the Company's historical revenues have been derived
primarily from services that are recognized on a percentage-of-completion basis,
adoption of SoP No. 97-2 did not have a significant impact on the Company's
revenue recognition policy. In March 1998, the AICPA issued SoP No. 98-4, which
deferred for one year, certain provisions of SoP No. 97-2 relating to the
determination of fair value of multiple elements included in a software
arrangement. While the ultimate resolution of the guidance deferred by SoP 98-4
cannot be determined, based on its existing and expected future licensing
practices, the Company does not expect such resolution will have a significant
impact on its revenue recognition policy.
NOTE 3 -- SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- ------------
1995 1996 1997 1997 1998
----- ----- ----- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Supplemental disclosures:
Cash paid for interest.............................. $ -- $ 27 $194 $ 52 $ 40
==== ==== ==== ==== ====
Supplemental noncash activities:
Common Stock issued for equipment................... $ 5 $ -- $ -- $ -- $ --
==== ==== ==== ==== ====
Capital contribution by principal stockholder....... $275 $ -- $ -- $ -- $ --
==== ==== ==== ==== ====
Common Stock issued for shareholder note............ $ -- $524 $430 $ -- $100
==== ==== ==== ==== ====
</TABLE>
NOTE 4 -- BALANCE SHEET COMPONENTS
Property and equipment, net:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1996 1997 1998
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment............................ $ 799 $1,050 $ 1,199
Office furniture and equipment................ 473 526 548
Leasehold improvements........................ 351 357 357
Purchased internal-use software............... 90 161 386
------ ------ -------
1,713 2,094 2,490
Less accumulated depreciation and
amortization................................ (448) (991) (1,148)
------ ------ -------
$1,265 $1,103 $ 1,342
====== ====== =======
</TABLE>
F-11
<PAGE> 73
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Assets acquired under capital lease obligations are included in property
and equipment and totaled $1,421, $1,421 and $1,421, with related accumulated
depreciation of $372, $674 and $750, at December 31, 1996 and 1997 and March 31,
1998, respectively.
Accrued expenses:
<TABLE>
<CAPTION>
DECEMBER 31,
------------ MARCH 31,
1996 1997 1998
---- ---- -----------
(UNAUDITED)
<S> <C> <C> <C>
Compensation and benefits........................ $ 39 $455 $161
Deferred rent.................................... 130 117 107
Other............................................ 64 91 19
---- ---- ----
$233 $663 $287
==== ==== ====
</TABLE>
NOTE 5 -- INCOME TAXES
No current provision or benefit for federal or state income taxes has been
recorded for the years ended December 31, 1995, 1996 and 1997 and for the
three-month periods ended March 31, 1997 and 1998, as the Company has incurred
net operating losses and has no carryback potential.
At December 31, 1997, the Company had federal and state net operating loss
carryforwards of approximately $14,300 available to reduce future taxable
income. At March 31, 1998, the Company had federal and state net operating loss
carryforwards of approximately $16,500 available to reduce future taxable
income. Such carryforwards may be limited in certain circumstances including,
but not limited to, cumulative stock ownership changes of more than 50 percent
over a three-year period and expire at varying amounts during the period from
2002 through 2013. The Company believes that there was a cumulative change of
ownership of greater than 50 percent in June 1997. Accordingly, the amount of
loss carryforwards that can be utilized to reduce future taxable income for
federal and state income tax purposes will be limited to approximately $6,700
per year.
Net deferred tax assets are composed of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Net operating loss carryforwards............ $ 2,750 $ 5,750 $ 6,650
Deferred revenues........................... -- 600 600
Other....................................... 10 150 100
------- ------- -------
Gross deferred tax assets................... 2,760 6,500 7,350
Deferred tax asset valuation allowance...... (2,760) (6,500) (7,350)
------- ------- -------
Net deferred tax assets..................... $ -- $ -- $ --
======= ======= =======
</TABLE>
Based on a number of factors, including the lack of a history of profits,
management believes that there is sufficient uncertainty regarding the
realization of deferred tax assets such that a full valuation allowance has been
provided. The valuation allowance increased by $1,988 from December 31, 1995 to
December 31, 1996.
F-12
<PAGE> 74
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 6 -- COMMITMENTS
LEASES
The Company leases its main office facilities under a noncancelable
operating lease which expires in January 2000. Under the terms of the lease, the
Company is required to pay property taxes, insurance and normal maintenance
costs. The Company also leases certain equipment under capital lease
obligations.
Future minimum lease payments under noncancelable operating and capital
leases are as follows at December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDING OPERATING CAPITAL
DECEMBER 31, LEASES LEASES
- - ------------ --------- -------
<S> <C> <C>
1998................................................... $ 721 $ 490
1999................................................... 743 490
2000................................................... 62 387
------ ------
$1,526 1,367
======
Less amount representing interest........................ (253)
------
Present value of capital lease obligations............... 1,114
Less current portion..................................... (347)
------
Long-term portion........................................ $ 767
======
</TABLE>
Rent expense relating to noncancelable operating leases for the years ended
December 31, 1995, 1996 and 1997 and the three months ended March 31, 1997 and
1998, totaled $112, $573, $694, $169 and $175, respectively.
NOTE 7 -- STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
Convertible Preferred Stock consists of the following:
<TABLE>
<CAPTION>
SHARES ISSUED AND OUTSTANDING
----------------------------- LIQUIDATION
DECEMBER 31, AMOUNT AT
SHARES -------------- MARCH 31, MARCH 31,
AUTHORIZED 1996 1997 1998 1998
---------- ----- ----- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Series A........................ 1,250 1,250 1,250 1,250 $ 2,000
Series B........................ 2,251 2,234 2,234 2,234 8,936
Series C........................ 2,500 -- 2,191 2,441 19,528
----- ----- ----- ----- -------
6,001 3,484 5,675 5,925 $30,464
===== ===== ===== ===== =======
</TABLE>
Conversion
Each share of Preferred Stock is convertible at the option of the holder at
any time into Common Stock at the initial conversion rate of one share of Common
Stock for each share of Preferred Stock. The initial conversion rate of each
series of Preferred Stock is subject to adjustment as provided in the
Certificate of Incorporation. Each share of Preferred Stock shall automatically
be converted into shares of Common Stock at the then effective conversion rate
for each series upon the closing of a firm commitment underwritten initial
public offering of the Company's Common Stock at a price per share not less than
$8.00 per share and an aggregate offering price to the public of not less than
$10,000, exclusive of underwriting commissions and offering expenses.
F-13
<PAGE> 75
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Voting
Each holder of Series A, Series B and Series C Preferred Stock is entitled
to a number of votes equal to the number of shares of Common Stock into which
such holders' shares of Preferred Stock could be converted.
Dividend
Holders of Series A, Series B and Series C Preferred Stock are entitled to
a noncumulative dividend, when and if declared by the Board of Directors, at the
fixed rate of $0.128, $0.32, and $0.64, respectively, per share per annum, prior
and in preference to any distribution on the Common Stock.
Liquidation
In the event of any liquidation, dissolution or winding up of the Company
(as defined), the holders of the Series A, Series B and Series C Preferred Stock
shall be entitled to receive, prior and in preference to any distribution to the
holders of the Common Stock, the amount of $1.60, $4.00 and $8.00, respectively,
per share plus an amount equal to all declared but unpaid dividends on such
shares.
COMMON STOCK
Repurchase Rights
The Company has the right to repurchase the unvested portion of 2,425
shares of Common Stock sold to certain key employees at a weighted average price
of $0.40 per share. Under employment arrangements with certain key employees, in
the event the Company is acquired by or merged into another company prior to
full vesting of the shares subject to repurchase rights, the employees are
entitled to have the Company's repurchase right lapse as to 50 percent of the
unvested shares. The Company also has the right to repurchase 550 shares of
Common Stock sold to an investor at $0.50 per share, which expires on August 7,
1998. At December 31, 1997, 1,968 shares were subject to repurchase rights.
Reserved Shares
The Company has reserved an adequate number of shares of Common Stock to
satisfy the conversion of all Preferred Stock and the exercise of all
outstanding options and warrants.
WARRANTS
In July 1996, the Company granted fully exercisable warrants to purchase
Common Stock to two companies in connection with the issuance of Series B
Preferred Stock. The warrants enable the holders to purchase 441 and 59 shares
of Common Stock, respectively, at $6.00 per share and expire in July 2001. The
warrants had an immaterial fair value on the date of grant.
In September 1996, the Company granted fully exercisable warrants to
purchase Series B Preferred Stock to a company providing property and equipment
lease financing. The warrants enable the holder to purchase 18 shares of Series
B Preferred Stock at $4.00 per share and expire in September 2002. The warrants
and related services had an immaterial fair value on the date of grant.
In April 1997, the Company granted fully exercisable warrants to purchase
Common Stock to certain holders of Series C Preferred Stock providing business
development services. The warrants enable the holders to purchase 75 shares of
Common Stock at $0.80 per share and expire in April 2007. The warrants and
related services had an immaterial fair value on the date of grant.
F-14
<PAGE> 76
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
In June 1997, the Company granted fully exercisable warrants to purchase
Common Stock in connection with the issuance of Series C Preferred Stock. The
warrants enable the holders to purchase 525 shares of Common Stock at $8.00 per
share and expire in June 2009. The estimated fair value of the warrants totaled
$290 and is included in additional paid-in capital.
In June 1997, the Company granted warrants to purchase Common Stock to a
broadcasting company that agreed to use its reasonable efforts to air
Wink-enhanced programming. The warrants enable the holder to purchase 375 shares
of Common Stock at $8.00 per share and expire in June 2009. Warrants for 75
shares were fully exercisable on the date of grant and had an estimated fair
value of $40, which was recognized as sales and marketing expense and is
included in additional paid-in capital. Vesting of the remaining warrants to
purchase 300 shares was contingent upon specified future performance criteria.
The Company considered the fair value of the warrants at December 31, 1997 to be
their estimated fair value at the prospective vesting date and was recognizing
that amount ratably over the estimated service period of 18 months. During the
year ended December 31, 1997, $200 was recognized as sales and marketing expense
and is included in additional paid-in capital. See Note 9 -- Subsequent Events.
In November 1997, the Company granted fully exercisable warrants to
purchase Common Stock to a company providing business development services. The
warrants enable the holder to purchase 38 shares of Common Stock at $4.00 per
share and expire in November 2009. The warrants and related services had an
immaterial fair value on the date of grant.
Other
In February and November 1995, the Company's principal stockholder
contributed 20 shares of marketable equity securities to two employees of the
Company in exchange for services. The fair market value of the securities on the
contribution dates totaled $275, which has been recorded as compensation expense
and a capital contribution in the accompanying financial statements.
In June 1995, the Company issued 66 shares of its Common Stock to a
stockholder in exchange for temporary office space and other administrative
services provided during the first three months of 1995. The shares had an
immaterial fair value at the date of issue.
Through December 31, 1997, no dividends on either the Preferred or Common
Stock have been declared by the Board of Directors.
Share information for all periods presented has been retroactively adjusted
to reflect a 10-for-1 split of Common Stock and Preferred Stock in June 1995.
NOTE 8 -- EMPLOYEE BENEFIT PLANS
Stock Option Plan
The 1994 Stock Plan (the "Plan") provides for the issuance of up to 4,000
shares of Common Stock in connection with incentive and non-statutory stock
option awards granted to employees, directors and consultants to the Company.
Stock purchase rights may also be granted under the Plan. Options must be issued
at prices not less than 100 percent and 85 percent, for incentive and
non-statutory options, respectively of the estimated fair value of the Common
Stock on the date of grant and are exercisable for periods not exceeding ten
years from the date of grant. Options granted to stockholders who own greater
than 10 percent of the outstanding stock at the time of grant are exercisable
for periods not exceeding five years from the date of grant and must be issued
at prices not less than 110 percent of the estimated fair value at the date of
grant. Options granted under the Plan generally vest ratably over four years
following the date of grant, although the Board of Directors may issue options
that vest over up to five years. The Company has certain repurchase rights and
rights of first refusal on shares purchased under the Plan.
F-15
<PAGE> 77
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
During the year ended December 31, 1997 and the three months ended March
31, 1998, the Company recognized unearned compensation totaling $700 and $600,
respectively, with respect to certain stock option grants and sales of
restricted stock to employees. These expenses are being amortized over the
respective vesting periods. Amortization of unearned compensation totaled $215
for the year ended December 31, 1997 and $117 for the three months ended March
31, 1998, and has been allocated to operating costs and expenses based upon the
primary activity of the applicable employee. See Note 9 -- Subsequent Events.
Had compensation cost for the Company's stock-based compensation plan been
determined based on the grant dates for the awards using the minimum value
method prescribed by SFAS No. 123, the Company's net loss would have been as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- ------------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net loss:
As reported.................... $(2,148) $(5,884) $(9,166) $(1,829) $(2,656)
Pro forma...................... $(2,149) $(5,905) $(9,235) $(1,851) $(2,698)
Basic and diluted net loss per
share:
As reported.................... $ (0.37) $ (0.91) $ (1.25) $ (0.27) $ (0.33)
Pro forma...................... $ (0.37) $ (0.92) $ (1.26) $ (0.27) $ (0.34)
</TABLE>
Under SFAS No. 123, the minimum value of each option grant is estimated on
the grant date using the Black-Scholes option-pricing model with the following
weighted average assumptions used for grants made:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- ------------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Expected lives, in years......... 5 5 5 5 5
Risk free interest rates......... 6.9% 6.3% 6.3% 6.5% 6.7%
Dividend yield................... 0.0% 0.0% 0.0% 0.0% 0.0%
</TABLE>
The following table summarizes information about stock option transactions
under the Plan for the years ended December 31, 1995, 1996 and 1997 and for the
three months ended March 31, 1998:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS
--------------------------------------------------------- ENDED MARCH 31,
1995 1996 1997 1998
----------------- ----------------- ----------------- -----------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
------ -------- ------ -------- ------ -------- ------ --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
period............................ -- $ -- 793 $0.05 1,759 $0.23 2,122 $1.06
Granted............................. 793 0.05 980 0.37 1,099 1.82 501 4.58
Exercised........................... -- -- (14) 0.05 (537) 0.13 (105) 0.40
Canceled............................ -- -- -- -- (199) 0.44 (57) 0.85
--- ----- ----- -----
Outstanding at end of period........ 793 0.05 1,759 0.23 2,122 1.06 2,461 1.81
=== ===== ===== =====
Options exercisable at end of
period............................ -- 431 289 609
=== ===== ===== =====
Weighted-average fair value of
options granted during the
period............................ 0.01 0.15 0.67 2.55
</TABLE>
F-16
<PAGE> 78
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Because additional option grants are expected to be made each year, the
above pro forma disclosures are not representative of pro forma effects of
reported net income (loss) for future years.
The following table summarizes information about stock options outstanding
at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------- OPTIONS EXERCISABLE
WEIGHTED -----------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
--------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.01 - $0.25...................... 506 7.8 Years $0.11 149 $0.12
$0.40 - $0.80...................... 715 8.9 0.50 140 0.40
$1.00 - $2.00...................... 706 9.4 1.50 -- --
$4.00.............................. 195 9.6 4.00 -- --
----- ---
2,122 8.9 1.06 289 0.26
===== ===
</TABLE>
The following table summarizes information about stock options outstanding
at March 31, 1998 (Unaudited):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------- OPTIONS EXERCISABLE
WEIGHTED -----------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
--------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.01 - $0.25...................... 424 7.51 Years $0.12 181 $0.13
$0.40 - $0.80...................... 657 8.66 0.49 252 0.44
$1.00 - $2.00...................... 659 9.31 1.44 4 2.00
$4.00 - $6.00...................... 721 8.33 4.36 172 4.00
----- ---
2,461 8.54 1.81 609 1.36
===== ===
</TABLE>
401(k) Plan
Effective July 1996, the Company adopted the Wink Communications, Inc.
401(k) Profit Sharing Plan (the "401(k) Plan"), which qualifies as a deferred
salary arrangement under Section 401 of the Internal Revenue Service Code. Under
the 401(k) Plan, participating employees may defer a portion of their pretax
earnings not to exceed 15% of their total compensation. The Company, at its
discretion, may make contributions for the benefit of eligible employees. The
Company made no contributions through December 31, 1997.
NOTE 9 -- SUBSEQUENT EVENTS
FINANCING ACTIVITY
In January 1998, the Company issued 250 shares of Series C Preferred Stock
and a warrant to purchase 50 shares of Common Stock in exchange for cash
consideration of $2,000. These shares were sold subject to the same rights and
preferences as Series C Preferred Stock issued during 1997. The warrants have an
exercise price of $0.80 per share and expire in January 2008. The estimated fair
value of the warrant totaled $200 and is included in the carrying amount of the
Series C Preferred Stock.
F-17
<PAGE> 79
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
AMENDMENT OF CERTAIN WARRANT TERMS
Effective February 1, 1998, the Company amended its June 1997 warrant
issued to a broadcasting company. The amendment accelerated vesting and provided
the holder with fully exercisable warrants to purchase 300 shares of Common
Stock at an exercise price of $8.00 per share. The amended warrants expire in
June 2009. The fair market value of the warrants measured on the amendment date
did not change. The Company recognized the $300 difference resulting from
accelerated vesting as sales and marketing expense during the three months ended
March 31, 1998.
STOCK OPTIONS (UNAUDITED)
Subsequent to March 31, 1998, options to purchase 67 shares of Common Stock
were exercised at a weighted average exercise price of $0.36 per share and the
Company granted additional options to purchase an aggregate of 232 shares of
Common Stock under the 1994 Stock Plan at a weighted average exercise price of
$6.00 per share. In connection with these option grants, the Company recognized
unearned compensation totaling $750,000, which will be amortized to operating
expenses over the respective vesting periods of the related options.
DEVELOPMENT AND LICENSE AGREEMENT (UNAUDITED)
In April 1998, the Company entered into a development and license agreement
with TAK Interactive S.A. ("TAK"), a wholly owned subsidiary of Thomson
Multimedia S.A., pursuant to which the Company has agreed to license and support
a customized version of its enhanced broadcasting software in exchange for
future royalties on Wink enabled devices connected to the TAK Interactive
Television System and a specified percentage of all TAK net revenues (as
defined) during the term of the agreement. The agreement, which grants TAK an
exclusive license to deploy a full end-to-end interactive system offering Wink
Enhanced Broadcasting in 43 European countries (excluding Great Britain), has a
term of ten years, with TAK having the option to extend the term for an
additional five year period thereafter.
F-18
<PAGE> 80
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of the costs and expenses, other
than underwriting discounts and commissions, incurred and to be incurred by the
Registrant in connection with the issuance and distribution of the securities
registered hereby. All amounts are estimates except the SEC registration fee and
the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE
PAID BY
REGISTRANT
----------
<S> <C>
SEC registration fee....................................... $21,210
NASD filing fee............................................ 7,500
Nasdaq National Market listing fee.........................
Printing...................................................
Legal fees and expenses....................................
Accounting fees and expenses...............................
Director and officer SEC liability insurance...............
Blue sky fees and expenses.................................
Transfer agent and registrar fees..........................
Miscellaneous..............................................
-------
Total............................................ $
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") authorizes
a court to award, or a corporation's Board of Directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Article X of the Company's Amended Restated
Certificate of Incorporation (Exhibit 3.3 hereto) and Article VI of the
Company's Bylaws (Exhibit 3.5 hereto) provide for indemnification of the
Company's directors, officers, employees and other agents to the maximum extent
permitted by the DGCL. In addition, the Company has entered into Indemnification
Agreements (a form of which is provided as Exhibit 10.1 hereto) with its
officers and directors. The Underwriting Agreement (Exhibit 1.1 hereto) also
provides for cross-indemnification among the Company and the Underwriters with
respect to certain matters, including matters arising under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since June 1995, the Registrant has sold and issued the following
unregistered securities (all numbers reflect a ten-for-one stock split effective
July 24, 1995):
- Between June 1995 and June 1998, the Registrant sold and issued 776,791
shares of Common Stock to a total of 55 employees and 2 consultants at
purchase prices ranging from $0.01 to $4.00 per share upon exercise of
stock options or stock purchase rights, or as stock bonuses, pursuant to
the Registrant's 1994 Stock Plan in reliance upon Rule 701 promulgated
under the Securities Act or an exemption from registration provided by
Section 4(2) of the Securities Act.
- On June 21, 1995, the Registrant sold and issued 65,800 shares of Common
Stock to Geoworks at a purchase price of $0.05 per share in exchange for
the Registrant's use of office facilities and resources. Such sale was
made in reliance upon an exemption from registration provided by Section
4(2) of the Securities Act.
II-1
<PAGE> 81
- Between December 21, 1995 and March 29, 1996, the Registrant sold and
issued an aggregate of 2,233,750 shares of Series B Preferred Stock at a
purchase price of $4.00 per share to a total of 24 investors. Such sales
were made in reliance upon an exemption from registration provided by
Section 4(2) of the Securities Act.
- On July 31, 1996, the Registrant issued a warrant to purchase 441,257
shares of Common Stock with an exercise price of $6.00 per share to
Benchmark Capital Partners, L.P. and a warrant to purchase 58,743 shares
of Common Stock with an exercise price of $6.00 per share to Benchmark
Founders' Fund, L.P. Such issuances were made in reliance upon an
exemption from registration provided by Section 4(2) of the Securities
Act.
- On September 18, 1996, the Registrant issued a warrant to purchase 17,500
shares of Series B Preferred Stock with an exercise price of $4.00 per
share to Venture Lending & Leasing, Inc. as partial consideration for the
financing of certain equipment and leasehold improvements. Such issuance
was made in reliance upon an exemption from registration provided by
Section 4(2) of the Securities Act.
- On December 2, 1996, the Registrant issued 1,310,000 shares of Common
Stock at a purchase price of $0.40 per share to an officer of the
Registrant. Such sale was made in reliance upon Rule 701 promulgated
under the Securities Act.
- Between April 17, 1997 and January 6, 1998, the Registrant sold and
issued an aggregate of 2,441,000 shares of Series C Preferred Stock at a
purchase price of $8.00 per share to a total of 35 investors. Such sales
were made in reliance upon an exemption from registration provided by
Section 4(2) of the Securities Act.
- On April 17, 1997, the Registrant issued a warrant to purchase 75,000
shares of Common Stock with an exercise price of $0.80 per share to WC
Investors, LLC. Such issuance was made in reliance upon an exemption from
registration provided by Section 4(2) of the Securities Act.
- On May 27, 1997, the Registrant issued 250 shares of Common Stock at a
purchase price of $1.00 per share, and between July 21, 1997 and
September 2, 1997, the Registrant issued an aggregate of 750 shares of
Common Stock at a purchase price of $2.00 per share, to a consultant of
the Registrant in exchange for recruiting services rendered. Such sales
were made in reliance upon Rule 701 promulgated under the Securities Act.
- On June 18, 1997, the Registrant issued a warrant to purchase 525,000
shares of Common Stock with an exercise price of $8.00 per share to GE
Capital Corporation and a warrant to purchase 375,000 shares of Common
Stock with an exercise price of $8.00 per share to NBC Multimedia, Inc.
Such issuances were made in reliance upon an exemption from registration
provided by Section 4(2) of the Securities Act.
- On October 15, 1997, the Registrant issued 96 shares of Common Stock at a
purchase price of $2.00 per share to a consultant of the Registrant in
exchange for consulting services rendered. Such sale was made in reliance
upon Rule 701 promulgated under the Securities Act.
- On November 3, 1997, the Registrant issued 215,000 shares of Common Stock
at a purchase price of $2.00 per share to an officer of the Registrant.
Such sale was made in reliance upon Rule 701 promulgated under the
Securities Act.
- On November 3, 1997, the Registrant issued a warrant to purchase 38,200
shares of Common Stock with an exercise price of $4.00 per share to a
consultant of the Registrant for a purchase price of $20,000. Such sale
was made in reliance upon an exemption from registration provided by
Section 4(2) of the Securities Act.
- On January 6, 1998, the Registrant issued a warrant to purchase 50,000
shares of Common Stock with an exercise price of $0.80 per share to
EGI-Wink Investors. Such issuance was made in reliance upon an exemption
from registration provided by Section 4(2) of the Securities Act.
II-2
<PAGE> 82
- On February 1, 1998, the Registrant issued 25,000 shares of Common Stock
at a purchase price of $4.00 per share to an officer of the Registrant.
Such sale was made in reliance upon Rule 701 promulgated under the
Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Articles of Incorporation of the
Company's California predecessor.
3.2 Certificate of Incorporation of the Company.
3.3* Amended and Restated Certificate of Incorporation of the
Company.
3.4* Form of Second Amended and Restated Certificate of
Incorporation of the Company to be filed following the
closing of the offering.
3.5 Bylaws of the Company.
4.1* Specimen Common Stock Certificate
4.2 Investor Rights Agreement dated as of June 18, 1997 between
the Company, NBC Multimedia, Inc. and the individuals and
entities listed in the exhibit thereto.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati regarding the
legality of the Common Stock being registered.
10.1 Form of Indemnification Agreement between the Company and
each of its officers and directors.
10.2 1994 Stock Plan and form of agreement thereunder.
10.3* 1998 Stock Plan and form of agreement thereunder.
10.4* 1998 Director Stock Option Plan and form of agreement
thereunder.
10.5* 1998 Employee Stock Purchase Plan and form of agreement
thereunder.
+10.6 Charter Programmer Affiliation Agreement dated December 9,
1997 between the Company and ESPN Inc.
+10.7 Charter Programmer Affiliation Agreement dated October 6,
1997 between the Company and Court TV.
+10.8 Charter Programmer Affiliation Agreement dated December 8,
1997 between the Company and Cable News Network, Inc.
+10.9 Charter Programmer Affiliation Agreement dated December 9,
1997 between the Company and MTV Networks.
+10.10 Charter Programmer Affiliation Agreement dated October 27,
1997 between the Company and CBS Cable, a division of
Westinghouse Electric Corporation.
+10.11 Charter Programmer Affiliation Agreement dated December 12,
1997 between the Company and Turner Entertainment Group.
+10.12 Charter Programmer Affiliation Agreement dated February 25,
1998 between the Company and Showtime Networks Inc.
+10.13 Charter Programmer Affiliation Agreement dated July 18, 1997
between the Company and The Weather Channel Enterprises,
Inc.
+10.14 Letter Agreement dated June 3, 1997 between the Company and
NBC Multimedia, Inc. dba NBC Interactive Media.
+10.15 Cable Affiliation Agreement dated October 31, 1997 between
the Company and 21st Century Cable TV, Inc.
</TABLE>
II-3
<PAGE> 83
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
+10.16 Cable Affiliation Agreement dated May 8, 1998 between the
Company and Jones Programming Services Inc.
+10.17 Cable Affiliation Agreement dated February 23, 1998 between
the Company and InterMedia Partners Southeast.
+10.18 Cable Affiliation Agreement dated October 8, 1997 between
the Company and Charter Communications, Inc.
+10.19 Programming Agreement dated November 21, 1997 between the
Company and Century Communications Corp.
+10.20 Development and License Agreement dated September 1, 1997
between the Company and Matsushita Electric Industrial Co.,
Ltd.
+10.21 Development and License Agreement dated January 5,1998
between the Company and Pioneer Electronic Corporation Ltd.
+10.22 Development and License Agreement dated June 8, 1995 between
the Company and General Instrument Corporation of Delaware,
as amended on January 24, 1997 and August 18, 1997.
+10.23 Development and License Agreement dated January 15, 1996
between the Company and Scientific-Atlanta, Inc., as amended
on January 27, 1998.
+10.24 Development and License Agreement dated April 1998 between
the Company and TAK Interactive S.A.
+10.25 Online Server for Intertext License Agreement dated
September 30, 1997 between the Company and Toshiba
Corporation, as amended on March 23, 1998.
+10.26 Application Server License Agreement dated September 30,
1997 between the Company and Toshiba Corporation, as amended
on September 30, 1997.
+10.27 Engine License Agreement dated September 30, 1997 between
the Company and Toshiba Corporation, as amended on September
30, 1997.
+10.28 Engine License Agreement dated October 6, 1997 between the
Company and Toshiba America Consumer Products, Inc.
10.29 Personnel Services Agreement dated November 6, 1997 between
GE Information Services, Inc. and the Company.
10.30 Directors and Officers Liability and Private Company
Reimbursement Insurance Policy, American International
Companies, Policy period June 1, 1997 to June 1, 1998.
10.31 Sublease by and between Computer Associates International,
Inc and the Company dated November 28, 1995, and amended on
March 21, 1996.
10.32 Loan Agreement dated as of September 18, 1996 between the
Company and Venture Lending & Leasing, Inc.
10.33 Warrant issued to GE Capital Corporation dated June 18,
1997.
10.34 Warrant issued to NBC Multimedia, Inc. dated June 18, 1997.
10.35 Warrant issued to Venture Lending and Leasing, Inc.
10.36 Restricted Stock Purchase Agreement dated December 2, 1996
between the Company and Mary Agnes Wilderotter.
10.37 Restricted Stock Purchase Agreement dated January 15, 1998
between the Company and Mary Agnes Wilderotter.
10.38 Restricted Stock Purchase Agreement dated November 3, 1997
between the Company and Paritosh Choksi.
10.39 Employment Letter from the Company to Paritosh Choksi dated
October 20, 1997.
</TABLE>
II-4
<PAGE> 84
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
10.40 Employment Letter from the Company to Mary Agnes Wilderotter
dated October 22, 1996.
11.1 Statement regarding computation of historical and pro forma
net loss per share.
21.1 List of Subsidiaries.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (filed herewith on the signature page of
this Registration Statement).
27.1 Financial Data Schedule.
</TABLE>
- - ---------------
* To be supplied by amendment.
+ Confidential treatment has been requested with respect to certain portions of
this exhibit pursuant to a request for confidential treatment filed with the
Commission. Omitted portions have been filed separately with the Commission.
ITEM 17. UNDERTAKINGS
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 foregoing provisions, 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 of 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 the 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 purposes 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.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing, as specified in the Underwriting Agreement, certificates in such
denomination and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-5
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Alameda, State of
California, on this 17th day of June 1998.
WINK COMMUNICATIONS, INC.
By: /s/ MARY AGNES WILDEROTTER
------------------------------------
Name: Mary Agnes Wilderotter
Title: President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
each of Mary Agnes Wilderotter and Paritosh K. Choksi or any of them, each
acting alone, his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for such person and in his or her
name, place and stead, in any and all capacities, in connection with this
Registration Statement, including to sign and file in the name and on behalf of
the undersigned as director or officer of the Registrant (i) any and all
amendments or supplements (including any and all stickers and post-effective
amendments) to this Registration Statement, with all exhibits thereto, and other
documents in connection therewith, and (ii) any and all additional registration
statements, and any and all amendments thereto, relating to the same offering of
securities as those that are covered by this Registration Statement that are
filed pursuant to Rule 462(b) under the Securities Act of 1933, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and things requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on June 17, 1998
in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ MARY AGNES WILDEROTTER President and Chief Executive Officer;
- - ----------------------------------------------------- Director (principal executive officer)
Mary Agnes Wilderotter
/s/ PARITOSH K. CHOKSI Chief Financial Officer; Vice President and
- - ----------------------------------------------------- Secretary (principal financial officer and
Paritosh K. Choksi principal accounting officer)
/s/ BRIAN P. DOUGHERTY Chairman of the Board of Directors and Chief
- - ----------------------------------------------------- Technical Officer
Brian P. Dougherty
/s/ BRUCE W. DUNLEVIE Director
- - -----------------------------------------------------
Bruce W. Dunlevie
/s/ HIDETAKA YAMAMOTO Director
- - -----------------------------------------------------
Hidetaka Yamamoto
/s/ F. PHILIP HANDY Director
- - -----------------------------------------------------
F. Philip Handy
</TABLE>
II-6
<PAGE> 86
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ JEFFREY COATS Director
- - -----------------------------------------------------
Jeffrey Coats
/s/ WILLIAM SCHLEYER Director
- - -----------------------------------------------------
William Schleyer
/s/ MICHAEL FUCHS Director
- - -----------------------------------------------------
Michael Fuchs
</TABLE>
II-7
<PAGE> 87
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Articles of Incorporation of the
Company's California predecessor.
3.2 Certificate of Incorporation of the Company.
3.3* Amended and Restated Certificate of Incorporation of the
Company.
3.4* Form of Second Amended and Restated Certificate of
Incorporation of the Company to be filed following the
closing of the offering.
3.5 Bylaws of the Company.
4.1* Specimen Common Stock Certificate
4.2 Investor Rights Agreement dated as of June 18, 1997 between
the Company, NBC Multimedia, Inc. and the individuals and
entities listed in the exhibit thereto.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati regarding the
legality of the Common Stock being registered.
10.1 Form of Indemnification Agreement between the Company and
each of its officers and directors.
10.2 1994 Stock Plan and form of agreement thereunder.
10.3* 1998 Stock Plan and form of agreement thereunder.
10.4* 1998 Director Stock Option Plan and form of agreement
thereunder.
10.5* 1998 Employee Stock Purchase Plan and form of agreement
thereunder.
+10.6 Charter Programmer Affiliation Agreement dated December 9,
1997 between the Company and ESPN Inc.
+10.7 Charter Programmer Affiliation Agreement dated October 6,
1997 between the Company and Court TV.
+10.8 Charter Programmer Affiliation Agreement dated December 8,
1997 between the Company and Cable News Network, Inc.
+10.9 Charter Programmer Affiliation Agreement dated December 9,
1997 between the Company and MTV Networks.
+10.10 Charter Programmer Affiliation Agreement dated October 27,
1997 between the Company and CBS Cable, a division of
Westinghouse Electric Corporation.
+10.11 Charter Programmer Affiliation Agreement dated December 12,
1997 between the Company and Turner Entertainment Group.
+10.12 Charter Programmer Affiliation Agreement dated February 25,
1998 between the Company and Showtime Networks Inc.
+10.13 Charter Programmer Affiliation Agreement dated July 18, 1997
between the Company and The Weather Channel Enterprises,
Inc.
+10.14 Letter Agreement dated June 3, 1997 between the Company and
NBC Multimedia, Inc. dba NBC Interactive Media.
+10.15 Cable Affiliation Agreement dated October 31, 1997 between
the Company and 21st Century Cable TV, Inc.
+10.16 Cable Affiliation Agreement dated May 8, 1998 between the
Company and Jones Programming Services Inc.
+10.17 Cable Affiliation Agreement dated February 23, 1998 between
the Company and InterMedia Partners Southeast, L.P.
</TABLE>
<PAGE> 88
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
+10.18 Cable Affiliation Agreement dated October 8, 1997 between
the Company and Charter Communications, Inc.
+10.19 Programming Agreement dated November 21, 1997 between the
Company and Century Communications Corp.
+10.20 Development and License Agreement dated September 1, 1997
between the Company and Matsushita Electric Industrial Co.,
Ltd.
+10.21 Development and License Agreement dated January 5,1998
between the Company and Pioneer Electronic Corporation Ltd.
+10.22 Development and License Agreement dated June 8, 1995 between
the Company and General Instrument Corporation of Delaware,
as amended on January 24, 1997 and August 18, 1997.
+10.23 Development and License Agreement dated January 15, 1996
between the Company and Scientific-Atlanta, Inc., as amended
on January 27, 1998.
+10.24 Development and License Agreement dated April 1998 between
the Company and TAK Interactive S.A.
+10.25 Online Server for Intertext License Agreement dated
September 30, 1997 between the Company and Toshiba
Corporation, as amended on March 23, 1998.
+10.26 Application Server License Agreement dated September 30,
1997 between the Company and Toshiba Corporation, as amended
on September 30, 1997.
+10.27 Engine License Agreement dated September 30, 1997 between
the Company and Toshiba Corporation, as amended on September
30, 1997.
+10.28 Engine License Agreement dated October 6, 1997 between the
Company and Toshiba America Consumer Products, Inc.
10.29 Personnel Services Agreement dated November 6, 1997 between
GE Information Services, Inc. and the Company.
10.30 Directors and Officers Liability and Private Company
Reimbursement Insurance Policy, American International
Companies, Policy period June 1, 1997 to June 1, 1998.
10.31 Sublease by and between Computer Associates International,
Inc. and the Company dated November 28, 1995, and amended on
March 21, 1996.
10.32 Loan Agreement dated as of September 18, 1996 between the
Company and Venture Lending & Leasing, Inc.
10.33 Warrant issued to GE Capital Corporation dated June 18,
1997.
10.34 Warrant issued to NBC Multimedia, Inc. dated June 18, 1997.
10.35 Warrant issued to Venture Lending and Leasing, Inc.
10.36 Restricted Stock Purchase Agreement dated December 2, 1996
between the Company and Mary Agnes Wilderotter.
10.37 Restricted Stock Purchase Agreement dated January 15, 1998
between the Company and Mary Agnes Wilderotter.
10.38 Restricted Stock Purchase Agreement dated November 3, 1997
between the Company and Paritosh Choksi.
10.39 Employment Letter from the Company to Paritosh Choksi dated
October 20, 1997.
10.40 Employment Letter from the Company to Mary Agnes Wilderotter
dated October 22, 1996.
11.1 Statement regarding computation of historical and pro forma
net loss per share.
21.1 List of Subsidiaries.
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<C> <S>
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (filed herewith on the signature page of
this Registration Statement).
27.1 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF WINK COMMUNICATIONS, INC.
The undersigned, Rita C. Dettore and Chanel Aquino, certify that:
1. They are the Vice President and the Assistant Secretary, respectively, of
Wink Communications, Inc., a California corporation.
2. Article IV, Section 3(b) of the Amended and Restated Articles of
Incorporation of this corporation is amended to read as follows:
"Board Size. The authorized number of directors of the Company's Board
shall be not less than six (6) nor more than ten (10). The exact number of
directors shall be specified in the Bylaws of the corporation and may be
changed, within the limits specified above, by a duly adopted resolutions of the
Company' s Board. The Company shall not alter the indefinite range in number of
directors specified above or fix a definite number of directors without a
provision for an indefinite range in its Articles of Incorporation, Bylaws or
otherwise, without first obtaining the written consent, or affirmative vote at a
meeting, of the holders of at least a majority of the then-outstanding shares of
Preferred Stock, all series consenting or voting (as the case may be) together
as a separate class."
3. The foregoing amendment of Amended and Restated Articles of Incorporation has
been duly approved by the Board of Directors.
4. The foregoing amendment of Amended and Restated Articles of Incorporation has
been duly approved by the required vote of the shareholders in accordance with
Section 902 and 903 of the California General Corporation Law. The total number
of all outstanding shares entitled to vote was 15,913,205. The number of shares
of all outstanding shares voting in favor of the foregoing amendment of the
Amended and Restated Articles of Incorporation exceeded the vote required. The
number of all outstanding Preferred Stock entitled to vote was 5,924,750. The
number of shares of outstanding Preferred Stock voting in favor of the amendment
of the Amended and Restated Certificate of Incorporation exceeded the vote
required. The vote required was the affirmative vote of a majority of the
outstanding shares entitled to vote and the vote of outstanding shares of
Preferred Stock, all series consenting or voting together as a separate class.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
/s/ Rita C. Dettore
------------------------------------------
Date: June 8, 1998 Rita C. Dettore, Vice President
/s/ Chanel Aquino
------------------------------------------
Chanel Aquino, Assistant Secretary
<PAGE> 2
CERTIFICATE OF CORRECTION
OF THE
CERTIFICATE OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
WINK COMMUNICATIONS, INC.
Rita C. Dettore and Chanel S. Aquino certify that:
1) They are the Vice President and Assistant Secretary, respectively, of
Wink Communications, Inc., a California corporation.
2) A Certificate of Amended and Restated Articles of Incorporation was
filed with the Secretary of State on December 4, 1997 (the "Certificate").
3) The first paragraph of Article III of the Certificate, which currently
reads as follows:
"This corporation is authorized to issue two classes of stock,
designated Common Stock, par value $0.001 per share ("Common Stock") and
Preferred Stock, par value $0.001 per share. The number of shares of
Common Stock which this Corporation is authorized to issue is 30,000,000.
The number of shares of Preferred Stock which this Corporation is
authorized to issue is 6,001,250, 1,250,000 of which shall be designated
"Series A Preferred," 2,251,250 of which shall be designated "Series B
Preferred" and 2,500,000 of which shall be designated "Series C Preferred"
(Series A Preferred, Series B Preferred and Series C Preferred are
referred to collectively as the "Preferred Stock")."
is corrected to read in full as follows:
"This corporation is authorized to issue two classes of stock,
designated Common Stock, par value $0.001 per share ("Common Stock") and
Preferred Stock, par value $0.001 per share. The number of shares of
Common Stock which this Corporation is authorized to issue is 21,038,200.
The number of shares of Preferred Stock which this Corporation is
authorized to issue is 6,001,250, 1,250,000 of which shall be designated
"Series A Preferred," 2,251,250 of which shall be designated "Series B
Preferred" and 2,500,000 of which shall be designated "Series C Preferred"
(Series A Preferred, Series B Preferred and Series C Preferred are
referred to collectively as the "Preferred Stock")."
4) This certificate does not alter the wording of any resolution or
written consent which was in fact adopted by the Board of Directors or the
Shareholders.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have executed at Alameda, California,
this December 30, 1997.
/s/ Rita C. Dettore
--------------------------------------
Rita C. Dettore, Vice President
/s/ Chanel S. Aquino
--------------------------------------
Chanel S. Aquino, Assistant Secretary
-2-
<PAGE> 4
CERTIFICATE
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WINK COMMUNICATIONS, INC.
Maggie Wilderotter and Gary Hammer certify that:
1. They are the duly elected President and acting Secretary, respectively,
of Wink Communications, Inc., a California corporation (the "Company").
2. The Amended and Restated Articles of Incorporation of the Company are
hereby amended and restated in full to read in their entirety as set forth in
Exhibit A attached hereto.
3. The attached Amended and Restated Articles of Incorporation have been
duly approved by the Board of Directors of this Corporation.
4. The attached Amended and Restated Articles of Incorporation have been
duly approved by the holders of the requisite number of shares of this Company
in accordance with Sections 902 and 903 of the California General Corporation
Law. The total number of outstanding shares of each class entitled to vote with
respect to the attached amendment and restatement was 9,787,224 shares of Common
Stock, 1,250,000 shares of Series A Preferred Stock, 2,233,750 shares of Series
B Preferred Stock and 2,191,000 shares of Series C Preferred Stock. The number
of shares of Common Stock and Preferred Stock voting in favor of the attached
Amended and Restated Articles of Incorporation equaled or exceeded the vote
required. The vote required was a majority of the outstanding shares of Common
Stock and a majority of the outstanding shares of Preferred Stock, each voting
as a separate class.
<PAGE> 5
IN WITNESS WHEREOF, the undersigned have executed these Amended and
Restated Articles of Incorporation on December 1 , 1997.
/s/ Maggie Wilderotter
--------------------------------------------
Maggie Wilderotter, President
/s/ Gary Hammer
--------------------------------------------
Gary Hammer, Secretary
The undersigned further declare under penalty of perjury under the laws of
the State of California that the matters set forth in this certificate are true
and correct of their own knowledge.
Executed at Alameda, California on December 1 , 1997.
/s/ Maggie Wilderotter
--------------------------------------------
Maggie Wilderotter, President
/s/ Gary Hammer
--------------------------------------------
Gary Hammer, Secretary
<PAGE> 6
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WINK COMMUNICATIONS, INC.
I
The name of the corporation is Wink Communications, Inc.
II
The purpose of the corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III
This corporation is authorized to issue two classes of stock, designated
Common Stock, par value $0.001 per share ("Common Stock") and Preferred Stock,
par value $0.001 per share. The number of shares of Common Stock which this
Corporation is authorized to issue is 30,000,000. The number of shares of
Preferred Stock which this Corporation is authorized to issue is 6,001,250,
1,250,000 of which shall be designated "Series A Preferred," 2,251,250 of which
shall be designated "Series B Preferred" and 2,500,000 of which shall be
designated "Series C Preferred" (Series A Preferred, Series B Preferred and
Series C Preferred are referred to collectively as the "Preferred Stock").
No share or shares of Preferred Stock acquired by the corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be canceled, retired and eliminated from the shares which
the corporation shall be authorized to issue.
IV
The relative rights, preferences, privileges and restrictions granted to
or imposed on the respective classes of shares of capital stock or the holders
thereof are as follows:
1. Dividends.
(a) The holders of the Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of funds legally available
therefor, dividends at the rate of $0.128 per share of Series A Preferred per
annum, $0.32 per share of Series B Preferred per annum, and $0.64 per share of
Series C Preferred per annum, payable in preference and priority to
<PAGE> 7
any payment of any dividend on Common Stock of the corporation. Such dividends
shall not be cumulative, and no right to such dividends shall accrue to holders
of Preferred Stock unless declared by the Board of Directors. No dividends or
other distributions shall be made with respect to the Common Stock in any fiscal
year, other than dividends payable solely in Common Stock, until:
(i) in the case of Series A Preferred, a dividend in the
amount of at least $0.128 per share of Series A
Preferred;
(ii) in the case of Series B Preferred, a dividend in the
amount of at least $0.32 per share of Series B
Preferred; and
(iii) in the case of Series C Preferred, a dividend in the
amount of at least $0.64 per share multiplied by (i) the
number one (1), in the event of dividends or other
distributions made during the first fiscal year in which
the Series C Preferred is outstanding, or (ii) the
number of years elapsed since the first date of issuance
of the Series C Preferred (pro rated for any partial
years), less the aggregate amount previously paid as
dividends on the Series C Preferred, in the event of
dividends or other distributions made after the first
fiscal year in which the Series C Preferred is
outstanding,
has in each case been declared and paid during that fiscal year.
(b) For purposes of this Section 1, unless the context otherwise
requires, a "distribution" shall mean the transfer of cash or other property
without consideration whether by way of dividend or otherwise, payable other
than in Common Stock, or the purchase or redemption of shares of the corporation
(other than repurchases of Common Stock issued to or held by employees,
officers, directors or consultants of the corporation or its subsidiaries upon
termination of their employment or services) for cash or property.
(c) As authorized by Section 402.5(c) of the California Corporations
Code, the provisions of Sections 502 and 503 of the California Corporations Code
shall not apply with respect to repurchases by the corporation of shares of
Common Stock issued to or held by employees, officers, directors or consultants
of the corporation or its subsidiaries upon termination of their employment or
services.
2. Liquidation Preference. In the event of any liquidation, dissolution,
or winding up of the corporation, either voluntary or involuntary, distributions
to the shareholders of the corporation shall be made in the following manner:
-2-
<PAGE> 8
(a) The holders of the Preferred Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets or surplus
funds of the corporation to the holders of the Common Stock by reason of their
ownership of such stock, (i) the amount of $1.60 per share for each share of
Series A Preferred then held by them (adjusted for any combinations,
consolidations, or stock distributions or stock dividends with respect to such
shares) plus an amount equal to all declared but unpaid dividends on the Series
A Preferred, (ii) the amount of $4.00 per share for each share of Series B
Preferred then held by them (adjusted for any combinations, consolidations, or
stock distributions or stock dividends with respect to such shares) plus an
amount equal to all declared but unpaid dividends on the Series B Preferred and
(iii) the amount of $8.00 per share for each share of Series C Preferred then
held by them (adjusted for any combinations, consolidations, or stock
distributions or stock dividends with respect to such shares) plus an amount
equal to all declared but unpaid dividends on the Series C Preferred. If the
assets and funds thus distributed among the holders of the Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the entire assets and funds of the corporation legally
available for distribution shall be distributed ratably among the holders of the
Preferred Stock in a manner that the amount distributed to each holder of
Preferred Stock shall equal the amount obtained by multiplying the entire assets
and funds of the corporation legally available for distribution hereunder by a
fraction, the numerator of which shall be the aggregate liquidation preference
of the shares of Preferred Stock then held by such holder, and the denominator
of which shall be the total liquidation preference of all shares of Preferred
Stock then outstanding.
(b) After payment has been made to the holders of the Preferred
Stock of the full amounts to which they shall be entitled as set forth in
Section 2(a) above, then the entire remaining assets and funds of the
corporation legally available for distribution, if any, shall be distributed
ratably among the holders of the Common Stock in a manner such that the amount
distributed to each holder of Common Stock shall equal the amount obtained by
multiplying the entire remaining assets and funds of the corporation legally
available for distribution hereunder by a fraction, the numerator of which shall
be the number of shares of Common Stock then held by such holder, and the
denominator of which shall be the total number of shares of Common Stock then
outstanding.
(c) For purposes of this Section 2, a merger or consolidation of the
corporation with or into any other corporation or corporations, unless the
shareholders of the corporation immediately following such transaction directly
or indirectly own greater than fifty percent (50%) of the total voting power of
the surviving or acquiring corporation or corporations and the aggregate per
share value (determined in good faith by the corporation's Board of Directors)
of each share of Preferred Stock following such merger or consolidation plus any
consideration paid to the holder of such share of Preferred Stock in connection
with such merger or consolidation is at least equal to the liquidation
preference which such holder would be entitled to receive under Section 2(a)
hereof in the event of liquidation, dissolution or winding up of the
corporation, or a
-3-
<PAGE> 9
sale of all or substantially all of the assets of the corporation, shall be
treated as a liquidation, dissolution or winding up of the corporation.
(d) Notwithstanding Sections 2(a) and 2(b) hereof, the corporation
may at any time, out of funds legally available therefor, repurchase shares of
Common Stock of the corporation issued to or held by employees, officers,
directors or consultants of the corporation or its subsidiaries upon termination
of their employment or services on terms approved by a majority of disinterested
members of the entire Board of Directors.
3. Voting Rights and Directors.
(a) Generally. Except as otherwise required by law or by Sections 3
or 5 hereof, the holder of each share of Common Stock issued and outstanding
shall have one vote, and the holder of each share of Preferred Stock shall be
entitled to vote on all matters and entitled with respect to such share to a
number of votes equal to the number of shares of Common Stock into which such
share of Preferred Stock could be converted at the record date for determination
of the shareholders entitled to vote on such matters, or, if no such record date
is established, at the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of the corporation having general voting power and not separately as a
class. Holders of Common Stock and Preferred Stock shall be entitled to notice
of any shareholders' meeting in accordance with the Bylaws of the corporation.
Fractional votes by the holders of Preferred Stock shall not, however, be
permitted, and any fractional voting rights shall (after aggregating all shares
into which shares of Preferred Stock held by each holder could be converted) be
rounded to the nearest whole number.
(b) Board Size. The authorized number of directors of the Company's
Board shall be not less than four (4) nor more than seven (7). The exact number
of directors shall be specified in the Bylaws of the corporation and may be
changed, within the limits specified above, by a duly adopted resolution by the
Company's Board. The Company shall not alter the indefinite range in number of
directors specified above or fix a definite number of directors without a
provision for an indefinite range in its Articles of Incorporation, Bylaws or
otherwise, without first obtaining the written consent, or affirmative vote at a
meeting, of the holders of at least a majority of the then-outstanding shares of
the Preferred Stock, all series consenting or voting (as the case may be)
together as a separate class.
(c) Board of Directors Election and Removal.
(i) Election. The holders of the Preferred Stock, all series
voting together as a separate class (with cumulative voting rights as among
themselves in accordance with Section 708 of the California Corporations Code),
shall be entitled to elect one (1) director of the Company; the holders of the
Common Stock, voting as a separate class (with cumulative voting rights as among
themselves in accordance with Section 708 of the California Corporations Code),
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shall be entitled to elect one (1) director of the Company; and the holders of
the Preferred Stock and the Common Stock, voting together as a single class
(with cumulative voting rights as among themselves in accordance with Section
708 of the California Corporations Code), shall be entitled to elect the
remaining authorized number of directors of the Company.
(ii) Quorum; Required Vote.
(A) Quorum. At any meeting held for the purpose of
electing directors, the presence in person or by proxy of the holders of a
majority of the shares of the Preferred Stock or Common Stock then outstanding,
respectively, shall constitute a quorum of the Preferred Stock or Common Stock,
as the case may be, for the election of directors to be elected solely by the
holders of the Preferred Stock or Common Stock, respectively. The holders of
Preferred Stock and Common Stock representing a majority of the voting power of
all the then-outstanding shares of Preferred Stock and Common Stock shall
constitute a quorum for the election of the director to be elected jointly by
the holders of the Preferred Stock and the Common Stock.
(B) Required Vote. With respect to the election of any
director or directors by the holders of the outstanding shares of a specified
series, series, class or classes of stock given the right to elect such director
or directors pursuant to Subsection 3(c)(i) above ("Specified Stock"), that
candidate or those candidates (as applicable) shall be elected who either: (1)
in the case of any such vote conducted at a meeting of the holders of such
Specified Stock, receive the highest number of affirmative votes of the
outstanding shares of such Specified Stock, up to the number of directors to be
elected by such Specified Stock; or (2) in the case of any such vote taken by
written consent without a meeting, are elected by the unanimous written consent
of the holders of shares of such Specified Stock.
(iii) Vacancy. If there shall be any vacancy in
the office of a director elected by the holders of any Specified Stock pursuant
to Subsection 3(c)(i), then a successor to hold office for the unexpired term of
such director may be elected by either: (A) the remaining director or directors
(if any) in office that were so elected by the holders of such Specified Stock,
by the affirmative vote of a majority of such directors (or by the sole
remaining director elected by the holders of such Specified Stock if there is
but one), or (B) the affirmative vote of holders of the shares of such Specified
Stock that are entitled to elect such director under Subsection 3(c)(i).
(iv) Removal. Subject to Section 303 of the
Corporations Code, any director who shall have been elected to the Board by the
holders of any Specified Stock pursuant to Subsection 3(c)(i) or by any director
or directors elected by holders of any Specified Stock as provided in Subsection
3(c)(iii)(A) may be removed during his or her term of office, either with or
without cause, by, and only by, the affirmative vote of shares representing a
majority of the voting power of all the outstanding shares of such Specified
Stock entitled to vote,
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given either a meeting of such shareholders duly called for that purpose or
pursuant to a written consent of shareholders without a meeting. Any vacancy
created by such removal may be filled only in the manner provided in Subsection
3(c)(iii).
(v) Procedures. Any meeting of the holders of
any Specified Stock, and any action taken by the holders of any Specified Stock
by written consent without a meeting, in order to elect or remove a director
under this Section 3(c), shall be held in accordance with the procedures and
provisions of the Company's Bylaws, the California Corporations Code and
applicable law regarding shareholder meetings and shareholder actions by written
consent, as such are then in effect (including but not limited to procedures and
provisions for determining the record date for shares entitled to vote).
(vi) Termination. Notwithstanding anything in
this Subsection 3(c) to the contrary, the provisions of this Subsection 3(c)
shall cease to be of any further force or effect upon the earlier of (A) the
merger or consolidation of the Company with or into any other corporation or
corporations if such consolidation or merger is approved by the shareholders of
the Company in compliance with applicable law and the Articles of Incorporation
and Bylaws of the Company; or (B) a sale of all or substantially all of the
Company's assets.
4. Conversion. The holders of the Preferred Stock have conversion rights
as follows (the "Conversion Rights"):
(a) Right to Convert.
(i) Series A Preferred. Each share of Series A Preferred shall
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share at the office of the corporation or any transfer agent
for the Series A Preferred, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Series A Issuance Price
(as hereinafter defined) by the Series A Conversion Price, determined as
hereinafter provided, in effect at the time of the conversion (the "Series A
Conversion Rate"). The Issuance Price for Series A Preferred Stock shall be
$1.60 per share. The price at which shares of Common Stock shall be deliverable
upon conversion (the "Series A Conversion Price") for Series A Preferred Stock
shall initially be $1.60 per share of Common Stock. Such initial Series A
Conversion Price shall be subject to adjustment as hereinafter provided.
Upon conversion, all declared and unpaid dividends on
the Series A Preferred shall be paid in cash.
(ii) Series B Preferred. Each share of Series B Preferred
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share at the office of the corporation or any transfer
agent for the Series B Preferred, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Series B
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Issuance Price (as hereinafter defined) by the Series B Conversion Price,
determined as hereinafter provided, in effect at the time of the conversion (the
"Series B Conversion Rate"). The Issuance Price for Series B Preferred Stock
shall be $4.00 per share. The price at which shares of Common Stock shall be
deliverable upon conversion (the "Series B Conversion Price") for Series B
Preferred Stock shall initially be $4.00 per share of Common Stock. Such initial
Series B Conversion Price shall be subject to adjustment as hereinafter
provided.
Upon conversion, all declared and unpaid dividends on the
Series B Preferred shall be paid in cash.
(iii) Series C Preferred. Each share of Series C Preferred
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share at the office of the corporation or any transfer
agent for the Series C Preferred, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Series C
Issuance Price (as hereinafter defined) by the Series C Conversion Price,
determined as hereinafter provided, in effect at the time of the conversion (the
"Series C Conversion Rate"). The Issuance Price for Series C Preferred Stock
shall be $8.00 per share. The price at which shares of Common Stock shall be
deliverable upon conversion (the "Series C Conversion Price") for Series C
Preferred Stock shall initially be $8.00 per share of Common Stock. Such initial
Series C Conversion Price shall be subject to adjustment as hereinafter
provided.
Upon conversion, all declared and unpaid dividends on
the Series C Preferred shall be paid in cash.
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Conversion Price either (i) immediately prior to the closing of a firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the offer and
sale of Common Stock for the account of the corporation to the public at a price
per share (prior to underwriter commissions and offering expenses) of not less
than $8.00 per share (as appropriately adjusted for any subsequent stock splits,
stock dividends, reclassifications or recapitalizations) and with gross proceeds
to the Company (prior to underwriter commissions and offering expenses) of not
less than $10,000,000 or (ii) upon the receipt by the corporation of the
affirmative vote at a duly noticed shareholders meeting or pursuant to a duly
solicited written consent of the holders of more than sixty-six and two-thirds
percent (66 2/3%) of the then outstanding shares of Preferred Stock. In the
event of the automatic conversion of the Preferred Stock upon a public offering
as set forth in clause (i) above, the person(s) entitled to receive the Common
Stock issuable upon such conversion of Preferred Stock shall not be deemed to
have converted such Preferred Stock until immediately prior to the closing of
such sale of securities.
(c) Mechanics of Conversion. Before any holder of Preferred Stock
shall be entitled to convert the same into full shares of Common Stock and to
receive certificates therefor,
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he shall surrender the certificate or certificates therefor, duly endorsed, at
the office of the corporation or of any transfer agent for the Preferred Stock,
and shall give written notice to the corporation at such office that he elects
to convert the same; provided, however, that in the event of an automatic
conversion pursuant to Section 4(b), the outstanding shares of Preferred Stock
shall be converted automatically without any further action by the holders of
such shares and whether or not the certificates representing such shares are
surrendered to the corporation or its transfer agent, and provided further that
the corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such automatic conversion unless the
certificates evidencing such shares of Preferred Stock are either delivered to
the corporation or its transfer agent as provided above, or the holder notifies
the corporation or its transfer agent that such certificates have been lost,
stolen or destroyed and executes an agreement satisfactory to the corporation to
indemnify the corporation from any loss incurred by it in connection with such
certificates. The corporation shall, as soon as practicable after such delivery,
or receipt of such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Preferred Stock,
a certificate or certificates for the number of shares of Common Stock to which
he shall be entitled as aforesaid and a check payable to the holder in the
amount of any cash amounts payable as the result of a conversion into fractional
shares of Common Stock. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Preferred Stock to be converted, or in the case of automatic
conversion on the date of closing of the offering or the effective date of such
written consent, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
(d) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of Preferred Stock. In lieu of any fractional shares to
which the holder of Preferred Stock would otherwise be entitled, the corporation
shall pay cash equal to such fraction multiplied by the fair market value of the
Common Stock on the date of such conversion, as determined by the board of
directors of the corporation. Whether or not fractional shares are issuable upon
such conversion shall be determined on the basis of the total number of shares
of Preferred Stock held by each holder at the time converting into Common Stock
and the total number of shares of Common Stock issuable upon such aggregate
conversion.
(e) Adjustment of Conversion Price. The Conversion Price of the
Preferred Stock shall be subject to adjustment from time to time as follows:
(i) Issuance of Common Stock and Common Stock Equivalents. If,
after the date hereof, the corporation shall issue (or, pursuant to Section
4(e)(ii)(C) hereof, shall be deemed to have issued) any Common Stock other than
"Excluded Stock" (as defined below) for a consideration per share less than the
Conversion Price for such series of Preferred Stock in effect immediately prior
to the issuance of such Common Stock (excluding stock dividends, subdivisions,
split-ups, combinations, dividends or recapitalizations covered by Sections
4(e)(iv), (v), (vi) and
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<PAGE> 14
(vii)), the Conversion Price for such series of Preferred Stock in effect
immediately after each such issuance shall forthwith be adjusted to a price
equal to the quotient obtained by dividing:
(A) an amount equal to the sum of
(x) the total number of shares of Common Stock
outstanding (including any shares of Common Stock issuable upon conversion of
such series of Preferred Stock, or deemed to have been issued pursuant to
Section 4(e)(ii)(C) and 4(e)(iii)) immediately prior to such issuance multiplied
by the Conversion Price for such series of Preferred Stock in effect immediately
prior to such issuance, plus
(y) the consideration received by the
corporation upon such issuance, by
(B) the total number of shares of Common Stock
outstanding immediately prior to such issuance of Common Stock (including any
shares of Common Stock issuable upon conversion of such series of Preferred
Stock or deemed to have been issued pursuant to Section 4(e)(ii)(C) and
4(e)(iii)) plus the number of shares of Common Stock actually issued in the
transaction which resulted in the adjustment pursuant to this Section 4(e)(i).
(ii) Treatment of Certain Issuances. For the purposes of any
adjustment of the Conversion Price for such series of Preferred Stock pursuant
to Section 4(e)(i), the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
after deducting any discounts or commissions paid or incurred by the corporation
in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as reasonably determined by
the board of directors of the corporation, in accordance with generally accepted
accounting treatment.
(C) In the case of the issuance of (x) options to
purchase or rights to subscribe for Common Stock (other than Excluded Stock),
(y) securities by their terms convertible into or exchangeable for Common Stock
(other than Excluded Stock), or (z) options to purchase or rights to subscribe
for such convertible or exchangeable securities:
(1) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a
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consideration equal to the consideration (determined in the manner provided in
Section 4(e)(ii)(A) and 4(e)(ii)(B) above), if any, received by the corporation
upon the issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock covered thereby;
(2) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof, shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration received by the
corporation for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
additional minimum consideration, if any, to be received by the corporation upon
the conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in the manner
provided in Section 4(e)(ii)(A) and 4(e)(ii)(B) above);
(3) on any change in the number of shares of
Common Stock deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or exchangeable securities, or on
any change in the minimum purchase price of such options, rights or securities,
other than a change resulting from the antidilution provisions of such options,
rights or securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon (x) the
issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change or (y) the options or rights related to such
securities not converted or exchanged prior to such change, as the case may be,
been made upon the basis of such change; and
(4) on the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon the
issuance of such options, rights, convertible or exchangeable securities or
options or rights relate to such convertible or exchangeable securities, as the
case may be, been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(iii) Excluded Stock. "Excluded Stock" shall mean:
(A) all shares of Common Stock issued and outstanding
on the date this certificate is filed with the California Secretary of State;
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(B) all shares of Series A Preferred, Series B
Preferred and Series C Preferred, and the Common Stock into which the shares of
Series A Preferred, Series B Preferred and Series C Preferred are convertible;
(C) up to 17,500 shares of Series B Preferred, 500,000
shares of Common Stock and up to 125,000 shares of Common Stock issuable upon
exercise of warrants issued to Venture Lending & Leasing, Inc., Benchmark
Capital Partners, L.P. and Benchmark Founders Fund, L.P., and WC Investors, LLC,
respectively;
(D) up to 5,564,546 shares of Common Stock or other
securities issued after February 1, 1995 to employees, officers, directors,
contractors, advisors, consultants, banks, lessors or vendors of the
corporation;
(E) up to 900,000 shares of Common Stock issuable upon
exercise of warrants issued to General Electric Capital Corporation or its
affiliates, including NBC Multimedia, Inc. or its affiliates;
All outstanding shares of Excluded Stock (including shares issuable upon
conversion of the Series A Preferred Stock , the Series B Preferred Stock and
the Series C Preferred Stock) shall be deemed to be outstanding for all purposes
of the computations of Section 4(e)(i).
(iv) Stock Splits and Stock Dividends. If the number of shares
of Common Stock outstanding at any time after the date hereof is increased by a
stock dividend payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock, then, on the date such payment is made or such change
is effective, the Conversion Price of each series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of any shares of such series of Preferred Stock shall be increased in
proportion to such increase of outstanding shares.
(v) Reverse Stock Splits. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, then, on the effective
date of such combination, the Conversion Price of each series of Preferred Stock
shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion of any shares of such series of Preferred Stock shall be
decreased in proportion to such decrease in outstanding shares.
(vi) Cash Dividends. In case the corporation shall declare a
cash dividend upon its Common Stock generally payable otherwise than out of
retained earnings or shall distribute to all holders of its Common Stock shares
of its capital stock (other than Common Stock), stock or other securities of
other persons, evidences of indebtedness issued by the corporation or other
persons, assets (excluding cash dividends) or options or rights (excluding
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<PAGE> 17
options to purchase and rights to subscribe for Common Stock or other securities
of the corporation convertible into or exchangeable for Common Stock), then, in
each such case, the holders of shares of Preferred Stock shall, concurrent with
the distribution to holders of Common Stock, receive a like distribution based
upon the number of shares of Common Stock into which such Preferred Stock is
then convertible.
(vii) Reorganization; Reclassification. In the case, at any
time after the date hereof, of any capital reorganization, or any
reclassification of the stock of the corporation (other than as a result of a
stock dividend or subdivision, split-up or combination of shares), the
consolidation or merger of the corporation with or into another person (other
than a consolidation or merger to which the provisions of Section 2 hereof apply
or in which the corporation is the continuing entity and which does not result
in any change in the Common Stock), or a sale or transfer of all or
substantially all of the corporation's assets, the shares of Preferred Stock
shall, after such reorganization, reclassification, consolidation, merger, or
sale, be convertible into the kind and number of shares of stock or other
securities or property of the corporation or otherwise to which such holder
would have been entitled if, immediately prior to such reorganization,
reclassification, consolidation, merger, or sale, such holder had converted its
shares of Preferred Stock into Common Stock. The provisions of this clause (vi)
shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers or sales.
(viii) All calculations under this Section 4 shall be made to
the nearest cent or to the nearest one hundredth (1/100) of a share, as
appropriate.
(f) Minimal Adjustments. No adjustment in the Conversion Price for
any series of Preferred Stock need be made if such adjustment would result in a
change in the Conversion Price of less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be made at the time
of and together with any subsequent adjustment which, on a cumulative basis,
amounts to an adjustment of $0.01 or more in the Conversion Price.
(g) No Impairment. The corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue, sale or repurchase of securities or any other voluntary
action, avoid or seek to avoid, directly or indirectly, the observance or
performance of any of the terms to be observed or performed hereunder by the
corporation or wrongfully deny any of the benefits or rights intended to be
conferred hereby, but will at all times in good faith assist in the carrying out
of all the provisions of this Section 4 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion Rights of the
holders of Preferred Stock against impairment. This provision shall not,
however, restrict the corporation's right to amend its Articles of Incorporation
with the requisite shareholder consent.
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate for a series of Preferred
Stock pursuant to this Section 4, the
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corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of such series of Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The corporation shall, upon written request
at any time of any holder of Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) all such adjustments and
readjustments, (ii) the Conversion Rate at the time in effect and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of such holder's shares of
Preferred Stock.
(i) Notices of Record Date. In the event that this corporation shall
propose at any time:
(A) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(B) to offer for subscription pro rata to the holders
of any class or series of its stock any additional shares of stock of any class
or series or other rights;
(C) to effect any reclassification or recapitalization
of its Common Stock outstanding involving a change in the Common Stock; or
(D) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this corporation shall send to the
holders of Preferred Stock:
(1) at least ten (10) days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to in clauses (C) and (D) above; and
(2) in the case of the matters referred to in
clauses (C) and (D) above, at least ten (10) days' prior written notice of the
date when the same shall take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by first class
mail, postage prepaid, addressed to the holders of Preferred Stock at the
address for each such holder as shown on the
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books of this corporation. Any notice required by the provisions of this Section
4 to be given to the holder of shares of Preferred Stock shall be deemed given
if deposited in the United States mail, postage prepaid, and addressed to each
holder of record at such holder's address appearing on the corporation's books.
(j) Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
5. Protective Provisions. In addition to any other rights provided by law,
so long as any shares of Preferred Stock remain outstanding, the corporation
shall not, without first obtaining the approval by vote or written consent, in
the manner provided by law, of the holders of at least a majority of the total
number of outstanding shares of Preferred Stock, all series voting together as a
single class:
(a) merge or consolidate with or into any corporation if such merger
or consolidation would result in the shareholders of the Company immediately
prior to such merger or consolidation holding less than majority of the voting
power of the stock of the surviving corporation immediately after such merger or
consolidation;
(b) sell all or substantially all the Company's assets in a single
transaction or series of related transactions;
(c) liquidate or dissolve;
(d) declare or pay any dividends (other than dividends payable
solely in shares of its own Common Stock) on or declare or make any other
distribution, directly or indirectly, on account of any shares of Common Stock
now or hereafter outstanding;
(e) except as permitted by Section 3(b), alter the authorized number
of directors in the corporation's Articles of Incorporation, Bylaws or
otherwise;
(f) amend or repeal any provision of, or add any provision to, the
corporation's Articles of Incorporation if such action would materially and
adversely alter or change the preferences, rights, privileges or powers of, or
the restrictions provided for the benefit of, the Preferred Stock;
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(g) authorize or issue shares of any class of stock having any
rights, preferences or privileges prior to or on a parity with the Preferred
Stock;
(h) reclassify any shares of Common Stock (or any other shares of
the corporation other than the Preferred Stock) into shares having any rights,
preferences or privileges prior to or on a parity with the Preferred Stock;
(i) authorize or issue any additional series or shares of heretofore
unauthorized Preferred Stock; or
(j) repurchase any shares of Common Stock or Preferred Stock (other
than shares of Common Stock issued to or held by employees, officers, directors
or consultants of the corporation or its subsidiaries upon termination of their
employment or services on terms approved by a majority of disinterested members
of the entire Board of Directors).
6. Waivers and Consents. Any preference, right, privilege or power of the
Preferred Stock may be waived, and any action of the corporation may be
consented to, by the affirmative vote of the holders of a majority of the
then-outstanding shares of Preferred Stock, taken at a duly constituted meeting
or by written consent, and such waiver or consent shall be binding upon all
holders of Preferred Stock.
7. No Reissuance of Preferred Stock. Any share of Preferred acquired by
the corporation, whether by redemption, repurchase, conversion or otherwise,
shall be canceled, and shall not be reissuable.
V
1. Limitation of Directors' Liability. The liability of the directors of
this corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
2. Indemnification of Corporate Agents. This corporation is authorized to
indemnify the directors, officers and agents of the corporation to the fullest
extent permissible under California law.
3. Repeal or Modification. Any repeal or modification of the foregoing
provisions of this Article V shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such repeal or modification.
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EXHIBIT 3.2
CERTIFICATE OF INCORPORATION
OF
WINK COMMUNICATIONS, INC.
I. The name of the corporation (the "Corporation") is:
Wink Communications, Inc.
II. The address of the Corporation's registered office in the State of
Delaware is 15 E. North Street, Dover, Delaware 19903-0899, County of Kent. The
name of its registered agent at such address is Incorporating Services, Ltd.
III. The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
IV. This corporation is authorized to issue two classes of stock,
designated Common Stock, par value $0.001 per share ("Common Stock") and
Preferred Stock, par value $0.001 per share. The number of shares of Common
Stock which this Corporation is authorized to issue is 21,038,200. The number of
shares of Preferred Stock which this Corporation is authorized to issue is
6,001,250.
The shares of Preferred Stock may be issued from time to time in one
or more series pursuant to a resolution or resolutions providing for such issue
duly adopted by the Board of Directors. The Board of Directors of the
Corporation is expressly authorized, by filing a certificate pursuant to the
applicable law of the State of Delaware, to: (i) establish from time to time the
number of shares to be included in each such series; (ii) fix the rights,
preferences, restrictions and designations of the shares of each such series,
including but not limited to the fixing or alteration of the dividend rights,
dividend rate, conversion rights, conversion rate, voting rights, rights and
terms of redemption (including sinking fund provisions), redemption price or
prices, voting rights and liquidation preferences of any series of Preferred
Stock for which no shares have been issued and are outstanding; (iii) increase
number of shares of any series at any time; and (iv) decrease the number of
shares of any series prior or subsequent to the issue of shares of that series,
but not below the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
V. The name and mailing address of the incorporator are as follows:
Paritosh K. Choksi
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
<PAGE> 2
VI. The Corporation is to have perpetual existence.
VII. Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before voting
begins or unless the Bylaws of the Corporation shall so provide.
VIII. The number of directors which constitute the whole Board of
Directors of the Corporation shall be designated in the Bylaws of the
Corporation.
IX. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the Corporation.
X. (a) To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may hereafter be amended, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach fiduciary duty as a director.
(b) The Corporation shall indemnify to the fullest extent permitted
by law any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he, his testator or intestate is or was a director, officer or
employee of the Corporation or any predecessor of the Corporation or serves or
served at any other enterprise as a director, officer or employee at the request
of the Corporation or any predecessor to the Corporation.
(c) Neither any amendment nor repeal of this Article X, nor the
adoption of any provision of this Corporation's Certificate of Incorporation
inconsistent with this Article X, shall eliminate or reduce the effect of this
Article X, in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article X, would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
XI. Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the Corporation.
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<PAGE> 3
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the Corporation Law of the State of
Delaware, do make this certificate, hereby declaring and certifying, under
penalties of perjury, that this is my act and deed and the facts herein stated
are true, and accordingly have hereunto set my hand this 30th day of
April, 1998.
/s/ Paritosh K. Choksi
--------------------------------------
Paritosh K. Choksi, Incorporator
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<PAGE> 1
EXHIBIT 3.5
BYLAWS
OF
WINK COMMUNICATIONS, INC.
(A DELAWARE CORPORATION)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I CORPORATE OFFICES.....................................................................1
1.1 REGISTERED OFFICE.................................................................1
1.2 OTHER OFFICES.....................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS.............................................................1
2.1 PLACE OF MEETINGS.................................................................1
2.2 ANNUAL MEETING....................................................................1
2.3 SPECIAL MEETING...................................................................2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS..................................................2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS..........................................................................2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE......................................4
2.7 QUORUM............................................................................4
2.8 ADJOURNED MEETING; NOTICE.........................................................5
2.9 VOTING............................................................................5
2.10 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT.................................5
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING ..........................6
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING........................................6
2.13 PROXIES...........................................................................7
2.14 ORGANIZATION......................................................................8
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE.............................................8
2.16 INSPECTORS OF ELECTION............................................................8
2.17 INSPECTORS OF ELECTION AND PROCEDURES FOR COUNTING WRITTEN
CONSENTS..........................................................................9
ARTICLE III DIRECTORS..........................................................................10
3.1 POWERS...........................................................................10
3.2 NUMBER OF DIRECTORS..............................................................11
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS.........................................11
3.4 RESIGNATION AND VACANCIES........................................................12
3.5 REMOVAL OF DIRECTORS.............................................................13
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.........................................13
3.7 FIRST MEETINGS...................................................................13
3.8 REGULAR MEETINGS.................................................................14
3.9 SPECIAL MEETINGS; NOTICE.........................................................14
3.10 QUORUM...........................................................................14
3.11 WAIVER OF NOTICE.................................................................15
3.12 ADJOURNMENT......................................................................15
3.13 NOTICE OF ADJOURNMENT............................................................15
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................................15
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.15 FEES AND COMPENSATION OF DIRECTORS...............................................15
3.16 APPROVAL OF LOANS TO OFFICERS....................................................15
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION...........................16
3.18 CONDUCT OF BUSINESS..............................................................16
ARTICLE IV COMMITTEES..........................................................................16
4.1 COMMITTEES OF DIRECTORS..........................................................16
4.2 MEETINGS AND ACTION OF COMMITTEES................................................17
4.3 COMMITTEE MINUTES................................................................17
ARTICLE V OFFICERS.............................................................................17
5.1 OFFICERS.........................................................................17
5.2 APPOINTMENT OF OFFICERS..........................................................18
5.3 SUBORDINATE OFFICERS.............................................................18
5.4 REMOVAL AND RESIGNATION OF OFFICERS..............................................18
5.5 VACANCIES IN OFFICES.............................................................19
5.6 CHAIRMAN OF THE BOARD............................................................19
5.7 PRESIDENT........................................................................19
5.8 VICE PRESIDENTS..................................................................19
5.9 SECRETARY........................................................................20
5.10 CHIEF FINANCIAL OFFICER..........................................................20
5.11 ASSISTANT SECRETARY..............................................................20
5.12 ADMINISTRATIVE OFFICERS..........................................................21
5.13 AUTHORITY AND DUTIES OF OFFICERS.................................................21
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS..................................................................................21
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS........................................21
6.2 INDEMNIFICATION OF OTHERS........................................................22
6.3 INSURANCE........................................................................23
ARTICLE VII RECORDS AND REPORTS................................................................23
7.1 MAINTENANCE AND INSPECTION OF RECORDS............................................23
7.2 INSPECTION BY DIRECTORS..........................................................23
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS...................................24
7.4 CERTIFICATION AND INSPECTION OF BYLAWS...........................................24
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VIII GENERAL MATTERS...................................................................24
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING............................24
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS........................................24
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED...............................25
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES.................................25
8.5 SPECIAL DESIGNATION ON CERTIFICATES..............................................26
8.6 LOST CERTIFICATES................................................................26
8.7 TRANSFER AGENTS AND REGISTRARS...................................................26
8.8 CONSTRUCTION; DEFINITIONS........................................................27
8.10 FISCAL YEAR......................................................................27
8.11 SEAL.............................................................................27
8.12 STOCK TRANSFER AGREEMENTS........................................................27
8.13 REGISTERED STOCKHOLDERS..........................................................27
8.14 NOTICES..........................................................................28
ARTICLE IX AMENDMENTS..........................................................................28
ARTICLE X DISSOLUTION..........................................................................28
ARTICLE XI CUSTODIAN...........................................................................29
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES......................................29
11.2 DUTIES OF CUSTODIAN..............................................................30
</TABLE>
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<PAGE> 5
BYLAWS
OF
WINK COMMUNICATIONS, INC.
(a Delaware corporation)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
certificate of incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and
at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the third
Tuesday in March in each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected,
and any other proper business may be transacted if brought before the meeting in
accordance with Section 2.5 of these Bylaws.
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<PAGE> 6
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
Except as otherwise provided by the General Corporation Law of Delaware,
all notices of meetings of stockholders shall be sent or otherwise given in
accordance with Section 2.6 of these bylaws not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (i) in the case of a special meeting,
the purpose or purposes for which the meeting is called (no business other than
that specified in the notice may be transacted) or (ii) in the case of the
annual meeting, those matters which the board of directors, at the time of
giving the notice, intends to present for action by the stockholders (but any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS
(a) To be properly brought before an annual meeting, nominations
for the election of directors or other business must be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the board of directors, (ii) otherwise properly brought before the meeting by or
at the direction of the board of directors or (iii) otherwise properly brought
before the meeting by a stockholder in accordance with Section 2.5(b). To be
properly brought before a special meeting, nominations for the election of
directors or other business must be specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the board of directors.
(b) For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the corporation. To be timely, such stockholder's
notice must be delivered to or mailed and received by the secretary of the
corporation not less than 60 days prior to the meeting; provided, however, that
in the event that less than 60 days notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of business on the
seventh day following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business and
(v) any other information that is required to be provided by the
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<PAGE> 7
stockholder pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in his capacity as a proponent to a
stockholder proposal. Notwithstanding the foregoing, in order to include
information with respect to a stockholder proposal in the proxy statement and
form of proxy for a stockholder's meeting, stockholders must provide notice as
required by the regulations promulgated under the Exchange Act. Notwithstanding
anything in these bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
Section 2.5. The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this Section 2.5,
and, if he or she should so determine, he or she shall so declare at the meeting
that any such business not properly brought before the meeting shall not be
transacted.
(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the corporation entitled to vote
in the election of directors at the meeting who complies with the notice
procedures set forth in this paragraph (c). Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the corporation in accordance with
the provisions of paragraph (b) of this Section 2.5. Such stockholder's notice
shall set forth (i) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (b) of this Section 2.5; and (ii)
as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder and (E) any other information relating to such person
that is required to be disclosed in solicitations of proxies for elections of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act (including without limitation such person's written
consent to being named in the proxy statement, if any, as a nominee and to
serving as a director if elected). At the request of the Board of Directors, any
person nominated by a stockholder for election as a director shall furnish to
the Secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrants, determine and declare at the
meeting that a nomination was not made in accordance with the procedures
prescribed by these bylaws, and if he should so determine, he shall so declare
at the meeting, and the defective nomination shall be disregarded.
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<PAGE> 8
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication. If any notice addressed to a
stockholder at the address of that stockholder appearing on the books of the
corporation is returned to the corporation by the United States Postal Service
marked to indicate that the United States Postal Service is unable to deliver
the notice to the stockholder at that address, then all future notices or
reports shall be deemed to have been duly given without further mailing if the
same shall be available to the stockholder on written demand of the stockholder
at the principal executive office of the corporation for a period of one (1)
year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 QUORUM
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. Where a separate vote by a class or classes is
required, a majority, present in person or by proxy, of the shares of such class
or classes entitled to take action with respect to that vote on that matter
shall constitute a quorum. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the holders of a majority of the shares represented at the
meeting and entitled to vote thereat, present in person or represented by proxy,
shall have power to adjourn the meeting in accordance with Section 2.8 of these
bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
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<PAGE> 9
2.8 ADJOURNED MEETING; NOTICE
Any stockholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by (i) the chairman of the meeting
or (ii) the vote of the holders of a majority of the shares represented at that
meeting and entitled to vote thereat, either in person or by proxy. In the
absence of a quorum, no other business may be transacted at that meeting except
as provided in Section 2.7 of these bylaws.
When a meeting is adjourned to another time and place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.12 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation
or these bylaws, each stockholder shall be entitled to one vote for each share
of capital stock held by such stockholder. Any stockholder entitled to vote on
any matter may vote part of the shares in favor of the proposal, refrain from
voting the remaining shares or, may vote them against the proposal; but, if the
stockholder fails to specify the number of shares which the stockholder is
voting affirmatively, it will be conclusively presumed that the stockholder's
approving vote is with respect to all shares which the stockholder is entitled
to vote.
2.10 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of stockholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and notice,
if a quorum be present either in person or by proxy, and if, either before or
after the meeting, each person entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of stockholders. All such waivers, consents,
and approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
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<PAGE> 10
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing setting forth the action so taken
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Such consents shall be delivered to the corporation by delivery to it
registered office in the state of Delaware, its principal place of business, or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days
after the date the earliest dated consent is delivered to the corporation, a
written consent or consents signed by holders of a sufficient number of votes to
take action are delivered to the corporation in the manner prescribed in the
first paragraph of this section.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
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<PAGE> 11
If the board of directors does not so fix a record date the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of directors
may fix a record date, which record date shall neither precede nor be more than
ten (10) days after the date upon which such resolution is adopted by the board
of directors. Any stockholder of record seeking to have the stockholders
authorize or take action by written consent shall, by written notice to the
secretary, request the board of directors to fix a record date. The board of
directors shall promptly, but in all events within ten (10) days after the date
on which such notice is received, adopt a resolution fixing the record date.
If the board of directors has not fixed a record date within such time,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation in the manner prescribed in the first paragraph of Section 2.11
of these bylaws. If the board of directors has not fixed a record date within
such time and prior action by the board of directors is required by law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the date on
which the board of directors adopts the resolution taking such prior action.
The record date for any other purpose shall be as provided in Section
8.1 of these bylaws.
2.13 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation in accordance with the procedure established for the meeting
or taking of action in writing, as the case may be, but no such proxy shall be
voted or acted upon after three (3) years from its date, unless the proxy
provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, telefacsimile or otherwise) by the
stockholder or the stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the General Corporation Law of Delaware
(relating to the irrevocability of proxies).
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<PAGE> 12
2.14 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, and in the absence of the chairman of the board, the vice presidents, in
order of their rank as fixed by the board of directors, shall call the meeting
of the stockholders to order, and shall act as chairman of the meeting. In the
absence of the president, the chairman of the board, and all of the vice
presidents, the stockholders shall appoint a chairman for such meeting. The
chairman of any meeting of stockholders shall determine the order of business
and the procedures at the meeting, including such matters as the regulation of
the manner of voting and the conduct of business. The date and time of the
opening and closing of the polls for each matter upon which the stockholders
will vote at the meeting shall be announced at the meeting. The secretary of the
corporation shall act as secretary of all meetings of the stockholders, but in
the absence of the secretary at any meeting of the stockholders, the chairman of
the meeting may appoint any person to act as secretary of the meeting.
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders and
of the number of shares held by each such stockholder.
2.16 INSPECTORS OF ELECTION
The corporation may, and to the extent required by law, shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The corporation may designate one
or more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of stockholders,
the person presiding at the meeting may, and to the extent required by law,
shall, appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability. Every vote taken by ballots shall be
counted by an inspector or inspectors appointed by the chairman of the meeting.
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Such inspectors shall:
(a) determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine and certify the result; and
(g) do any other acts that may be proper to conduct the election
or vote with fairness to all stockholders.
2.17 INSPECTORS OF ELECTION AND PROCEDURES FOR COUNTING WRITTEN
CONSENTS
Within three (3) business days after receipt of the earliest dated
consent delivered to the corporation in the manner provided in Section 228(c) of
the General Corporation Law of Delaware or the determination by the board of
directors of the corporation that the corporation should seek corporate action
by written consent, as the case may be, the secretary may, but is not required
to, engage nationally recognized independent inspectors of elections for the
purpose of performing a ministerial review of the validity of the consents and
revocations. The cost of retaining inspectors of election shall be borne by the
corporation.
Consents and revocations shall be delivered to the inspectors upon
receipt by the corporation, the stockholder or stockholders soliciting consents
or soliciting revocations in opposition to action by consent proposed by the
corporation (the "Soliciting Stockholders") or their proxy solicitors or other
designated agents. As soon as consents and revocations are received, the
inspectors shall review the consents and revocations and shall maintain a count
of the number of valid and unrevoked consents. The inspectors shall keep such
count confidential and shall not reveal the count to the corporation, the
Soliciting Stockholders or their representatives or any other person or entity.
As soon as practicable after the earlier of (i) sixty (60) days after the date
of the earliest dated consent delivered to the corporation in the manner
provided in Section 228(c) of the General Corporation Law of Delaware or (ii) a
written request therefor by the corporation or the Soliciting Stockholders
(whichever is soliciting consents) (which request, except in the case of
corporate action by written consent taken pursuant to the solicitations of not
more than ten (10) persons, may be made no earlier
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than after such reasonable amount of time after the commencement date of the
applicable solicitation of consents as is necessary to permit the inspectors to
commence and organize their count, but in no event less than five (5) days after
such commencement date), notice of which request shall be given to the party
opposing the solicitation of consents, if any, which request shall state that
the corporation or Soliciting Stockholders, as the case may be, have a good
faith belief that the requisite number of valid and unrevoked consents to
authorize or take the action specified in the consents has been received in
accordance with these bylaws, the inspectors shall issue a preliminary report to
the corporation and the Soliciting Stockholders stating: (i) the number of valid
consents; (ii) the number of valid revocations; (iii) the number of valid and
unrevoked consents; (iv) the number of invalid consents; (v) the number of
invalid revocations; and (vi) whether, based on their preliminary count, the
requisite number of valid and unrevoked consents has been obtained to authorize
or take the action specified in the consents.
Unless the corporation and the Soliciting Stockholders shall agree in
writing to a shorter or longer period, the corporation and the Soliciting
Stockholders shall have 48 hours to review the consents and revocations and to
advise the inspectors and the opposing party in writing as to whether they
intend to challenge the preliminary report of the inspectors. If no written
notice of an intention to challenge the preliminary report is received within 48
hours after the inspectors' issuance of the preliminary report, the inspectors
shall issue to the corporation and the Soliciting Stockholders their final
report containing the information from the inspectors' determination with
respect to whether the requisite number of valid and unrevoked consents was
obtained to authorize and take the action specified in the consents. If the
corporation or the Soliciting Stockholders issue written notice of an intention
to challenge the inspectors' preliminary report within 48 hours after the
issuance of that report, a challenge session shall be scheduled by the
inspectors as promptly as practicable. A transcript of the challenge session
shall be recorded by a certified court reporter. Following completion of the
challenge session, the inspectors shall as promptly as practicable issue their
final report to the corporation and the Soliciting Stockholders, which report
shall contain the information included in the preliminary report, plus all
changes made to the vote totals as a result of the challenge and a certification
of whether the requisite number of valid and unrevoked consents was obtained to
authorize or take the action specified in the consents. A copy of the final
report of the inspectors shall be included in the book in which the proceedings
of meetings of stockholders are recorded.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
to any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be
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managed and all corporate powers shall be exercised by or under the direction of
the board of directors.
3.2 NUMBER OF DIRECTORS
The board of directors shall be not less than six (6) nor more than ten
(10). The exact number of directors shall be eight (8) until changed, within the
limits specified above, by a bylaw amending this Section 3.2, duly adopted by
the board of directors or by the stockholders, or by a duly adopted amendment to
the certificate of incorporation. No reduction of the authorized number of
directors shall have the effect of removing any director before that director's
term of office expires. If for any cause, the directors shall not have been
elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall hold
office until the expiration of the term for which elected and until a successor
has been elected and qualified; except that if any such election shall not be so
held, such election shall take place at a stockholders' meeting called and held
in accordance with the General Corporation Law of Delaware.
Effective upon the effective date of the registration of any class of
securities of the corporation pursuant to the requirements of the Exchange Act
(the "Effective Date"), the directors of the corporation shall be divided into
three classes as nearly equal in size as is practicable, hereby designated Class
I, Class II and Class III. The term of office of the initial Class I directors
shall expire at the first regularly-scheduled annual meeting of the stockholders
following the Effective Date, the term of office of the initial Class II
directors shall expire at the second annual meeting of the stockholders
following the Effective Date and the term of office of the initial Class III
directors shall expire at the third annual meeting of the stockholders following
the Effective Date. At each annual meeting of stockholders, commencing with the
first regularly-scheduled annual meeting of stockholders following the Effective
Date, each of the successors elected to replace the directors of a Class whose
term shall have expired at such annual meeting shall be elected to hold office
until the third annual meeting next succeeding his or her election and until his
or her respective successor shall have been duly elected and qualified. If the
number of directors is hereafter changed, any newly created directorships or
decrease in directorships shall be so apportioned among the classes as to make
all classes as nearly equal in number as is practicable, provided that no
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
Directors need not be stockholders unless so required by the certificate
of incorporation or these bylaws, wherein other qualifications for directors may
be prescribed.
Elections of directors need not be by written ballot.
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3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, only
a majority of the board of directors then in office, including those who have so
resigned (until the effective date of such resignation), shall have the power to
fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has been
elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled only by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled only by a majority of the
directors elected by such class or classes or series thereof then in office, or
by a sole remaining director so elected. In the event that no directors elected
by such class or classes of stock or series remain, the majority of the other
directors then in office, although less than a quorum, or a sole remaining
director may fill such vacancy or vacancies.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
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holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, if and so long as stockholders of the corporation are entitled to
cumulative voting, if less than the entire board is to be removed, no director
may be removed without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
board of directors. Whenever the holders of any class or series are entitled to
elect one or more directors by the certificate of incorporation, this Section
3.5 shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series and not to the vote of the outstanding shares as a whole.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of such director's term of
office.
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.
3.7 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be held
at such time and place as shall be fixed by the vote of the stockholders at the
annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and
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place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
3.8 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time as shall from time to time be determined by the board of directors. If
any regular meeting day shall fall on a legal holiday, then the meeting shall be
held at the same time and place on the next succeeding full business day.
3.9 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least two
(2) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or telecopy or to the telegraph company at
least four (4) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. If
the meeting is to be held at the principal executive office of the corporation,
the notice need not specify the place of the meeting. Moreover, a notice of
special meeting need not state the purpose of such meeting, and, unless
indicated in the notice thereof, any and all business may be transacted at a
special meeting.
3.10 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.12 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
certificate of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the quorum for that meeting.
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3.11 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers shall be filed with the corporate
records or made part of the minutes of the meeting. A waiver of notice need not
specify the purpose of any regular or special meeting of the board of directors.
3.12 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting of the board to another time and place.
3.13 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting of the
board need not be given unless the meeting is adjourned for more than
twenty-four (24) hours. If the meeting is adjourned for more than twenty-four
(24) hours, then notice of the time and place of the adjourned meeting shall be
given before the adjourned meeting takes place, in the manner specified in
Section 3.9 of these bylaws, to the directors who were not present at the time
of the adjournment.
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board of directors.
3.15 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
3.16 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of
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the directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION
In the event only one director is required by these bylaws or the
certificate of incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the directors
shall be deemed to refer to such notice, waiver, etc., by such sole director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to the board of directors.
3.18 CONDUCT OF BUSINESS
At any meeting of the board of directors, business shall be transacted
in such order and manner as the board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one or more committees, each
consisting of one or more directors, to serve at the pleasure of the board. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have and
may exercise all the powers and authority of the board, but no such committee
shall have the power or authority to (i) amend the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the General Corporation Law of
Delaware, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation or fix the number of
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shares of any series of stock or authorize the increase or decrease of the
shares of any series), (ii) adopt an agreement of merger or consolidation under
Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend
to the stockholders the sale, lease or exchange of all or substantially all of
the corporation's property and assets, (iv) recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution or (v) amend the
bylaws of the corporation; and, unless the board resolution establishing the
committee, a supplemental resolution of the board of directors, the bylaws or
the certificate of incorporation expressly so provide, no such committee shall
have the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law of Delaware.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the following provisions of Article III of these
bylaws: Section 3.6 (place of meetings; meetings by telephone), Section 3.8
(regular meetings), Section 3.9 (special meetings; notice), Section 3.10
(quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section
3.13 (notice of adjournment) and Section 3.14 (board action by written consent
without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
4.3 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 OFFICERS
The Corporate Officers of the corporation shall be a president, a
secretary and a chief financial officer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, a chief executive
officer, a chief operating officer, a chief technical officer,
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one or more vice presidents (however denominated), one or more assistant
secretaries, a treasurer, one or more assistant treasurers and such other
officers as may be appointed in accordance with the provisions of Section 5.3 of
these bylaws. Any number of offices may be held by the same person.
In addition to the Corporate Officers of the Company described above,
there may also be such Administrative Officers of the corporation as may be
designated and appointed from time to time by the president of the corporation
in accordance with the provisions of Section 5.12 of these bylaws.
5.2 APPOINTMENT OF OFFICERS
The Corporate Officers of the corporation, except such officers as may
be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment, and shall hold their
respective offices for such terms as the board of directors may from time to
time determine.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office for such period, have such power and
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.
The president may from time to time designate and appoint Administrative
Officers of the corporation in accordance with the provisions of Section 5.12 of
these bylaws.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of a Corporate Officer under any contract
of employment, any Corporate Officer may be removed, either with or without
cause, by the board of directors at any regular or special meeting of the board
or, except in case of a Corporate Officer chosen by the board of directors, by
any Corporate Officer upon whom such power of removal may be conferred by the
board of directors.
Any Corporate Officer may resign at any time by giving written notice to
the corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Corporate
Officer is a party.
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Any Administrative Officer designated and appointed by the president may
be removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these bylaws. If there is
no president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board
of directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He or
she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
The president shall, without limitation, have the authority to execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
5.8 VICE PRESIDENTS
In the absence or disability of the president, and if there is no
chairman of the board, the vice presidents, if any, in order of their rank as
fixed by the board of directors or, if not ranked, a vice president designated
by the board of directors, shall perform all the duties of the president and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these bylaws, the president or the
chairman of the board.
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5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of the board of directors,
committees of directors and stockholders. The minutes shall show the time and
place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director for a purpose reasonably related to his
position as a director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He or she shall disburse the funds of
the corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to
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act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
5.12 ADMINISTRATIVE OFFICERS
In addition to the Corporate Officers of the corporation as provided in
Section 5.1 of these bylaws and such subordinate Corporate Officers as may be
appointed in accordance with Section 5.3 of these bylaws, there may also be such
Administrative Officers of the corporation as may be designated and appointed
from time to time by the president of the corporation. Administrative Officers
shall perform such duties and have such powers as from time to time may be
determined by the president or the board of directors in order to assist the
Corporate Officers in the furtherance of their duties. In the performance of
such duties and the exercise of such powers, however, such Administrative
Officers shall have limited authority to act on behalf of the corporation as the
board of directors shall establish, including but not limited to limitations on
the dollar amount and on the scope of agreements or commitments that may be made
by such Administrative Officers on behalf of the corporation, which limitations
may not be exceeded by such individuals or altered by the president without
further approval by the board of directors.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing powers, authority and duties, all officers
of the corporation shall respectively have such authority and powers and perform
such duties in the management of the business of the corporation as may be
designated from time to time by the board of directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted
by the General Corporation Law of Delaware as the same now exists or may
hereafter be amended, indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was a
director or officer of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation shall mean any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise or
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(iii) who was a director or officer of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director or officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
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6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his or her position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
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7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president,
the chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
7.4 CERTIFICATION AND INSPECTION OF BYLAWS
The original or a copy of these bylaws, as amended or otherwise altered
to date, certified by the secretary, shall be kept at the corporation's
principal executive office and shall be open to inspection by the stockholders
of the corporation, at all reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive payment
of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted and
which shall not be more than sixty (60) days before any such action. In that
case, only stockholders of record at the close of business on the date so fixed
are entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board of directors adopts the applicable
resolution.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other
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evidences of indebtedness that are issued in the name of or payable to the
corporation, and only the persons so authorized shall sign or endorse those
instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize and empower any officer or officers, or agent or agents, to enter
into any contract or execute any instrument in the name of and on behalf of the
corporation; such power and authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares, shall be entitled to have a certificate
signed by, or in the name of the corporation by, the chairman or vice-chairman
of the board of directors, or the president or vice-president, and by the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
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The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, each of which shall be an
incorporated bank or trust company -- either domestic or foreign, who shall be
appointed at such times and places as the requirements of the corporation may
necessitate and the board of directors may designate.
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8.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of this
provision, as used in these bylaws, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both an
entity and a natural person.
8.9 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.10 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.11 SEAL
The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
8.12 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.13 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
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not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
8.14 NOTICES
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery, by mail, postage paid, or by facsimile transmission. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his last known address as it appears on the books of the corporation. The time
when such notice shall be deemed received, if hand delivered, or dispatched, if
sent by mail or facsimile, transmission, shall be the time of the giving of the
notice.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of bylaws with the original bylaws, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or the filing of the operative written consent(s) shall be stated in
said book.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of
directors of the corporation that the corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
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At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent
in writing, either in person or by duly authorized attorney, to a dissolution,
no meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consent's becoming effective in
accordance with Section 103 of the General Corporation Law of Delaware, the
corporation shall be dissolved. If the consent is signed by an attorney, then
the original power of attorney or a photocopy thereof shall be attached to and
filed with the consent. The consent filed with the Secretary of State shall have
attached to it the affidavit of the secretary or some other officer of the
corporation stating that the consent has been signed by or on behalf of all the
stockholders entitled to vote on a dissolution; in addition, there shall be
attached to the consent a certification by the secretary or some other officer
of the corporation setting forth the names and residences of the directors and
officers of the corporation.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the required
vote for action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or
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(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate or distribute its
assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
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CERTIFICATE OF ADOPTION OF BYLAWS
OF
WINK COMMUNICATIONS, INC.
Adoption by Incorporator
The undersigned person appointed in the Certificate of Incorporation as
the Incorporator of Wink Communications, Inc. hereby adopts the foregoing
bylaws, comprising thirty-one (31) pages, as the Bylaws of the corporation.
Executed this 30th day of April, 1998.
/s/ Paritosh K. Choksi
----------------------------------------
Paritosh K. Choksi
Incorporator
Certificate by Secretary of Adoption by Incorporator
The undersigned hereby certifies that he is the duly elected, qualified,
and acting Secretary of Wink Communications, Inc. and that the foregoing Bylaws,
comprising thirty-one (31) pages, were adopted as the Bylaws of the corporation
on April 30th, 1998, by the person appointed in the Certificate of Incorporation
as the Incorporator of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 30th
day of April, 1998.
/s/ Paritosh K. Choksi
----------------------------------------
Paritosh K. Choksi
Secretary
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EXHIBIT 4.2
WINK COMMUNICATIONS, INC.
-----------------------
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
JUNE 18, 1997
-----------------------
<PAGE> 2
WINK COMMUNICATIONS, INC.
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS AGREEMENT is made as of the 18th day of June 1997, among Wink
Communications, Inc., a California corporation (the "Company"), NBC Multimedia,
Inc. (together with its affiliates, "NBC") and each of the individuals and
entities listed on Exhibit A hereto, as amended from time to time to include
Series C Investors (as hereinafter defined) (referred to herein individually as
"Investor" and collectively as "Investors").
RECITALS
WHEREAS, pursuant to the First Amended and Restated Registration Rights
Agreement dated as of December 21, 1995 and the Second Amended and Restated
Investor Rights Agreement dated as of April 17, 1997 (collectively, the "Prior
Registration Rights Agreement") among the Company and certain of the Investors
indicated on Exhibit A attached hereto ("Prior Investors"), the Company granted
the Prior Investors certain rights regarding registration of the Company's
securities under the Securities Act of 1933, as amended ("Registration Rights");
and
WHEREAS, pursuant to the Series A and Series B Preferred Stock Purchase
Agreements, as amended, and the Series C Preferred Stock Purchase Agreement
dated as of April 17, 1997 (the "Prior Purchase Agreements"), among the Company
and the Prior Investors, the Company granted the Prior Investors certain rights
regarding financial information, records inspection and rights of first refusal
(collectively with the Registration Rights referred to herein as "Rights"); and
WHEREAS, the Prior Registration Rights Agreement and the Prior Purchase
Agreements set forth all the Rights of the Prior Investors; and
WHEREAS, the purchasers of Series C Preferred Stock (the "Series C
Investors"), in connection with their proposal to purchase up to 2,500,000
shares of the Company's Series C Preferred Stock pursuant to the Series C
Preferred Stock Purchase Agreement dated as of April 17, 1997 and amended on
June 18, 1997 (the "Series C Agreement"), desire to obtain such Rights granted
pursuant to the Prior Registration Rights Agreement and the Prior Purchase
Agreements; and
WHEREAS, the Company and the Prior Investors, to induce the Series C
Investors to purchase the Series C Preferred Stock, desire to grant the Series C
Investors and other Investors the Rights granted pursuant to the Prior
Registration Rights Agreement and the Prior Purchase Agreements.
NOW, THEREFORE, in consideration of the above and of the mutual promises
set forth herein, the parties hereto agree that, subject to the closing of the
purchase of Series C Preferred Stock by the Series C Investors pursuant to the
Series C Agreement: (i) all Rights set forth in the Prior Registration Rights
Agreement and the Prior Purchase Agreements are terminated and of no further
force and effect; (ii) the Company hereby grants to the Prior Investors and the
Series C Investors the rights set forth below; and (iii) the Company and the
Prior Investors, to induce the Series C Investors to invest in the
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Company, hereby accept and agree to the termination of all prior Rights and
accept and agree to be bound by the terms of this Agreement.
SECTION 1
DEFINITIONS
1.1 CERTAIN DEFINITIONS. Hereafter, in this Agreement the following
terms shall have the following respective meanings:
"Purchaser" shall mean each Prior Investor, each Series C
Investor and NBC.
"Purchasers" shall mean all Prior Investors, all Series C
Investors and NBC, referred to collectively.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Preferred" shall mean the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock of the Company.
"Conversion Stock" shall mean the Common Stock issued or issuable
upon conversion of the Preferred.
"Holder" shall mean any Purchaser holding Registrable Securities
or the GECC Warrant and any person holding Registrable Securities to whom the
rights under this Agreement have been transferred in accordance with Section
2.14 hereof, plus, for purposes of Section 2 (other than Sections 2.4, 2.6 and
2.7) and Section 5, the holder of the Lender Warrant.
"Initiating Holders" shall mean any Purchasers or transferees of
Purchasers under Section 2.14 hereof who in the aggregate are Holders of greater
than 25% of the Registrable Securities.
"Benchmark Warrants" shall mean the warrants to purchase an
aggregate of 500,000 shares of Common Stock at a price of $6.00 per share issued
to Benchmark Capital Partners, L.P. and Benchmark Founders Fund, L.P. on July
31, 1996.
"Lender Warrant" shall mean the warrant to purchase 17,500 shares
of Series B Preferred Stock at a price of $4.00 per share issued to Venture
Lending and Leasing, Inc. on September 18, 1996.
"GECC Warrant" shall mean the warrant or warrants to purchase an
aggregate of up to 900,000 shares of Common Stock (subject to adjustments) at a
price of $8.00 per share (subject to
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adjustments) issued or to be issued to General Electric Capital Corporation or
its affiliates, including NBC.
"WCI Warrants" shall mean the warrants to purchase an aggregate
of up to 125,000 shares of Common Stock at a price of $0.80 per share issued or
to be issued to WC Investors, LLC.
"Registrable Securities" means (i) the Conversion Stock, (ii) any
Common Stock of the Company issued or issuable in respect of the Conversion
Stock or other securities issued or issuable pursuant to the conversion of the
Preferred upon any stock split, stock dividend, recapitalization, or similar
event (a "Recapitalization"), or any Common Stock otherwise issued or issuable
with respect to the Preferred, (iii) with respect to Section 2 herein (other
than Sections 2.4, 2.6 and 2.7), the shares of Common Stock of the Company
issued or issuable upon conversion of the Preferred Stock issued or issuable
upon exercise of the Lender Warrant, and (iv) the Common Stock of the Company
issued or issuable upon exercise of the Benchmark Warrants, the WCI Warrants or
the GECC Warrant; provided, however, that shares of Common Stock or other
securities shall be treated as Registrable Securities only 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, whether in a registered
offering, Rule 144 transaction or otherwise, or (B) sold or are available for
sale, in the written opinion of counsel to the Company, in a transaction exempt
from the registration and prospectus delivery requirements of the Securities
Act, such that all transfer restrictions and restrictive legends with respect
thereto are removed upon the consummation of such sale.
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, except as
otherwise stated below, incurred by the Company in complying with Sections 2.4,
2.5 and 2.6 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, 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) and the reasonable fees and disbursements
of one counsel for all Holders in the event of three exercises of a requested
registration provided for in Section 2.4 hereof, in the event of all Company
registrations pursuant to Section 2.5 hereof, and for all Company registrations
on Form S-3 pursuant to Section 2.6 hereof.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 2.2 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.
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"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth above, all reasonable fees and
disbursements of counsel for any Holder.
SECTION 2
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT; REGISTRATION RIGHTS
2.1 RESTRICTIONS ON TRANSFERABILITY. The Preferred and the Conversion
Stock shall not be sold, assigned, transferred or pledged except upon the
conditions specified in this Section 2, which conditions are intended to ensure
compliance with the provisions of the Securities Act. Each Purchaser will cause
any proposed purchaser, assignee, transferee, or pledgee of the Preferred or
Conversion Stock held by a Purchaser to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Section 2.
2.2 RESTRICTIVE LEGEND. Each certificate representing (i) the Preferred,
(ii) the Conversion Stock and (iii) any other securities issued in respect of
the Preferred or the Conversion Stock upon any Recapitalization, merger,
consolidation or similar event shall (unless otherwise permitted by the
provisions of Section 2.3 below) be stamped or otherwise 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 OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE AGREEMENT
COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
Each Purchaser and Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Preferred or the
Common Stock in order to implement the restrictions on transfer established in
this Section 2.
2.3 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 2.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
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transfer not involving a change in beneficial ownership, (ii) in transactions
involving the distribution without consideration of Restricted Securities by any
of the Purchasers to any of its partners or members, or retired partners or
members, or to the estate of any of its partners or members or retired partners
or members, (iii) transfers to a Holder's family members or to trusts for the
benefit of a Holder or a Holder's family members, or (iv) in the case of General
Electric Capital Corporation ("GECC") or NBC, transfers to one or more
affiliates within meaning of Rule 501(b) under the Securities Act, of GECC or
NBC otherwise in compliance with this Agreement), 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) an unqualified written opinion of legal counsel,
who shall be 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, 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. 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 2.2 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 provision
of the Securities Act.
2.4 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 not less than 500,000
shares (appropriately adjusted for Recapitalizations) of Registrable Securities,
or any lesser number of shares if the anticipated aggregate offering price, net
of underwriting discounts and commissions, would exceed $20,000,000, 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, 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 twenty (20) days after mailing
of such written notice by the Company;
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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 2.4:
(A) 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;
(B) Prior to December 31, 1999;
(C) 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 benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(D) After the Company has effected three such
registrations pursuant to this Section 2.4(a), and such registrations have been
declared or ordered effective; or
(E) 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, in which case the Company's obligation to use its best efforts to
register, qualify or comply under this Section 2.4 shall be deferred for a
period not to exceed one hundred twenty (120) days from the date of receipt of
written request from the Initiating Holders; provided that the Company may not
exercise this right more than once in any twelve-month period.
Subject to the foregoing clauses (A) through (E), 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 2.4 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 2.4(a)(i). In such event, the right of any Holder to registration
pursuant to Section 2.4 shall be conditioned upon such Holder's participation in
the underwriting arrangements required by this Section 2.4, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited 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, but subject to the Company's reasonable approval.
Notwithstanding any other provision of this Section 2.4, if the managing
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to
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<PAGE> 8
be underwritten, then the Company shall so advise all Holders, 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 and registration shall not be reduced unless all other
securities of the Company are first entirely excluded from the underwriting and
registration; provided further, however, that if the number of shares of
Registrable Securities to be included in such underwriting or registration is
reduced to less than 75% of the aggregate number of shares of Registrable
Securities originally requested for registration pursuant to Section 2.4(a),
then such registration or underwriting shall not be counted as one of the two
permitted requests for registration under Section 2.4(a)(D). 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 one hundred (100) shares. 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 one
hundred eighty (180) days after the effective date of such registration, or such
other shorter period of time as the underwriters may require.
2.5 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 twenty (20) days after mailing of such written notice
by the Company, by any Holder.
(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 2.5(a)(i). In such event, the right of any Holder to
registration pursuant to Section 2.5 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
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<PAGE> 9
underwriting by the Company. Notwithstanding any other provision of this Section
2.5, 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 Registrable Securities to be included in such registration (or
exclude them entirely). The Company shall so advise all Holders and other
holders distributing their securities through such underwriting, and the number
of shares of Registrable Securities that may be included in the registration and
underwriting (after inclusion of all shares to be included by the Company) shall
be allocated among all Holders requesting inclusion of Registrable Securities in
such registration 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 right of the underwriters to
exclude Registrable Securities from the registration and underwriting as
described above shall be restricted such that (i) the number of Registrable
Securities included in any such registration may not be reduced below
twenty-five percent (25%) of the shares included in the registration, except for
a registration relating to the Company's initial public offering from which all
Registrable Securities may be excluded; and (ii) all shares that are not
Registrable Securities and all shares that are held by persons who are employees
or directors of the Company (or any subsidiary of the Company) shall first be
excluded from such registration and underwriting before any Registrable
Securities are so excluded. To facilitate the allocation of shares in accordance
with the above provisions, the Company may round the number of shares allocated
to any Holder or holder to the nearest one hundred (100) shares. If any Holder
or holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to one hundred eighty (180) days after the effective date of
the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.5 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
2.6 REGISTRATION ON FORM S-3.
(a) If any Holder or Holders request 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 offering price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, 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 and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than one registration pursuant to this
Section 2.6 in any six (6) month period or in excess of three registrations
under this Section 2.6. The substantive provisions of Section 2.4(b) shall be
applicable to each registration initiated under this Section 2.6.
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(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 2.6: (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) if the Company, within
ten (10) days of the receipt of the request of the initiating Holders, gives
notice of its bona fide intention to effect the filing of a registration
statement with the Commission within ninety (90) days of receipt of such request
(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); (iii) 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 benefit plan), provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; 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 Company or its shareholders for registration statements to be
filed in the near future, in which case the Company's obligation to use its best
efforts to file a registration statement shall be deferred for a period not to
exceed one hundred twenty (120) days from the receipt of the request to file
such registration by such Holder.
2.7 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, 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,
including standoff obligations, are subordinate to the rights of the Holders
hereunder and would not reduce the amount of Registrable Securities of the
Holders which may be included in a registration.
2.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with (i) three registrations pursuant to Section 2.4, (ii) all
registrations pursuant to Section 2.5, and (iii) all registrations pursuant to
Section 2.6 shall be borne by the Company. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders and all
other Registration Expenses shall be borne by the Holders of such securities pro
rata on the basis of the number of shares so registered.
2.9 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 2,
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
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at least one hundred eighty (180) days or until the distribution described in
the Registration Statement has been completed;
(b) Furnish to the Holders participating in such registration and
to the underwriters 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;
(c) 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;
(d) 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 underwriters of such offering;
(e) 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.
2.10 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers,
directors, partners, members, accountants, legal counsel and agents, 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 2, and each underwriter, if any, and
each person who controls any underwriter 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 final registration statement, 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 by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
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
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other expenses reasonably incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability or action, 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, officers, accountants, legal counsel and agents, 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, directors, partners, members, accountants, legal counsel and
agents, 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 final 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, in each case to the extent, but only to the 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; provided, however that the total
amount payable in indemnity by a Holder under this Section 2.10(b) shall not
exceed the net proceeds received by such Holder in the registered offering out
which the obligation to indemnify under this Section 2.10(b) arises.
(c) Each party entitled to indemnification under this Section
2.10 (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, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2 unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action, in which case the Indemnifying Party shall be relieved of
its obligation under this Section 2.10 to the extent of such prejudice, and
provided further that the Indemnifying Party shall not assume the defense for
matters as to which there is a conflict of interest or separate and different
defenses. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party,
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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.
2.11 TERMINATION OF REGISTRATION RIGHTS. The rights granted pursuant to
this Agreement, to the extent not earlier terminated by the terms hereof, shall
terminate as to any Holder at such time as such Holder is able to sell publicly
without registration all Registrable Securities then held by such Holder, if
any, within a ninety (90) day period pursuant to Rule 144 under the Securities
Act or a similar exemption.
2.12 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
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this Section
2.
2.13 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission that 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 Securities Exchange Act of 1934, as
amended (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
(c) So long as a Purchaser owns any Restricted Securities, to
furnish to the Purchaser forthwith upon request (i) 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 first
registration statement filed by the Company for an offering of its securities to
the general public) and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as a Purchaser may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Purchaser
to sell any such securities without registration.
2.14 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted Purchasers under Sections 2.4, 2.5 and 2.6 may be
assigned in connection with any transfer or assignment of Registrable Securities
or the GECC Warrant by a Purchaser provided that: (i) such transfer
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may otherwise be effected in accordance with applicable securities laws, (ii)
such transferee agrees to be bound hereby and (iii) either (A) such assignee or
transferee is reasonably acceptable to Purchaser and acquires at least 250,000
shares of Preferred and/or Common Stock issued upon conversion thereof
(appropriately adjusted for Recapitalizations) or options, warrants or
convertible securities exercisable or exchangeable therefor, (B) such transferee
is a family member of the Purchaser or a trust for the benefit of the Purchaser
or a family member of the Purchaser, (C) if Purchaser is a partnership or
limited liability company, such transferee is (w) a general partner or member or
retired general partner or member of Purchaser, (x) such general partner or
member or retired general partner's or member's spouse or siblings or the lineal
descendants or ancestors of such general partner or member or retired partner or
member or his spouse, (y) one or more trusts established for the benefit of any
of the foregoing individuals, or (z) without limitation of the foregoing, with
respect to WC Investors, LLC, such Transferee is Sam Zell, Sheli Z. Rosenberg,
Rod F. Dammeyer, F. Philip Handy, Thomas F. Gaffney and Robert P. Saltsman or
the spouse or siblings or lineal descendants or ancestors of any of the
foregoing individuals or one or more trusts established for the benefit of any
of the foregoing individuals (all of the individuals and trusts refereed to in
clauses (w), (x), (y) and (z) being hereinafter referred to as "Partnership/LLC
Transferees"), or (D) such transferee is a corporation, partnership, or limited
liability entity and in such case, an affiliate (within the meaning of Rule
501(b) under the Securities Act) of GECC or NBC.
2.15 STANDOFF AGREEMENT. Each Holder agrees in connection with the
Company's initial public offering of the Company's securities that, upon request
of the Company or the underwriters managing any underwritten offering of the
Company's securities, not to publicly sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any securities of the
Company in a public transaction (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed one hundred eighty (180)
days) from the effective date of such registration as may be requested by the
underwriters; provided, that the officers and directors of the Company who own
stock of the Company have also agreed to such restrictions.
SECTION 3
3.1 FINANCIAL INFORMATION. The Company will mail the following reports
to each Purchaser for so long as such Purchaser is a holder of any Shares of
Preferred or Common Stock issued upon conversion of the Shares of Preferred or
of warrants or other convertible securities exercisable for or convertible into
shares of Preferred or Common Stock:
(i) As soon as practicable after the end of each fiscal year,
and in any event within ninety (90) days thereafter, consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of such fiscal year,
and consolidated statements of income and consolidated statements of 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
-13-
<PAGE> 15
previous fiscal year and the budgeted figures for the fiscal year then reported,
all in reasonable detail and audited by independent public accountants selected
by the Company.
(ii) As soon as practicable, and in any case within forty-five
(45) days after the end of each fiscal quarter of the Company (except the last
quarter of the Company's fiscal year), quarterly unaudited financial statements,
including an unaudited balance sheet, an unaudited statement of income and an
unaudited statement of cash flows, together with a comparison to the Company's
budget and a statement of the Chief Financial Officer of the Company that such
statements fairly present the consolidated financial position and consolidated
financial results of the Company for the fiscal quarter covered, subject to
appropriate year end adjustments; and
(iii) As soon as practicable and in any event no later than
thirty (30) days after the close of each fiscal year of the Company, an annual
operating budget, prepared on a monthly basis, for the next immediate fiscal
year. The Company shall also furnish, within a reasonable time of its
preparation, amendments to such annual budget, if any.
3.2 INSPECTION RIGHTS. The Company shall permit each Purchaser holding
at least 250,000 shares of Preferred (or shares of Common Stock issued upon
conversion of the Preferred or any combination thereof or warrants or
convertible securities exercisable for or convertible into at least 250,000
shares of Preferred and/or Common Stock), at such Purchaser'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 on reasonable notice and at such reasonable times as may be
requested by such Purchaser. Shares held by an investor and its Partnership/LLC
Transferees shall be aggregated for purposes of meeting the 250,000 minimum
share requirement in this Section 3.2; provided, however, that in the case of
such aggregation, the investor and all Partnership/LLC Transferees shall
together designate one representative to exercise inspection rights pursuant to
this Section 3.2.
3.3 RULE 144A INFORMATION. The Company will provide each Purchaser, upon
request and at such Purchaser's expense, with such reasonable written
information as may be required in order to permit such Purchaser to resell any
shares of the Company's stock pursuant to Rule 144A promulgated under the
Securities Act.
3.4 ASSIGNMENT OF RIGHTS. The rights granted pursuant to this Section 3
and Section 4 may not be assigned or otherwise conveyed by any Purchaser or by
any subsequent transferee of any such rights without the prior written consent
of the Company; provided, however, that any Purchaser may assign to any
transferee, except for a competitor of the Company (as the Company may determine
in its sole discretion), after giving notice to the Company, the rights granted
pursuant to this Section 3 and Section 4 provided that such transferee agrees to
be bound hereby and (i) acquires at least 250,000 shares of Preferred and/or
Common Stock issued upon conversion of the shares of Preferred (appropriately
adjusted for stock splits, stock dividends, recapitalizations and the like) (or
shares of Common Stock issued upon conversion of the Preferred or any
combination thereof or warrants or convertible securities exercisable for or
convertible into at least 250,000 shares of Preferred and/or Common Stock), (ii)
is Partnership/LLC Transferee of a Purchaser, (iii) is another Purchaser or (iv)
in the case of GECC or
-14-
<PAGE> 16
NBC, is an affiliate within the meaning of Rule 501(b) of the Securities Act of
the transferring Purchaser.
3.5 TERMINATION OF RIGHTS. The rights set forth in this Section 3 shall
terminate and be of no further force or effect at the earlier of (i) the closing
of an underwritten public offering pursuant to an effective registration
statement under the Securities Act, covering the offer and sale of Common Stock
for the account of the Company to the public or (ii) such time as the Company is
required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended.
SECTION 4
RIGHT OF FIRST REFUSAL
4.1 GENERAL. Each Purchaser and any party to whom such Purchaser's
rights under this Section 4 have been duly assigned in accordance with Section
3.4 (each such Purchaser or assignee being hereinafter referred to as a "Rights
Holder") shall have a right of first refusal to purchase such Rights Holder's
Pro Rata Share (as defined below) of all (or any part) of any "New Securities"
(as defined in Section 4.2) that the Company may from time to time issue after
the date of this Agreement. A Rights Holder's "Pro Rata Share" for purposes of
this right of first refusal is the ratio of (a) the number of shares of Common
Stock then held by such Rights Holder or issuable upon conversion of any
Preferred Stock then held by such Rights Holder or upon exercise of the
Benchmark Warrants, the WCI Warrants or the GECC Warrant, to (b) the total
outstanding number of shares of Common Stock outstanding or issuable upon
conversion of any outstanding Preferred Stock or upon exercise of the Benchmark
Warrants, the WCI Warrants, and, without duplication, the GECC Warrant.
Notwithstanding the foregoing, each Rights Holder's "Pro Rata Share" shall be
increased in proportion to the maximum amount by which any single Rights Holder
proposes to purchase more than its Pro Rata Share of the New Securities,
calculated without regard to this sentence; provided, however, that if the total
number of New Securities to be sold is insufficient to permit satisfaction of
the so increased Pro Rata Shares of all Rights Holders, then each Rights
Holder's Pro Rata Share shall be increased only to the extent that there are
sufficient New Securities, and no Rights Holder shall be permitted to purchase
more than its Pro Rata Share as so increased.
4.2 NEW SECURITIES. "New Securities" shall mean any Common Stock or
Preferred Stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or Preferred Stock; provided, however, that
the term "New Securities" does not include:
(i) up to 3,000,000 shares of the Company's Common Stock (and/or
options or warrants therefor) issued after February 1, 1995 (and net of any
repurchases) to employees, officers, directors, contractors, advisors or
consultants of the Company pursuant to incentive agreements or plans approved by
the Board of Directors of the Company;
-15-
<PAGE> 17
(ii) any securities issuable upon conversion of or with respect
to any then outstanding shares of Series A Preferred Stock, Series B Preferred
Stock or Series C Preferred Stock of the Company or Common Stock or other
securities issuable upon conversion thereof;
(iii) any options, warrants or rights to purchase any securities
of the Company outstanding on the date of this Agreement, including the Lender
Warrant, the Benchmark Warrants, the WCI Warrants and the GECC Warrant,
(collectively, "Derivative Securities") and any securities issuable upon the
exercise or conversion of any Derivative Securities;
(iv) shares of the Company's Common Stock or Preferred Stock
issued in connection with any stock split, stock dividend or recapitalization in
which each Right Holder's Pro Rata Share is not reduced;
(v) securities offered by the Company to the public pursuant to
a registration statement filed under the Securities Act;
(vi) securities issued pursuant to the acquisition of another
corporation or entity by the Company by consolidation, merger, purchase of all
or substantially all of the assets, or other reorganization in which the Company
acquires, in a single transaction or series of related transactions, all or
substantially all of the assets of such other corporation or entity or fifty
percent (50%) or more of the voting power of such other corporation or entity or
fifty percent (50%) or more of the equity ownership of such other entity; or
(vii) all shares of the Company's Series C Preferred Stock sold
pursuant to the Series C Agreement, as it may be amended from time to time in
accordance therewith and the Articles of Incorporation of the Company as in
effect on the date hereof.
4.3 PROCEDURES. In the event that the Company proposes to undertake an
issuance of New Securities, it shall give to each Rights Holder written notice
of its intention to issue New Securities (the "Notice"), describing the type of
New Securities and the price and the general terms upon which the Company
proposes to issue such New Securities. Each Rights Holder shall have ten (10)
days from the date of the sending of any such Notice to agree in writing to
purchase such Rights Holder's Pro Rata Share of such New Securities for the
price and upon the general terms specified in the Notice by giving written
notice of the Company and stating therein the quantity of New Securities to be
purchased (not to exceed such Rights Holder's Pro Rata Share). If any Rights
Holder fails to so agree in writing within such ten (10) day period to purchase
such Rights Holder's full Pro Rata Share of an offering of New Securities (a
"Nonpurchasing Holder"), then such Nonpurchasing Holder shall forfeit the right
hereunder to purchase that part of his Pro Rata Share of such New Securities
that he did not so agree to purchase.
4.4 FAILURE TO EXERCISE. In the event that the Rights Holders fail to
exercise in full the right of first refusal within such ten (10) day period,
then the Company shall have 120 days thereafter to sell the New Securities with
respect to which the Rights Holders' rights of first refusal hereunder were not
exercised, at a price and upon general terms not materially more favorable to
the purchasers thereof than
-16-
<PAGE> 18
specified in the Company's Notice to the Rights Holders (provided that if the
Company actually sells the New Securities at a price or upon general terms more
favorable to the purchasers thereof, the Company shall retroactively adjust the
price and terms of the New Securities sold to Rights Holders pursuant to the
exercise of their rights under this Section 4.4 to be such more favorable
terms). In the event that the Company has not issued and sold the New Securities
within such 120 day period, then the Company shall not thereafter issue or sell
any New Securities without again first offering such New Securities to the
Rights Holders pursuant to this Section 4.
4.5 TERMINATION OF RIGHTS. The rights set forth in this Section 4 shall
terminate and be of no further force or effect at the earlier of (i) the closing
of an underwritten public offering pursuant to an effective registration
statement under the Securities Act, covering the offer and sale of Common Stock
for the account of the Company to the public; (ii) such time as the Company is
required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended; or (iii) with respect to a particular Rights
Holder, at such time as such Rights Holder does not own at least 250,000 shares
of Preferred and/or Common Stock issued upon conversion of the shares of
Preferred and/or warrants or convertible securities exercisable for or
convertible into at least 250,000 shares of Preferred and/or Common Stock
(appropriately adjusted for stock split, stock dividend, stock splits, stock
dividends, recapitalizations and the like). For purposes of calculating the
250,000 minimum share requirement in this Section 4.5(iii), shares held by an
investor and its Partnership/LLC Transferee shall be aggregated.
SECTION 5
MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of California as applied to
agreements made and performed in California by residents of the State of
California.
5.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full and
entire under standing and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein and therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of a majority of the Registrable Securities may,
with the Company's prior written consent, waive, modify or amend on behalf of
all holders, any provisions hereof, except that any such waiver, modification or
amendment which affects a Purchaser in a manner or to an extent more adverse
than any other Purchaser shall require the prior written consent of such
Purchaser.
-17-
<PAGE> 19
5.3 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid or otherwise delivered by hand or by messenger,
addressed (a) if to a Purchaser, at such Purchaser's address set forth in
Exhibit A, or at such other address as such Purchaser shall have furnished to
the Company in writing, (b) if to any other Holder, at such address as such
Holder shall have furnished the Company in writing, or until any such Holder so
furnishes an address to the Company, then to and at the address of the last
Holder of such shares who has so furnished an address to the Company, or (c) if
to the Company, at the Company's principal place of business, addressed to the
attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to the Purchasers. Each such notice or other communication
shall, unless otherwise expressly provided herein, be treated as effective or
having been given when delivered if delivered personally, or, if sent by mail,
at the earlier of its receipt or seventy-two (72) hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail, addressed and mailed as aforesaid.
5.4 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
5.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
5.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
5.7 PRIOR REGISTRATION RIGHTS AGREEMENT. Upon both (i) the execution of
this Agreement by Investors holding (x) a majority of the Registrable Securities
outstanding or deemed to be outstanding immediately prior to the Closing under
the Series C Agreement, and (y) a majority of the Preferred Stock and Conversion
Stock outstanding or deemed to be outstanding immediately prior to the Closing
under the Series C Agreement, and (ii) the initial sale by the Company of any
shares of Series C Preferred Stock, this Agreement shall supersede and replace
the Prior Registration Rights Agreement, which shall be terminated and cease to
have any further force or effect. This Agreement amends and restates in its
entirety that certain Second Amended and Restated Investor Rights Agreement
dated as of April 17, 1997.
5.8 PRIOR PURCHASE AGREEMENTS. The Amendment to Series A Preferred Stock
Purchase Agreement (the "Series A Amendment") dated as of December 21, 1995 by
and between the Company and Toshiba Corporation (which superseded the provisions
of Section 8 of the Series A Preferred Stock Agreement (the "Series A
Agreement") executed as of February 1, 1995 by and between the Company and
Toshiba Corporation) and Section 8 of the Series B Preferred Stock Purchase
Agreement (the "Series B Agreement") dated as of December 21, 1995 among the
Company and the persons and entities
-18-
<PAGE> 20
listed on the Schedule of Purchasers attached thereto as Exhibit A are hereby
deemed null and void and are hereby replaced in their entirety by Section 4 of
this Agreement. Except as expressly amended and modified hereby, the Series A
Agreement and the Series B Agreement shall each continue in full force and
effect in accordance with its terms. By execution of this Agreement, each Prior
Investor hereby (a) consents to the issuance of the Series C Preferred Stock as
contemplated by the Agreement and the Amended and Restated Articles of
Incorporation, (b) waives its rights of first refusal pursuant to Section 8 of
the Series B Agreement with respect to the Company's offer and sale of Series C
Preferred Stock under the Series C Agreement, except to the extent of its
purchase of Series C Preferred Stock that it has acquired prior to the date of
this Agreement under the Series C Agreement, and (c) consents to the termination
of the Series A Amendment and the amendment of the Series A Agreement and/or the
Series B Agreement, as applicable, as contemplated herein.
-19-
<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Investor Rights
Agreement as of the date first above written.
WINK COMMUNICATIONS, INC.
By: /s/ Mary Agnes Wilderotter
---------------------------------
Its: President and CEO
--------------------------------
INVESTOR
see attached table
- - ------------------------------------
By:
---------------------------------
Its:
--------------------------------
NBC MULTIMEDIA, INC.
By: /s/ Martin J. Yudkovitz
---------------------------------
Its: President and CEO
--------------------------------
INVESTOR RIGHTS AGREEMENT
<PAGE> 22
EXHIBIT A
<TABLE>
<CAPTION>
SCHEDULE OF HOLDERS
Name and Address Registrable Securities
- - ---------------- ----------------------
<S> <C>
SERIES A INVESTOR
Toshiba Corporation 1,250,000 shares of Series A Preferred
Attn: Hidetaka Yamamoto
Deputy General Manager
Business Planning
Advanced-I Group
1-1, Shibaura 1-Chome,
Minato-ku, Tokyo 105-01,
JAPAN
SERIES B INVESTORS
General Instrument Corporation 600,000 shares of Series B Preferred
2200 Byberry Road
Hatboro, PA 19040
Attn: Dan Moloney, Vice President
Scientific-Atlanta, Inc. 600,000 shares of Series B Preferred
1 Technology Parkway
Atlanta, GA 30092-2967
Attn: General Counsel
Nippon Telegraph and Telephone 600,000 shares of Series B Preferred
Corporation
19-2 Nishi-shinjuku 3-chome
Shinjuku-ku, Tokyo 163-19
JAPAN
Benchmark Capital Partners, L.P. 335,880 shares of Series B Preferred
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Attention: Bruce Dunlevie
Benchmark Founders' Fund, L.P. 39,120 shares of Series B Preferred
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Attention: Bruce Dunlevie
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
Jordan J. Breslow 2,500 shares of Series B Preferred
Geoworks
960 Atlantic Ave.
Alameda, CA 94501
Deborah G. Dawson 2,500 shares of Series B Preferred Stock
2355 Polk Street, Apt. 403
San Francisco, CA 94109
Christopher T. Del Sesto 5,000 shares of Series B Preferred Stock
44 Seaview Ave.
Cranston, RI 02905-3616
James H. Goldberger 2,500 shares of Series B Preferred Stock
Geoworks
960 Atlantic Avenue
Alameda, CA 94501
Ira M. Hammer 2,500 shares of Series B Preferred Stock
100 East Bellevue, Apt. # 14B
Chicago, IL 60611
Gary A. Jensen 2,500 shares of Series B Preferred Stock
722 Santa Clara Ave. #E
Alameda, CA 94501
Paul Kagan 2,500 shares of Series B Preferred Stock
126 Clock Tower Place
Carmel, CA 93923
Jonathan E. Kaplan 2,500 shares of Series B Preferred Stock
Geoworks
960 Atlantic Avenue
Alameda, CA 94501
Arend Lijphart 2,500 shares of Series B Preferred Stock
4276 Caminito Terviso
San Diego, CA 92122
Leland J. Llevano 2,500 shares of Series B Preferred Stock
Geoworks
960 Atlantic Avenue
Alameda, CA 94501
</TABLE>
<PAGE> 24
<TABLE>
<S> <C>
Shininchi Makino 2,500 shares of Series B Preferred Stock
Toshiba Corporation
Advanced-I Group
1-1, Shibaura 1-Chome,
Minato-ku, Tokyo 105-01,
JAPAN
Mayer Family Partners, a California 2,500 shares of Series B Preferred Stock
Limited Partnership
1342 Reliez Valley Road
Lafayette, CA 94549
Attention: Gordon Mayer
Sophia Mityagin 2,500 shares of Series B Preferred Stock
3538 Larochelle Drive
Columbus, OH 43221
David W. Scarborough 2,500 shares of Series B Preferred Stock
Geoworks
960 Atlantic Avenue
Alameda, CA 94501
Sadao Shirane 2,500 shares of Series B Preferred Stock
Toshiba Corporation
Advanced-I Group
1-1, Shibaura 1-Chome,
Minato-ku, Tokyo 105-01,
JAPAN
Clive G. Smith 5,000 shares of Series B Preferred Stock
P.O. Box 380790
Cambridge, MA 02238
Bobbie Valladon 2,500 shares of Series B Preferred Stock
Geoworks
960 Atlantic Ave.
Alameda, CA 94501
WS Investment Company 96A 8,750 shares of Series B Preferred Stock
Arthur F. Schneiderman
Herbert P. Fockler
650 Page Mill Road
Palo Alto, CA 94304
</TABLE>
<PAGE> 25
<TABLE>
<S> <C>
Hidetaka Yamamoto 2,500 shares of Series B Preferred Stock
Toshiba Corporation
Advanced-I Group
1-1, Shibaura 1-Chome,
Minato-ku, Tokyo 105-01,
JAPAN
General Instrument Corporation 550,000 shares of Common Stock in the event
181 West Madison, 49th Floor registration rights are granted with respect to any
Chicago, IL 60602 other shares of Common Stock
Attention: Richard Smith
Venture Leading & Leasing, Inc. Upon exercise of the Lender Warrant, 17,500 shares
Western Technology Investment of Series B Preferred Stock*
2010 North First Street, Suite 310
San Jose, CA 95131
Attention: Linda Smith
Benchmark Capital Partners, L.P. Upon exercise of the Benchmark Warrants, 441,257
2480 Sand Hill Road, Suite 200 shares of Common Stock
Menlo Park, CA 94025
Attention: Bruce Dunlevie
Benchmark Founders Fund, L.P. Upon exercise of the Benchmark Warrants, 58,743
2480 Sand Hill Road, Suite 200 shares of Common Stock
Menlo Park, CA 94025
Attention: Bruce Dunlevie
</TABLE>
- - ---------------------
* Registrable Securities only for purposes of Section 2 (excluding
Sections 2.4, 2.6 and 2.7 thereof) of the Investor Rights Agreement.
<PAGE> 26
<TABLE>
<CAPTION>
SERIES C INVESTORS
<S> <C>
WC Investors, LLC Upon exercise of the WCI Warrant, 75,000
Two North Riverside Plaza, Suite 1900 shares of Common Stock
Chicago, IL 60606
Attention: Phil Handy
WC Investors, LLC 375,000 shares of Series C Preferred Stock
Two North Riverside Plaza
Chicago, IL 60606
Attention: Ellen Havdala
Benchmark Capital Partners, L.P. 54,836 shares of Series C Preferred Stock
Benchmark Founders' Fund, L.P.
2480 Sand Hill Road
Menlo Park, CA 94025
Attention: Bruce Dunlevie
General Partner
Toshiba Corporation 250,000 shares of Series C Preferred Stock
1-1, Shibaura 1-Chome
Minato-ku, Tokyo 105-1
JAPAN
Attention: Hidetaka Yamamoto
General Manager
Business Planning Advanced-I Group
Wells Fargo Bank, Trustee of the 62,500 shares of Series C Preferred Stock
Vision Service Executive Deferred
Compensation Plan
Wells Fargo Bank, N.A.
420 Montgomery Street, 2nd Floor
San Francisco, CA 94104
Attention: Peggy Cowen MAC #0101-021
AJ Trusts Partnership 62,500 shares of Series C Preferred Stock
c/o Morton A. Pactor
Monte Vista Management Company
Stevenson Street, 9th Floor
San Francisco, CA 94105
Pace Communications, Inc. 31,250 shares of Series C Preferred Stock
c/o Bonnie Hunter
1301 Carolina Street
Greensboro, NC 27401
</TABLE>
<PAGE> 27
<TABLE>
<S> <C>
Samuel Bronfman II Recipient 62,500 shares of Series C Preferred Stock
Pour-Off Trust U/A/D March 1, 1989
Seagram Classics Wine Company
2600 Campus Drive, Suite 160
San Mateo, CA 94403
General Instrument Corporation 62,500 shares of Series C Preferred Stock
GI Analog Network Systems Business Unit
2200 Byberry Road
Hatboro, PA 19040
Attention: Dan Moloney, Vice President
Scientific-Atlanta, Inc. 62,500 shares of Series C Preferred Stock
1 Technology Parkway
Atlanta, GA 30092-2967
Attention: General Counsel
GFI Company 375,000 shares of Series C Preferred Stock
Oklahoma Publishing Company
9000 N. Broadway, 10th Floor
Oklahoma City, OK 73114
Attention: David Story
Dominique Trempont 12,500 shares of Series C Preferred Stock
5 Randall Place
Menlo Park, CA 94025
William K. Hooper, Jr. 31,250 shares of Series C Preferred Stock
1845 Doris Drive
Menlo Park, CA 94025
Gregory D. Thatch 12,500 shares of Series C Preferred Stock
1730 I Street, Suite 220
Sacramento, CA 95814
Teresa A. Dial and Brian T. Burry 18,750 shares of Series C Preferred Stock
Wells Fargo Bank
420 Montgomery Street, 12th Floor
San Francisco, CA 94104
Gerald J. Jeffry, DDS, Inc. Profit Sharing Plan 18,750 shares of Series C Preferred Stock
2730 Lone Tree Way, Suite 1
Antioch, CA 94509
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
Jeffry Family Trust U/A/D 2-19-76 18,750 shares of Series C Preferred Stock
and Amended 5-15-95
Gerald J. Jeffry and Sheila C. Jeffry, Trustees
2730 Lone Tree Way, Suite 1
Antioch, CA 94509
General Electric Capital Corporation 625,000 shares of Series C Preferred Stock
c/o Equity Capital Group
260 Long Ridge Road
Stamford, Connecticut 06927
Margaret & Richard Juang 1,875 shares of Series C Preferred Stock
1211 St. Ann Drive
Erie, PA 16509
Barbara Weisser 1,875 shares of Series C Preferred Stock
RR4 Box 270; WilleyPoint
Oakland, ME 04963
Dennis J. Sullivan, Jr. 5,000 shares of Series C Preferred Stock
Dan Pinger Public Relations
The Historic Cable House
2245 Gilbert Avenue
Cincinnati, OH 45206
David & Patricia Dabbert 1,875 shares of Series C Preferred Stock
3009 Mayfield Way
Michigan City, Indiana 46360
Philip J. Wilderotter 1,875 shares of Series C Preferred Stock
106 Pear Street
Oakhurst, NJ 07755
Corinne LeBovit 1,875 shares of Series C Preferred Stock
309 Branchlands Drive
Charlottesville, VA 22901
The Blinn Family Trust U/D/T Created 3,000 shares of Series C Preferred Stock
October 11, 1994, FBO The Blinn Family
5275 Cross Creek Lane
Reno, NV 89511
Anna-Marie Blinn 2,000 shares of Series C Preferred Stock
2101 Shoreline Dr. #496
Alameda, CA 94501
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
Barry S. Kassar Trustee, and 2,500 shares of Series C Preferred Stock
Avra Kassar Trustee, the
Kassar Family Trust, UTD 5-4-88
2675 St Tropez Place
La Jolla, CA 92037
Don Catlin 1,875 shares of Series C Preferred Stock
12415 Rochedale Lane
Los Angeles, CA 90049
Eugene H. Felder, Jr. and Johanna S. Felder, 3,750 shares of Series C Preferred Stock
Trustees of the Felder Family Trust,
originally established July 24, 1984
2680 Park Avenue
Laguna Beach, CA 92651-2029
Hidetaka Nakahara 1,875 shares of Series C Preferred Stock
7018 Manila Avenue
El Cerrito, CA 94530
William A. Saupe, DDS and Marcella 1,875 shares of Series C Preferred Stock
S. Miranda, Tenants in Common
2416 Ashby Avenue
Berkeley, CA 94705
Sumie Matsushita 1,875 shares of Series C Preferred Stock
1-9-7 Nan-yodai
Hachioji-shi
Tokyo 192-03 JAPAN
Fereydoun Azarm 13,500 shares of Series C Preferred Stock
2280 Woodard Road
San Jose, CA 95124
Tom and Denise Morrison 625 shares of Series C Preferred Stock
1700 Aubusson Court
Bakersfield, CA 93311
EGI-Wink Investors, L.L.C. 250,000 shares of Series C Preferred Stock
Two North Riverside Plaza, Suite 1900
Chicago, IL 60606
Attention: Phil Handy
EGI-Wink Investors, L.L.C. Upon exercise of WCI Warrant, 50,000
Two North Riverside Plaza, Suite 1900 shares of Common Stock
Chicago, IL 60606
Attention: Phil Handy
</TABLE>
<PAGE> 1
EXHIBIT 10.1
WINK COMMUNICATIONS, INC.
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("AGREEMENT") is effective as of , 1998,
by and between Wink Communications, Inc., a Delaware corporation (the
"COMPANY"), and __________ ("INDEMNITEE").
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the significant increases in the cost of
such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. Certain Definitions.
(a) "CHANGE IN CONTROL" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same
<PAGE> 2
proportions as their ownership of stock of the Company, becomes the "beneficial
owner" (as defined in Rule 13d- 3 under said Act), directly or indirectly, of
securities of the Company representing more than 50% of the total voting power
represented by the Company's then outstanding Voting Securities (as defined
below), (ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at
the begin ning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of related
transactions) all or substantially all of the Company's assets.
(b) "CLAIM" shall mean with respect to a Covered Event (as
defined below): any threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, or any hearing, inquiry or
investigation that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other.
(c) References to the "COMPANY" shall include, in addition to
Wink Communications, Inc., any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger to which
Wink Communications, Inc. (or any of its wholly owned subsidiaries) is a party
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(d) "COVERED EVENT" shall mean any event or occurrence related to
the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
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<PAGE> 3
(e) "EXPENSES" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
participate in, any action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld), actually and
reasonably incurred, of any Claim and any federal, state, local or foreign taxes
imposed on the Indemnitee as a result of the actual or deemed receipt of any
payments under this Agreement.
(f) "EXPENSE ADVANCE" shall mean a payment to Indemnitee pursuant
to Section 3 of Expenses in advance of the settlement of or final judgement in
any action, suit, proceeding or alternative dispute resolution mechanism,
hearing, inquiry or investigation which constitutes a Claim.
(g) "INDEPENDENT LEGAL COUNSEL" shall mean an attorney or firm of
attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees under similar
indemnity agreements).
(h) References to "OTHER ENTERPRISES" shall include employee
benefit plans; references to "FINES" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "SERVING
AT THE REQUEST OF THE COMPANY" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "NOT OPPOSED TO THE
BEST INTERESTS OF THE COMPANY" as referred to in this Agreement.
(i) "REVIEWING PARTY" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
(j) "SECTION" refers to a section of this Agreement unless
otherwise indicated.
(k) "VOTING SECURITIES" shall mean any securities of the Company
that vote generally in the election of directors.
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<PAGE> 4
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any Claim (whether by reason of or arising in
part out of a Covered Event), including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses.
(b) Review of Indemnification Obligations. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Indepen dent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid in indemnifying Indemnitee; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee is entitled to
be indemnified hereunder under applicable law, any determination made by any
Reviewing Party that Indemnitee is not entitled to be indemnified hereunder
under applicable law shall not be binding and Indemnitee shall not be required
to reimburse the Company for any Expenses theretofore paid in indemnifying
Indemnitee until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).
Indemnitee's obligation to reimburse the Company for any Expenses shall be
unsecured and no interest shall be charged thereon.
(c) Indemnitee Rights on Unfavorable Determination; Binding
Effect. If any Reviewing Party determines that Indemnitee substantively is not
entitled to be indemnified hereunder in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceed ing. Absent
such litigation, any determination by any Reviewing Party shall be conclusive
and binding on the Company and Indemnitee.
(d) Selection of Reviewing Party; Change in Control. If there has
not been a Change in Control, any Reviewing Party shall be selected by the Board
of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's certificate of incorporation or
bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld).
Such counsel,
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<PAGE> 5
among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent Indemnitee would be entitled to be
indemnified hereunder under applicable law and the Company agrees to abide by
such opinion. The Company agrees to pay the reasonable fees of the Independent
Legal Counsel referred to above and to indemnify fully such counsel against any
and all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
Notwithstanding any other provision of this Agreement, the Company shall not be
required to pay Expenses of more than one Independent Legal Counsel in
connection with all matters concerning a single Indemnitee, and such Independent
Legal Counsel shall be the Independent Legal Counsel for any or all other
Indemnitees unless (i) the Company otherwise determines or (ii) any Indemnitee
shall provide a written statement setting forth in detail a reasonable objection
to such Independent Legal Counsel representing other Indemnitees.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. Expense Advances.
(a) Obligation to Make Expense Advances. The Company shall make
Expense Advances to Indemnitee upon receipt of a written undertaking by or on
behalf of the Indemnitee to repay such amounts if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified therefor by the
Company.
(b) Form of Undertaking. Any written undertaking by the
Indemnitee to repay any Expense Advances hereunder shall be unsecured and no
interest shall be charged thereon.
(c) Determination of Reasonable Expense Advances. The parties
agree that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including
without limitation Expense Advances) by the Company to the Indemnitee pursuant
to this Agreement shall be made to the fullest extent permitted by law as soon
as practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than forty-five (45) business days after such
written demand by Indemnitee is presented to the Company, except in the case of
Expense Advances, which shall be made no later than twenty (20) business days
after such written demand by Indemnitee is presented to the Company.
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<PAGE> 6
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement or applicable law, shall be a defense
to Indemnitee's claim or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any particular belief. In
connection with any determi nation by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently employed by
or on behalf of Indemnitee with respect to the same Claim; provided, however,
that (i) Indemnitee shall have the right to employ Indemnitee's separate counsel
in any such Claim at Indemnitee's expense and (ii) if (A) the employment of
separate counsel by Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably
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<PAGE> 7
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such Claim, then the fees and expenses
of Indemnitee's separate counsel shall be Expenses for which Indemnitee may
receive indemnification or Expense Advances hereunder.
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the Indemnitee
to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's certificate of incorporation, the Company's bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's certificate of
incorporation, its bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's certificate of
incorporation, bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in
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<PAGE> 8
the future to undertake with the Securities and Exchange Commission to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
9. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for
Expenses resulting from acts, omissions or transactions for which Indemnitee is
prohibited from receiving indemnification under this Agreement or applicable
law; provided, however, that notwithstanding any limitation set forth in this
Section 10(a) regarding the Company's obligation to provide indemnification,
Indemnitee shall be entitled under Section 3 to receive Expense Advances
hereunder with respect to any such Claim unless and until a court having
jurisdiction over the Claim shall have made a final judicial determination (as
to which all rights of appeal therefrom have been exhausted or lapsed) that
Indemnitee has engaged in acts, omissions or transactions for which Indemnitee
is prohibited from receiving indemnification under this Agreement or applicable
law.
(b) Claims Initiated by Indemnitee. To indemnify or make Expense
Advances to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, counterclaim or cross claim, except (i)
with respect to actions or proceedings brought to establish or enforce a right
to indemnification under this Agreement or any other agreement or insurance
policy or under the Company's certificate of incorporation or bylaws now or
hereafter in effect relating to Claims for Covered Events, (ii) in specific
cases if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise required under Section 145 of the Delaware General
Corporation Law (relating to indemnification of officers, directors, employees
and agents; and insurance), regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification or insurance recovery, as the
case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any Expenses
incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
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<PAGE> 9
(d) Claims Under Section 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute; provided,
however, that notwithstanding any limitation set forth in this Section 10(d)
regarding the Company's obligation to provide indemnification, Indemnitee shall
be entitled under Section 3 to receive Expense Advances hereunder with respect
to any such Claim unless and until a court having jurisdiction over the Claim
shall have made a final judicial determination (as to which all rights of appeal
therefrom have been exhausted or lapsed) that Indemnitee has violated said
statute.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or
Interpretation. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ulti mately successful in such action,
unless as a part of such action a court having jurisdiction over such action
makes a final judicial determination (as to which all rights of appeal therefrom
have been exhausted or lapsed) that each of the material assertions made by
Indemnitee as a basis for such action was not made in good faith or was
frivolous; provided, however, that until such final judicial determination is
made, Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action. In the event of an action
instituted by or in the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee in defense of such action
(including without limitation costs and expenses incurred with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action a court having jurisdiction over such action makes a final
judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that each of the material defenses asserted by Indemnitee
in such action was made in bad faith or was frivolous; provided, however, that
until such
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<PAGE> 10
final judicial determination is made, Indemnitee shall be entitled under Section
3 to receive payment of Expense Advances hereunder with respect to such action.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement
or as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Choice of Law. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of laws.
18. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
20. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations,
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<PAGE> 11
commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
WINK COMMUNICATIONS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
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Address: WINK COMMUNICATIONS, INC.
1001 Marina Village Parkway
Alameda, CA 94501
AGREED TO AND ACCEPTED BY:
INDEMNITEE
-------------------------------------
(signature)
Address:
-----------------------------
-----------------------------
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<PAGE> 1
EXHIBIT 10.2
WINK COMMUNICATIONS, INC.
1994 STOCK PLAN
(AS AMENDED BY THE BOARD OF DIRECTORS AND THE SHAREHOLDERS ON OCTOBER 15, 1997)
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Wink Communications, Inc., a California
corporation.
(g) "Consultant" means any person who is engaged by the Company
or any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not; provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of
the Company. For purposes of Incentive Stock Options, no such leave may exceed
90 days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract, including Company policies. If reemployment upon expiration
of a leave of absence approved by the Company
<PAGE> 2
is not so guaranteed, on the 91st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option.
(i) "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 to
constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "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;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination;
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 Administrator.
(l) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(m) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(n) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(o) "Option" means a stock option granted pursuant to the Plan.
(p) "Optioned Stock" means the Common Stock subject to an Option
or a Stock Purchase Right.
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<PAGE> 3
(q) "Optionee" means an Employee or Consultant who receives an
Option or Stock Purchase Right.
(r) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(s) "Plan" means this 1994 Stock Plan.
(t) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
(u) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
(v) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 below.
(w) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 4,000,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, and the original purchaser of such
Shares did not receive any benefits of ownership of such Shares, such Shares
shall become available for future grant under the Plan. For purposes of the
preceding sentence, voting rights shall not be considered a benefit of Share
ownership.
4. Administration of the Plan.
(a) Administrator. The Plan shall be administered by the Board or
a Committee appointed by the Board, which Committee shall be constituted to
comply with Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the
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<PAGE> 4
approval of any relevant authorities, including the approval, if required, of
any stock exchange upon which the Common Stock is listed, the Administrator
shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options and
Stock Purchase Rights or any combination thereof are granted hereunder;
(iv) to determine the number of shares of Common Stock to
be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions of any award
granted hereunder;
(vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(e) instead of Common Stock;
(viii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;
(ix) to determine the terms and restrictions applicable to
Stock Purchase Rights and the Restricted Stock purchased by exercising such
Stock Purchase Rights; and
(x) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options or Stock Purchase
Rights.
5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option or
Stock Purchase Right may, if otherwise eligible, be granted additional Options
or Stock Purchase Rights.
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<PAGE> 5
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value:
(i) of Shares subject to an Optionee's Incentive Stock
Options granted by the Company, any Parent or Subsidiary, which
(ii) become exercisable for the first time during any
calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(c) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment relationship with the Company, nor shall
it interfere in any way with his or her right or the Company's right to
terminate his or her employment relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
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<PAGE> 6
(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant.
(B) granted to any person, the per Share exercise
price shall be no less than 85% of the Fair Market Value per Share on the date
of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above pursuant to
a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) 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 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, (5) 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 (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan, but in no case at a rate of less than 20% per year over five (5)
years from the date the Option is granted.
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
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<PAGE> 7
been received by the Company. Full payment may, as authorized by the
Administrator, consist of any consideration and method of payment allowable
under Section 8(b) 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 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
upon exercise of the Option. 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.
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 Employment or Consulting Relationship. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant with the Company (but not in the event of an Optionee's change of
status from Employee to Consultant (in which case an Employee's Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option on the
ninety-first (91st) day following such change of status) or from Consultant to
Employee), such Optionee may, but only within such period of time as is
determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three (3)
months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee 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 Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
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 Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the day three months and
one day following such termination. To the extent that Optionee was not entitled
to exercise the Option at the date of termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
(d) Death of Optionee. In the event of the death of an 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 expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death,
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<PAGE> 8
the Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert to
the Plan. If, after death, the Optionee's estate or a person who acquired the
right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
10. Non-Transferability of Options and Stock Purchase Rights. Options
and Stock Purchase Rights 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.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator. Shares purchased pursuant
to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, but at a minimum rate of 20% per year.
(c) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his
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<PAGE> 9
or her purchase is entered upon the records of the duly authorized transfer
agent of the Company. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Stock Purchase Right is
exercised, except as provided in Section 12 of the Plan.
12. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclas sification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock 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." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
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 of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option or Stock Purchase Right will
terminate immediately prior to the consummation of such proposed action.
(c) Merger. In the event of a merger of the Company with or into
another corporation, each outstanding Option or Stock Purchase Right shall be
assumed or an equivalent option or right shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation. If, in such
event, the Option or Stock Purchase Right is not assumed or substituted, the
Option or Stock Purchase Right shall terminate as of the date of the closing of
the merger. For the purposes of this paragraph, the Option or Stock Purchase
Right shall be considered assumed if, following the merger, the option or right
confers the right to purchase, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger, the
consideration (whether stock, cash, or other securities or property) received in
the merger 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); provided, however, that if such consideration received in the merger
was 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 or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of
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<PAGE> 10
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.
13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.
14. 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 Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder 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 or Stock Purchase Rights
already granted, and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right 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, and the
requirements of any stock exchange upon 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 or Stock Purchase
Right, the Company may require the person exercising such Option or Stock
Purchase Right 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.
16. 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.
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<PAGE> 11
The 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.
17. Agreements. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Administrator shall approve from time to
time.
18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.
19. Information to Optionees and Purchasers. The Company shall provide
to each Optionee and to each individual who acquired Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquired Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
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<PAGE> 12
WINK COMMUNICATIONS, INC.
1994 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
OPTIONEE
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
GRANT NUMBER GRANT #
--------------------------------
DATE OF GRANT GRANT DATE
--------------------------------
VESTING COMMENCEMENT DATE VEST START
--------------------------------
EXERCISE PRICE PER SHARE EXERCISE PRICE
--------------------------------
TOTAL NUMBER OF SHARES GRANTED # SHARES
--------------------------------
TOTAL EXERCISE PRICE TOTAL EXERCISE PRICE
--------------------------------
TYPE OF OPTION: ISO INCENTIVE STOCK OPTION
NSO NONSTATUTORY STOCK OPTION
TERM/EXPIRATION DATE: EXPIRATION DATE
--------------------------------
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
25% of the Shares subject to the Option shall vest on the one year
anniversary of the Vesting Commencement Date, and 1/48 of the Shares subject to
the Option shall vest at the end of each full month thereafter.
<PAGE> 13
Termination Period:
This Option may be exercised for three (3) months after termination of
employment or consulting relationship, 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. Wink Communications, Inc., a California corporation
(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 Wink Communications 1994 Stock
Plan (the "Plan") adopted by the Company, which is incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, 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 Vesting Schedule set out in the Notice of Grant and with
the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction of
a Share.
(b) 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)(c).
(c) 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 as to
the holder's investment intent 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 shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice
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<PAGE> 14
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
accompanied by the Exercise Price.
No Shares will 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. 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) 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.
5. 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.
6. Termination of Relationship. In the event an Optionee's Continuous
Status as an Employee or Consultant terminates, Optionee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the
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<PAGE> 15
Notice of Grant. To the extent that Optionee was not entitled to exercise 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.
7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee 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 Option Agreement), exercise the Option to the extent otherwise
entitled to exercise it 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 Incentive Stock Option such Incentive
Stock Option shall automatically convert to a Nonstatutory Stock Option on the
day three months and one day following such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
8. 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 acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee could exercise the Option at
the date of death.
9. 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.
10. 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. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.
11. Taxation Upon Exercise of Option. Optionee understands that, upon
exercising a Nonstatutory 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 over the exercise price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If the
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.
Additionally, the Optionee may at some point be required to satisfy tax
withholding obligations with respect to the disqualifying disposition of an
Incentive Stock Option. The Optionee shall satisfy his or
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<PAGE> 16
her tax withholding obligation arising upon the exercise of this Option out of
Optionee's compensation or by payment to the Company.
12. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal and California 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 or California 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.
(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 90 days of such termination for the ISO to
be qualified as an ISO.
(iii) Exercise of Nonstatutory Stock Option. There may be a
regular federal income tax liability and California income tax liability upon
the exercise of a Nonstatutory Stock Option. 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 or a former
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
in cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver Shares if
such withholding amounts are not delivered at the time of exercise.
(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 and California 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 and California 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
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<PAGE> 17
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.
13. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
WINK COMMUNICATIONS, INC.
a California corporation
By:
---------------------------------
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<PAGE> 18
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.
Dated:
--------------------------- ------------------------------------
Optionee
Residence Address:
------------------------------------
------------------------------------
------------------------------------
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<PAGE> 19
EXHIBIT A
1994 STOCK PLAN
EXERCISE NOTICE
Wink Communications, Inc.
2061 Challenger Drive
Alameda, CA 94501
Attention: Secretary
1. Exercise of Option. Effective as of today, ___________________, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
________ shares of the Common Stock (the "Shares") of Wink Communications, Inc.
(the "Company") under and pursuant to the Wink Communications, Inc. 1994 Stock
Plan, as amended (the "Plan") and the [ISO]Incentive [NSO]Nonstatutory Stock
Option Agreement dated Grant Date (the "Option Agreement").
2. 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.
3. 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.
4. 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 right of first
<PAGE> 20
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 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).
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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
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<PAGE> 21
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.
(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 of 1933, as amended.
5. 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.
6. Restrictive Legends and Stop-Transfer Orders.
(a) 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 the Company or 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
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 A RIGHT OF FIRST REFUSAL
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
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<PAGE> 22
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.
(b) 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.
(c) 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.
7. 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 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.
8. 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.
9. 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.
10. 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.
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<PAGE> 23
11. 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.
12. Delivery of Payment. Optionee herewith delivers to the Company the
full Exercise Price for the Shares.
13. Entire Agreement. The Plan and Notice of Grant/Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Purchaser with
respect to the subject matter hereof, and may not be modified adversely to the
Purchaser's interest except by means of a writing signed by the Company and
Purchaser
Submitted by: Accepted by:
OPTIONEE: WINK COMMUNICATIONS, INC.
Optionee
By:
---------------------------------
Its:
- - ---------------------------------- --------------------------------
(Signature)
Address: Address:
- - ---------------------------------- ------------------------------------
- - ---------------------------------- ------------------------------------
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<PAGE> 24
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : Optionee
COMPANY : WINK COMMUNICATIONS, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
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
<PAGE> 25
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 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 one year 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 two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee 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 securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of 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 include 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.
(e) 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.
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<PAGE> 26
(f) 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:
------------------------------------
Optionee
Date:
-------------------------------
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<PAGE> 27
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."
<PAGE> 1
EXHIBIT 10.6
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 9th day of December, 1997, by and between Wink
Communications, Inc., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501, and ESPN Inc., a Delaware corporation
("Programmer"), whose address is 605 Third Avenue, New York, NY 10158.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use Wink
ITV Studio, Server Studio, Wink ITV Broadcast Server, and Wink provided
Server Modules version 1.0 and 1.x updates (hereinafter collectively
referred to as "Wink Software") to deliver interactive program(s) which
utilize the vertical blanking interval ("VBI") or an MPEG private data
stream provided concurrently with the corresponding video signal and are
compliant with the Wink interactive communications application protocol
("Interactive Wink Programs") to all Programmer viewers in the
continental United States, Alaska, Hawaii, the US territories in the
Caribbean and Canada.
1.2 Wink agrees to provide all applicable upgrades of all Wink Software to
Programmer at no charge during the initial term of this agreement.
1.3 This License is not transferable, nor may any rights hereunder be
transferred, assigned or sub-licensed in whole or in part by either
party without the prior written consent of the other party.
1.4 Programmer can only use the Wink software to provide Interactive Wink
Programs with the video programming services listed in Exhibit A.
Programmer must notify Wink in writing at least 30 days prior to
commencing transmission of Interactive Wink Programs with a video
programming service. Programmer agrees to adhere to the technical
specifications for the insertion of Interactive Wink Programs provided
in Exhibit A. Exhibit A, including the programming services enabled to
insert Interactive Wink Programs in their video signal, may be amended
from time to time by mutual agreement.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution of
this Agreement and terminate on the earlier of (a) March 1, 1999 or (b)
twelve (12) months after the first airing of Programmer's Interactive
Wink Programs on the programming service listed as the First Programming
Service in Exhibit A ("First Air Date"). Notwithstanding the foregoing,
if Wink has not made arrangements with various System Operators (as
defined in section 4.3 herein) for distribution of Wink service in at
least 250,000 households in the United States by not later than ninety
days after Programmer's First Air Date, Programmer may terminate this
Agreement. The parties agree that the First Air Date shall be the first
day that Programmer airs Interactive Wink Programs, and regular cable
subscriber households (not System Operator employees) are able to
receive such Interactive Wink Programs. Broadcasts of Interactive Wink
Programs to test transmission and reception reliability are not
applicable. Notwithstanding the foregoing, if Wink causes or allows any
other programmer to enter into an agreement with any System Operator on
terms and conditions more favorable to the programmer than those
enumerated in Exhibit D,
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Wink will notify Programmer to that effect and Programmer then will have
the right during the next 60 days after its receipt of said notice to
terminate this Agreement with no resulting liability.
2.2 Programmer may extend the Agreement and the licenses granted herein for
up to four (4) additional years, with the understanding that the license
fees provided in Exhibit C would apply for extension. The renewal
following the initial term must be for at least two years. Subsequent
renewals can be for not less than additional one additional year each.
Programmer agrees to provide Wink with notice of Programmer's decision
to renew or to let the Agreement expire at least 30 days prior to the
expiration of the then current term. Programmer can also elect to add
additional wholly-owned programming services within twelve months of the
First Air Date, or anytime during the effective extended term, if any.
Additional wholly-owned programming services would be eligible for the
pricing defined in Exhibit F, and would not be eligible for the
quarterly payments in 3.5 or for the equipment "earn-out" option in 3.2.
2.3 Wink agrees to extend terms substantially similar to those defined in
this Agreement to the ABC Television Network and to the Disney Channel,
provided the agreements with each programming service is executed no
later than June 1, 1998. If the ABC Television Network exercises its
option to enter into a substantially identical agreement with Wink
within this timeframe, Wink agrees to offer the pricing defined in
Exhibit F to ABC's wholly owned and operated affiliate stations and the
pricing defined in Exhibit G to ABC affiliates not wholly owned by ABC
during the effective initial term of the agreement between ABC and Wink.
Programmer agrees that the following terms are unique to Programmer, and
will not be extended to the programming services covered in this
paragraph: equipment "earn-out" terms in 3.2, weekly limit on
poll-related fees in 3.4 and quarterly payments from Wink in 3.5.
Programmer also agrees that the ad insertion "earn-out" terms in 4.5 are
only available to Programmer, the ABC Television Network and the Disney
Channel. Programmer understands and accepts that any network not owned
and operated by Programmer must commit to providing Interactive Wink
Programs for at least 10 hours of programming per week to be eligible
for the pricing defined in Exhibits C, F and G. Not with standing the
foregoing, Wink agrees that such networks would only be required to
provide Interactive Wink Programs for at least 5 hours of programming
per week for the first ninety (90) days following those networks' First
Air Date.
3. INTEGRATION AND PROGRAMMING
3.1 Programmer will distribute the Interactive Wink Programs with the
national feed for each Programming Service defined in Exhibit A, or in
the absence of a single national feed, through the feed with the largest
household reception area in the country and on any additional feeds that
reach at least 5% of Programmer's potential audience. Such distribution
will take place through Programmer's national uplink or broadcast
facilities.
3.2 Programmer and Wink agree to collaborate to enable the installation and
integration of the Wink Software into Programmer's facilities, and to
ensure the reliable transmission of the Interactive Wink Programs. Wink
is responsible for providing all equipment (including taxes and freight)
necessary to run the Wink Software and to enable insertion of
Interactive Wink Programs into
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the appropriate video signals, including but not limited to the
equipment listed on Exhibit E hereto. Programmer will reimburse Wink for
all costs of such equipment up to a maximum of $21,000 for the equipment
listed in Exhibit E hereto, such reimbursements to accrue as an
obligation of Programmer at the rate of $1,750 per month, and will be
paid by Programmer to Wink out of any incremental revenue received by
Programmer attributable to the Interactive Programs, after Programmer
retains the first [*]%of such revenue (such reimbursements and
incremental revenue to be calculated for on a monthly basis). At
whatever point this agreement terminates for any reason, Programmer will
not have any obligation to pay Wink any then-unpaid balance, but Wink
will have the right to regain custody and ownership of all such
equipment. Wink acknowledges that Programmer's uplink facility is
constrained in rack space, and accepts that Programmer may terminate if
the total rack space required to support the First and Second
Programming Services exceeds that occupied by two Norpak TES-3 data
inserters.
3.3 Programmer agrees to use reasonable efforts to commence transmission of
Interactive Wink Programs on the First Programming Service on or before
February 1, 1998. Wink understands and accepts that this First Air Date
is contingent upon a successful installation of the Wink Software and
associated hardware, and upon completion of training of Programmer
staff.
3.4 Wink agrees to provide weekly reporting to Programmer of all response
traffic generated by Programmer viewers and collected by Wink's Data
Center. Wink also agrees to provide Programmer daily reports on all
Interactive Wink Programs featuring Wink polls that are originated by
Programmer. [ * ] Poll reports will be provided by ZIP or by cable
system, at Programmer's option. The parties agree to review the number
of responses, the number of polls and Wink's costs in preparing poll
reports for Programmer on a quarterly basis, and Programmer agrees that
Wink may impose certain restrictions on the number of polls aired by
Programmer, if the operational implications of supporting such polls
becomes too onerous for Wink. Programmer accepts Wink's preferred terms
for all other response traffic and reporting, as outlined in Exhibit B,
except that any charges related to polls will be subject to the weekly
maximums defined above.
3.5 Beginning on the First Air Date, Programmer agrees to air Interactive
Wink Programs at least [ * ] on the First Programming Service, and an
additional [*] hours per week on the First and/or the Second Programming
Service combined. Programmer can determine the amount, if any, of
Programming on the Second Programming Service in its sole discretion,
and is not obligated to air any Programming on the Second Programming
Service. Programmer understands and accepts that any additional wholly
owned programming services which take advantage of the terms provided in
this Agreement must air a minimum of [ * ] of Interactive Wink Programs
a week. Programmer may decide which shows include Interactive Wink
Programs, as long as the total number of hours per week is reached. The
parties expect that some
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* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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of Programmer's Interactive Wink Programs will provide viewers with
on-demand access to scores, statistics, breaking news, and other
material deemed relevant by Programmer. During the initial term, Wink
agrees to pay Programmer [ * ] in which the programming commitment
defined in this paragraph has been met.
3.6 Programmer may suspend any individual Interactive Program at any time
and for any reason.
3.7 Programmer is responsible for payment to third party providers of sports
data or news, leagues, and other entities to which Programmer deems it
necessary to make payments to enable the creation or transmission of
Interactive Wink Programs.
3.8 The parties agree that the Interactive Wink Programs will require
bandwidth equivalent to one dedicated line of VBI on each programming
service. Programmer may elect to use additional VBI lines in it's sole
discretion. Programmer has the right to terminate this Agreement if
Programmer's Interactive Wink Programs (a) cause any degradation in
Programmer's video signal quality or (b) are not comparable in graphical
resolution and appearance to those examples provided by Wink on Wink's
demonstration video tapes prior to the signing of this Agreement.
3.9 Wink agrees that any Interactive Wink Programs created by Programmer,
with or without the assistance of Wink staff members, will remain the
intellectual property of Programmer. Wink agrees that Programmer may
license Interactive Wink Programs (or derivatives thereof) that
Programmer creates to third parties on any terms that the Programmer and
the third party can mutually agree upon. Programmer can not sub-license
Wink Software, or act as an agent for Wink.
3.10 Programmer acknowledges that Wink may elect to offer a nationally or
locally inserted full screen Interactive Wink Program to System
Operators featuring sports scores and other sports related news ("Wink
Sports Virtual Channel") during the initial term. Wink agrees to
negotiate in good faith with Programmer to provide the sports data and
the branding of the Wink Sports Virtual Channel, to conduct such
negotiations with Programmer prior to entering into any such
negotiations with any other sports programming service, and to offer
Programmer a right to match any offer Wink has received for sports data
and branding of the Wink Sports Virtual Channel prior to entering into
an agreement. Programmer agrees to match or decline any such offer with
two weeks of its receipt of written notification ( Wink agrees to
provide) of all material terms of such offer. If Wink does not receive a
written response matching or declining to match the offer(s) presented
in two weeks from the date of presentation to Programmer, Programmer's
right to match will expire.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to provide Interactive Wink Programs as described in
this Agreement for the programming services listed in Exhibit A.
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4.2 Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis.
4.3 Programmer agrees to provide the Interactive Wink Programs to any
multichannel video operator in the United States or Canada with whom
Programmer already has an agreement for carriage of Programmers video
programming ("System Operators") under the terms described in Exhibit D,
and agrees that Wink may provide a copy of Exhibits A and D to any
System Operator as evidence of Programmer's agreement to supply the
Interactive Wink Programs under such terms.
4.4 Programmer may choose to utilize other products and services of Wink not
quoted elsewhere in this Agreement from time to time. These services
will be extended by Wink to Programmer at the lower of the then
prevailing retail rate or the lowest rate offered any cable programmer
for the same products and services.
4.5 Programmer may request that Wink develop and install a Wink Server
Module for spot ad insertion which would enable the automatic triggering
of the insertion of Interactive Wink Programs related to ads aired by
the First or Second Programming Service ("Ad Insertion Server Module" or
"AISM"). Programmer may order this optional Wink Software at any time
under the standard terms and conditions defined in Exhibit C, or may
chose the following special terms during the initial term:
(a) Programmer commits to use it's best efforts to trial Wink enhanced
national spot ads with at least 5 advertisers. Programmer agrees to
support the sales efforts for such ads by arranging joint
Programmer/Wink presentations with at least 3 existing advertisers
within 60 days of ordering the AISM, and by responding on a timely basis
to requests from other advertisers for rates for Wink-enhanced ads.
(b) Wink agrees to defer the normal AISM license fees during the initial
term of this Agreement as follows. License fees accrue monthly. 75% of
any incremental revenues attributable to the value of the Wink
enhancements to the applicable spot advertisement received by Programmer
from such enhanced advertisements airing on Programmer's networks are
applied against the accrued license fees outstanding and paid to Wink
until the accrued license fees are earned out. In the event that
Programmer earns more than the accrued license fees, Wink may apply such
unapplied revenue towards future license fees, as they accrue. If
Programmer does not elect to extend the Agreement beyond the initial
term, Programmer and Wink will prepare a final report resolving accrued
license fees and Programmer Wink ad revenue no later than 45 days after
the last effective day of this Agreement. Any net license fees for the
AISM outstanding after this final report will be waived by Wink. If
Programmer elects to extend the Agreement, Wink may continue to earn
back the deferred AISM license fees from the initial term during renewal
years, until fully recouped.
5. PAYMENT TERMS
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5.1 On or before the thirtieth (30th ) day following each month throughout
the term of this Agreement, Programmer shall remit to Wink all fees owed
for licenses provided and services rendered in the previous month,
according to the price schedules provided in Exhibit C.
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Programmer of its obligation to make
any payment in a timely manner consistent with the terms of this
Agreement. Past due payments shall bear interest at a rate equal to the
lesser of (i) one and one-half percent (1 - 1/2%) per month or (ii) the
maximum legal rate permitted under law, and Programmer shall be liable
for all reasonable costs and expenses (including, without limitation,
reasonable court costs and attorneys' fees) incurred by Wink in
collecting any past due payments. Wink agrees that no interest shall be
due if the parties have a bona fide dispute over payments.
6. PROMOTION AND RESEARCH
6.1 After execution of this Agreement, the parties agree to issue a press
release acceptable to both parties announcing this agreement on or
before December 9, 1997. Wink will provide Programmer with a draft of
this release by December 3, 1997.
6.2 Wink agrees to provide Programmer with notice within 30 days of new
System Operators having enabled their subscribers to receive
Programmer's Interactive Wink Programs. Wink further agrees to
immediately notify Programmer as to the first day subscribers in Wink's
first five (5) cable systems are able to receive Programmer's
Interactive Wink Programs.
6.3 Wink agrees to promote and feature Programmers Interactive Wink Programs
as prominently as any other cable programming service in Wink's
marketing literature, during meetings with cable operators and the
press, and during industry trade shows. Wink will also use reasonable
efforts to assist Programmer in achieving it's marketing objectives in
materials prepared by third parties, such as cable equipment
manufacturers and cable operators. Programmer agrees to promote it's
participation as a charter Wink programmer to cable operators (provided
such promotion requires no material incremental expense or change to
Programmer's current marketing materials), and to serve as a press
reference for Wink during the effective term of the agreement.
6.4 Programmer agrees to cooperate with Wink and System Operators in
promoting Programmer's Interactive Wink Programs. Wink and System
Operators may prepare marketing materials relating to the Interactive
Wink Programs and may use Programmer's name, logo and screen shots
(collectively, "Programmer's Marks") from the Interactive Wink Programs,
provided that such materials are submitted to Programmer for review and
written approval prior to distribution. Programmer agrees to use
reasonable efforts to respond promptly to such requests for approval.
Wink hereby acknowledges that, Programmer is the sole owner of all
right, title and interest in and to the Programmer's Marks and any
marks, notices or designations utilized by Programmer in connection with
Programmer's business, and that no rights or ownership are intended to
be or shall be transferred to Wink. All uses of the Programmer's Marks
shall inure to the benefit of Programmer. Upon any expiration or
termination of this Agreement, Wink shall delete and
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discontinue all use of the Programmer's Marks. At no time during or
after the term of this Agreement shall Wink challenge or assist others
to challenge the Programmer's Marks or the registration thereof or
attempt to assist another in the attempt to register any trademarks,
marks or similar rights for marks the same as or confusingly similar to
the Programmers Marks.
6.5 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in collaboration with Programmer.
Programmer shall provide Wink with reasonable assistance at no cost to
Programmer in conducting such research with respect to Programmer's
viewers. Programmer agrees that Wink will have access to all such
research regarding the deployment, launch, and usage of Wink service by
Programmer viewers, subject to applicable consumer privacy laws. Wink
agrees to provide copies of final reports from such research activity to
Programmer.
6.6 Programmer understands and accepts that Wink will be providing reports
on viewer responses to the Interactive Wink Programs to System
Operator(s) for responses that originate from System Operator's
subscribers, and to advertisers and other parties for responses that
originate from Interactive Wink Programs paid for or sponsored by such
parties. Wink agrees that reports providing specific data regarding
viewer responses to Programmer's Interactive Wink Programs, including
data on Wink viewer responses to advertising on Programmer's Programming
Services, will not be made available to the press or other broadcast and
cable networks, except in aggregated form that does not identify
Programmer or specific Programmer viewer data.
7. WARRANTY
7.1 Wink hereby represents and warrants to Programmer that the Wink Software
(and subsequent revisions and upgrades to same provided by Wink to
Programmer) will operate and perform in accordance with all published
specifications with respect thereto. Wink also represents and warrants
that as of this signing of this Agreement, Wink is not aware of any
claims against Wink's patents, copyrights or other intellectual
property.
7.2 Wink hereby warrants and represents that the terms contained herein for
licensing of Wink software, provision of Wink services and Programmer's
commitment for Interactive Wink Programs are, as a whole, as favorable
as any other similar agreement Wink has entered into or will enter into
with other North American cable programming entities.
8. INDEMNIFICATION
8.1 Wink will indemnify and hold harmless Programmer, its parent and
subsidiary companies and their respective employees, directors, agents,
other representatives against any and all claims, causes of action,
damages and all other related expenses arising out of the breach or
alleged breach of any of its representations and warranties or any of
its other material obligations stated herein or any of its other
business activities directly related to Programmer or this Agreement.
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8.2 Programmer will indemnify and hold harmless Wink, its parent and
subsidiary companies and their respective employees, directors, agents,
other representatives against any and all claims, causes of action,
damages and all other related expenses arising out of the breach or
alleged breach of any of its representations and warranties or any of
its other material obligations stated herein or any of its other
business activities directly related to Wink or this Agreement.
8.3 In any case in which indemnification is sought hereunder, the party
seeking indemnification shall promptly notify the other in writing of
any claim or litigation to which the indemnification relates and the
party seeking indemnification shall afford the other the opportunity to
participate in and, at the other party's option, fully control any
compromise, settlement, litigation or other resolution or disposition of
such claim or litigation.
9. NOTICES
All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express deliver, addressed, to the addresses provided in the first
paragraph of this Agreement, and to the attention of:
If to Wink:
Vice President, Content
If to Programmer:
Senior Vice President, ESPN Enterprises
With a copy to:
Jim Noel, Assistant General Counsel, ESPN
The date of such facsimile transmission, telegraphing or personal
delivery or the next day if by express delivery, or the date three (3)
days after mailing, shall be deemed the date on which such notice is
given and effective.
10. WINK TRADEMARKS
All rights, title and interest in and to the Wink Software or other
rights, of whatever nature, related thereto shall remain the property of
Wink. Further, Programmer acknowledges and agrees that all Wink's names,
logos, marks, copyright notices or designations utilized by Wink in
connection with the service are the sole and exclusive property of Wink,
and no rights or ownership are intended to be or shall be transferred to
Programmer.
11. REPRESENTATION
11.1 Wink represents and warrants to Programmer that (i) it is a corporation
duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and
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<PAGE> 9
authority to enter into this Agreement and to fully perform its
obligations hereunder (iii) Wink is under no contractual or other legal
obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
11.2 Programmer represents and warrants to Wink that (i) Programmer is a
corporation duly organized and validly existing under the laws of the
State of Delaware; (ii) Programmer has the requisite power and authority
to enter in this Agreement and to fully perform its obligations
hereunder; and (iii) Programmer is under no contractual or other legal
obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
12. CONFIDENTIALITY
Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to
others, any of the other party's Confidential Information (as defined
below). Without limiting the generality of the foregoing, each party
will (i) restrict the disclosure of the other party's Confidential
Information to those of its employees who require such information for
purposes of performing its obligations hereunder, (ii) inform each such
employee of the confidential nature of the information disclosed, (iii)
prevent the use or disclosure by its employees of such Confidential
Information, except as provided herein, and (iv) promptly notify the
other party of any use or disclosure of the Confidential Information,
whether intentional or not, which violates the provisions of this
Paragraph 12. For purposes of this Agreement, the term "Confidential
Information" means all technical, business and other information
disclosed by one party to the other that derives economic value, actual
or potential, from not being generally known to other persons,
including, without limitation, technical and non-technical data,
devices, methods, techniques, drawings, processes, computer programs,
algorithms, methods of operation, financial data, financial plans,
product plans, and lists of actual or potential customers or suppliers.
Confidential Information does not include information which does not
constitute a trade secret under applicable law after the second
anniversary date of the expiration of this Agreement. The parties agree
to keep the terms of this Agreement confidential, but acknowledge that
certain disclosures may be required by law. Programmer understands and
acknowledges that Wink may provide copies of Exhibits A and D to System
Operators.
13. TERMINATION
13.1 Except as otherwise provided herein, neither Programmer nor Wink may
terminate this Agreement except upon thirty (30) days prior written
notice and then only if the other has made a misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within thirty (30) days of such notice.
13.2 Notwithstanding the above, Wink will have the right to terminate this
Agreement or all or any licenses granted herein if Programmer fails to
comply with any of its material obligations, including but not limited
to timely payment of license fees and other fees due Wink, under this
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Agreement. Should Wink elect to exercise this right to terminate for
nonperformance, it must be done in writing specifically setting forth
those items of nonperformance. Programmer will then have thirty (30)
days from receipt of notification to remedy the items of nonperformance.
Should Programmer fail to correct these items of nonperformance, then
Wink may terminate this agreement and any license granted herein. Wink's
termination of this Agreement shall be without prejudice to any other
remedies Wink may have, including, without limitation, all remedies with
respect to the unperformed balance of this Agreement; provided, however,
that if Programmer has not made payment of the fees or charges due
hereunder and such nonpayment continues after thirty (30) days prior
written notice by Wink, then Wink may terminate this Agreement or any
license granted herein.
13.3 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the
Wink Software will cease and Programmer will immediately and on
reasonable terms (i) grant to Wink access to its business premises and
the Wink Software and allow Wink to remove the Wink Software and any
equipment provided or financed by Wink (which removal shall be done with
as little disturbance as possible to Programmer's business operations),
(ii) purge all copies of all Wink Software from all computer processors
or storage media on which Programmer has installed or permitted others
to install such Wink Software, and (iii) when requested by Wink, certify
to Wink in writing, signed by an officer of Programmer, that all copies
of the Wink Software have been returned to Wink or destroyed and that no
copy of any Wink Software remains in Programmer's possession or under
its control.
13.4 Programmer has the right to suspend the airing of Interactive Wink
Programs if the transmission interferes with the airing of Programmer's
video programming, as determined in its sole discretion or if Wink fails
to provide weekly reports regarding usage of Programmer's Interactive
Wink Programs, and may continue such suspension until Wink has resolved
such problems to Programmer's satisfaction.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys to
enforce the terms of this Agreement, the prevailing party in any lawsuit shall
be entitled to an award of reasonable attorneys' fees and court costs.
a) This Agreement may not be assigned without prior written mutual consent
of Programmer and Wink. Consent shall not be required for assignment to
a corporate affiliate, assuming that the programming services providing
Interactive Wink Programs remain as defined in Exhibit A.
b) This Agreement may be amended only by an instrument in writing, executed
by Programmer and Wink.
c) This Agreement will be governed in all respects by the laws of the State
of California.
d) This Agreement represents the entire agreement between the parties and
supersedes and replaces all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof
between Programmer and Wink.
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. ESPN INC.
By: /s/ Maggie Wilderotter By: /s/ Richard K. Glover
------------------------------ ----------------------------------
Name: Maggie Wilderotter Name: Richard K. Glover
---------------------------- --------------------------------
Title: President & CEO Title: Senior Vice President
--------------------------- -------------------------------
-11-
<PAGE> 12
EXHIBIT A: PROGRAMMING SERVICES
DESCRIPTION OF PROGRAMMING SERVICES:
<TABLE>
<CAPTION>
START OF WINK VIDEO VBI LINE VIRTUAL INSERTION
NAME PROGRAMMING (A/D) LOCATION CH? POINT
<S> <C> <C> <C> <C> <C>
First Programming Service
ESPN February 1, 1998 Analog TBD TBD Bristol
Second Programming Service*
ESPN2 February 1, 1998 Analog TBD TBD Bristol
Other Programming Service*
ESPNEWS TBD TBD TBD TBD Bristol
Classic Sports TBD TBD TBD TBD Bristol
</TABLE>
* Programmer is under no obligation to include programming services other than
ESPN in this Agreement
Contact Information:
<TABLE>
<CAPTION>
ISSUE ADDRESS CONTACT(S) PHONE FAX/E-MAIL
<S> <C> <C> <C> <C>
Actual Contact Info:
</TABLE>
Operations (site visits, VBI insertion, etc.)
Chuck Pagano, VP of Ops, Eng. And Proj Dev
860-585-2286
Programming (development and scheduling of Interactive Wink Programs, reports,
etc.)
Jessamy Tang
212.916.9244
-12-
<PAGE> 13
EXHIBIT B: WINK RESPONSE CENTER SERVICES
<TABLE>
<CAPTION>
TRANSACTIONS/MONTH PRICE/TRANSACTION
PURCHASE TRANSACTION FEES [
(NAME, ADDRESS, CREDIT CARD)
<S> <C>
1-5,000
5,001 - 25,000
25,001 - 100,000
100,001 - 250,000
250,001 - 500,000
500,001 +
Request Transaction Fees
(Name, address)
1-5,000
5,001 - 25,000
25,001 - 100,000 *
100,001 - 250,000
250,001 - 500,000
500,001 +
Polls by ZIP - report only
1-100,000
100,001 +
Polls by System - report only
1-250,000
250,001 + ]
</TABLE>
1. Minimum monthly charges per application include UIC(Universal ICAP
code)registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest
price applies to all transactions for the month.
-13-
<PAGE> 14
EXHIBIT B CONTINUED...
PURCHASE AND REQUEST TRANSACTION FEES INCLUDE:
1. Daily name & address lists delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
POLL BY SYSTEM FEES
The fixed charge includes UIC and application registration, and a standard
reporting that summarizes all responses by type by city. If the application asks
the viewer for telephone prefix or zip code, the summary includes those totals.
EDI
<TABLE>
<S> <C> <C>
- - - Standard interface set-up fee [ * ]
- - - Non-standard Interface Quoted
- - - Interface License/Maintenance fee [ * ]
SET UP FEES-RESPONSE SERVICES
- - - Standard Cable System Billing interface [ * ]
--or--
[ * ]
- - - Non-standard billing interface
REPORT GENERATION FEES [ * ]
RESPONSE DATA CENTER PRODUCTS
- - - Purchase confirmation mailer
- - - List of responders who do not respond to
- - - purchase confirmation mailers [ * ]
- - - Branded envelope
- - - Advertiser/Programmer Purchase Points Club
</TABLE>
If at any time during the term of this agreement, any other cable programmer
receives any more favorable rates than those listed above, such more favorable
rates shall supersede the applicable rate(s) specified above.
-14-
<PAGE> 15
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 1
This pricing is available to the First and Second Programming Services, the ABC
TV Network and the Disney Channel, and is subject to the terms of the Agreement.
On-going annual fees are paid one twelfth each month, and are due the first of
the month.
<TABLE>
<CAPTION>
ON-GOING ANNUAL FIRST YRS 2-5 SAVINGS/
OR ONE-TIME RETAIL YEAR PRICE/ NETWORK
COSTS PRICE PRICE NETWORK (5 YEARS)
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [
Server Module On-going
Tech Support On-going
SUBTOTAL ON-GOING
Server hardware One-time
Data Insert. Unit(1) One-time
Set-top box, misc. One *
SUBTOTAL ONE-TIME
Installation and integr. One-time
Studio site license (5 seats) One-time
Svr Studio license (5 seats) One-time
Training (3x2days) (2) One-time
SUBTOTAL ONE-TIME
TOTAL BOTH ]
</TABLE>
* For ESPN and ESPN2, section 3.2 shall apply.
(1) One required per network. Thus, if ESPN desires to enable both ESPN and
ESPN2, two data insertion units will be required. Total hardware costs would
then be [ * ].
(2) This base training package provides training on the Broadcast Server, Wink
Studio and Server Studio, and will enable Programmer's staff to create, schedule
and air Interactive Wink Programs as contemplated by this Agreement. Wink will
also provide reasonable additional training to those same staff as may be
required and agreed upon between the parties.
Wink reserves the right to increase license fees annually after the first 24
months of the contract period by the percentage increase in the consumer price
index (CPI) for goods and services for the prior 12 months. The above pricing
does not cover detailed integration with Programmer's ad insertion system.
OPTIONAL SERVICES
Ad insertion interface license [ * ]
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses for optional services are billed separately at cost.
(Note 3) During the initial term, Programmer may elect to compensate Wink for
the ad insertion license fees out of actual revenues generated from the sale of
Wink advertisements or sponsorships, as described in section 4.5.
-15-
<PAGE> 16
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE WINK PROGRAMS
Programmer: ESPN Inc.
Programming Services: ESPN1 and ESPN2
This agreement (the "IWP Carriage Agreement") sets forth the terms and
conditions for the national distribution of Wink ITV Applications ("Interactive
Wink Programs") to any multichannel video operator in the United States or
Canada with whom Programmer already has an agreement for carriage of
Programmer's video programming ("System Operator").
1. BACKGROUND
Programmer has created one or more Interactive Wink Programs which are compliant
with the Wink Communications, Inc. (Wink") interactive communications
application protocol. The Interactive Wink Programs are transmitted by
Programmer using either the vertical blanking interval ("VBI") of the
corresponding video signal, or using MPEG private data streams provided
concurrently with the corresponding video signal(s).
System Operator distributes one or more of Programmer's signals through one or
more of the following: cable, satellite and MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this IWP Carriage Agreement shall commence on the date of
Programmers execution of this IWP Carriage Agreement. The parties acknowledge
that Programmer has an agreement with Wink for distribution of Interactive Wink
Programs (the "Wink-Programmer Agreement") for one year after the first
transmission of Interactive Wink Programs by Programmer (the "Initial Term").
If, as is its right in its sole discretion, Programmer exercises its option to
extend the Wink-Programmer Agreement, that renewal will be for a period of not
less than two additional years ("Initial Renewal"). The terms and conditions of
this IWP Carriage Agreement shall govern during the Initial Term and, if
applicable, the Initial Renewal, unless Programmer and Wink terminate their
Charter Programmer Affiliation Agreement earlier in accordance with the terms of
that agreement.
3. INTEGRITY OF INTERACTIVE WINK PROGRAMS
Programmer will ensure that the Interactive Wink Programs meet Wink's criteria
for Wink compliant applications (See Attachment 1). Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution.
-16-
<PAGE> 17
Programmer understands that failure to meet the above criteria could result in
System Operator suspending the distribution of one or more Interactive Wink
Programs until such time as all Interactive Wink Programs are certified by Wink
to be in compliance.
4. DISTRIBUTION
Programmer hereby grants System Operator a non-exclusive license to distribute
the Interactive Wink Programs delivered in the VBI or MPEG of Programmer's video
signal. Programmer agrees that each Interactive Program shall have been either
successfully tested by Programmer or certified as compliant by Wink prior to the
Delivery to System Operator for distribution, and shall bear any associated
costs of such testing.
Programmer agrees not to charge System Operator fees associated with Interactive
Wink Programs for the term of this Agreement. Likewise, System Operator agrees
that no fees or charges will be due from carriage or retransmission of the
Interactive Wink Programs as provided for hereunder.
Programmer will provide Wink written notice at least 30 days prior to
discontinuing national transmission of all Interactive Wink Programs. Wink has
agreed to provide such notices to System Operator, bur System Operator agrees
that Programmer has no liability or other obligations to System Operator, should
Wink fail to do so.
It is a condition of System Operator's right to carry the Interactive Wink
Programs that System Operator shall distribute Programmer's Interactive Wink
Programs without modification, and that System Operator may not modify or
enhance any VBI lines described in Exhibit A. Programmer agrees that System
Operator may copy the Interactive Wink Programs for simultaneous transmission in
different encoding formats other than what Programmer currently uses including
but not limited to, other VBI formats, out of band channels, and MPEG2 private
data streams; provided such Interactive Wink Programs are presented together
with the original corresponding video to System Operator's subscribers, and that
such copying is done to enable System Operator's subscribers to properly receive
and display the Interactive Wink Programs on their set top box or television
set.
System Operator can, if permitted in Exhibit A, locally insert Interactive Wink
Programs as instructed by Programmer. System Operator is solely responsible for
any costs associated with such local insertion. Programmer will notify System
Operator of changes to any such permissions through amendments to Exhibit A
provided at least 30 days prior to the effective date of such requirements.
System Operator may suspend transmission of the Interactive Program during the
insertion by System Operator of local advertising avails as authorized in any
separate agreements between Programmer and System Operator.
-17-
<PAGE> 18
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Wink Programs. Programmer also agrees to use Wink Communication's standard
scripts and guidelines for response applications.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive Wink
Programs and may use Programmer's name, logo, and screen shots from the
Interactive Wink Programs in such marketing materials, provided that such
materials are submitted to Programmer for review and written approval prior to
distribution. Programmer agrees to use reasonable efforts to respond to such
requests for approval in a timely fashion.
7. SCOPE
This Agreement does not interfere with or negate other Agreements between
Programmer and System Operator. This Agreement represents all of the terms and
conditions for Programmer providing Interactive Wink Programs. This Agreement
may be updated from time to time only by express written consent of Programmer.
PROGRAMMER
By: /s/ Richard K. Glover
------------------------------
Name: Richard K. Glover
------------------------------
Title: Senior Vice President
------------------------------
Date: 1/8/97
------------------------------
-18-
<PAGE> 19
EXHIBIT D, ATTACHMENT 1: CRITERIA FOR WINK COMPLIANT APPLICATION
- - - All applications must be registered and contain a unique universal ICAP
code (UIC) prior to being broadcast.
- - - Registered applications have passed a standard set of tests which
validate:
- that the application can be delivered through the VBI, will
arrive as appropriate and can be decoded in the Wink engine.
- that the application does not generate error messages.
- that the application receives scheduled updates, if applicable.
- that the application passes minimum acceptable latency
standards.
- that the application does not cause System Operator technical or
operational problems.
- that the application, if two-way, generates the appropriate
routing address and usage data.
-19-
<PAGE> 20
EXHIBIT F: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 2
Subject to the other terms and conditions of this agreement, this pricing is
available to all Programming Services owned and operated by Programmer and to
network affiliates owned and operated by ABC, and is subject to the terms of the
Agreement. On-going annual fees are paid one twelfth each month, and are due the
first of the month.
<TABLE>
<CAPTION>
ON-GOING ANNUAL FIRST YRS 2-5 SAVINGS/
OR ONE-TIME RETAIL YEAR PRICE/ NETWORK
COSTS PRICE PRICE NETWORK (5 YEARS)
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [
Server Module On-going
Tech Support On-going
SUBTOTAL ON-GOING
Server hardware One-time
Data Insert. Unit(1) One-time
Set-top box, misc. One
SUBTOTAL ONE-TIME *
Installation and integration One-time
Studio site license (5 seats) One-time
Server Studio site One-time
license (5 seats)
Studio/Server training One-time
(3x2days)
SUBTOTAL ONE-TIME
TOTAL BOTH ]
</TABLE>
(1) One required per network. More than one VBI line per network requires an
additional license from Norpak in the amount of [ * ]/VBI line.
WINK reserves the right to increase license fees annually after the first 12
months of the contract period by the percentage increase in the consumer price
index (CPI) for goods and services for the prior 12 months. The above pricing
for installation and integration covers all work necessary to enable scheduling
and transmission of program enhancements based on Wink Studio templates. It does
not cover detailed integration with Programmer's ad insertion system for the
purpose of enabling enhancements to spot advertising.
OPTIONAL SERVICES
Ad insertion interface [ * ]
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses for optional services are billed separately at cost.
-20-
<PAGE> 21
EXHIBIT G: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 3
This Pricing is available to all ABC network affiliates, subject to the terms of
the Agreement. On-going annual fees are paid one twelfth each month, and are due
the first of the month.
<TABLE>
<CAPTION>
TOTAL
ON-GOING 1997 FIRST YRS 2-5 SAVINGS/
OR ONE-TIME RETAIL YEAR PRICE/ NETWORK
COSTS PRICE PRICE NETWORK (5 YEARS)
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [
Server Module On-going
Tech Support On-going
SUBTOTAL ON-GOING
Server hardware One-time
Data Insert. Unit(1) One-time
Set-top, misc. One-time *
SUBTOTAL ONE-TIME
Installation and integration One-time
Studio site license (5 seats) One-time
Server Studio site One-time
license (5 seats)
Studio/Server One-time
training (3x2days)
SUBTOTAL ONE-TIME
TOTAL BOTH ]
</TABLE>
(1) One required per network. More than one VBI line per network requires an
additional license from Norpak in the amount of [ * ]/VBI line.
Wink reserves the right to increase license fees annually after the first 12
months of the contract period by the percentage increase in the consumer price
index (CPI) for goods and services for the prior 12 months. The above pricing
for installation and integration covers all work necessary to enable scheduling
and transmission of program enhancements based on Wink Studio templates. It does
not cover detailed Integration with Programmer's ad insertion system for the
purpose of enabling enhancements to spot advertising.
OPTIONAL SERVICES
Ad insertion interface [ * ]
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses for optional services are billed
separately at cost.
-21-
<PAGE> 1
EXHIBIT 10.7
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 6th day of October, 1997, by and between Wink
Communications, Inc., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and Court TV, a New York general
partnership ("Programmer"), whose address is 600 Third Avenue, New York, NY
10016.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use Wink
ITV Studio, Wink ITV Broadcast Server, and Wink provided Server Modules
version 1.0 and 1.x updates (hereinafter collectively referred to as
"Wink Software") to deliver interactive program(s) which utilize the
vertical blanking interval ("VBI") or an MPEG private data stream
provided concurrently with the corresponding video signal and are
compliant with the Wink interactive communications application protocol
("Interactive Programs") to all Programmer viewers in the continental
United States, Alaska, Hawaii, the US territories in the Caribbean and
Canada.
1.2 This License is not transferable, nor may any rights hereunder be
transferred, assigned or sub-licensed in whole or in part without Wink's
prior written consent. In the event of a change in ownership or
ownership structure of Programmer, right to license will be assigned to
new ownership entity, provided programming remains substantially the
same.
1.3 Programmer can only use the Wink software to provide Interactive
Programs with the video programming service listed in Exhibit A.
Programmer must notify Wink in writing at least 30 days prior to
commencing transmission of Interactive Programs with a video programming
service. Programmer agrees to adhere to the technical specifications for
the insertion of Interactive Programs provided in Exhibit A. Exhibit A
may be amended from time to time by Programmer upon 30 days prior
written notice, except that insertion points outside of Programmer's
facilities, including but not limited to local insertion by
participating cable operators, requires the mutual consent of the
parties.
1.4 During the term of this agreement, Wink agrees to grant Programmer a
right of first refusal to license the Wink Software for other video
programming services than those listed in Exhibit A, or for territories
other than those listed in paragraph 1.1 above. Such license would be
granted on Wink's then prevailing standard commercial terms.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution of
this Agreement and terminate three (3) years thereafter.
-1-
<PAGE> 2
2.2 Programmer can elect to terminate with 30 days written notice if any of
the following occur: (i) the commencing by Wink of a voluntary case
under applicable bankruptcy laws; (ii) the adjudication that Wink is
bankrupt or insolvent; or (iii) the filing by Wink of a petition seeking
to take advantage of any other law providing for the relief of debtors.
2.3 Both parties have the right to terminate the license agreement after one
year of national broadcasting or 15 months of local insertion of
Interactive Programs [deemed to commence as of October 8, 1997],
whichever comes first. The terminating party must give written notice of
their intent to terminate no less than 30 days prior to the termination
date, and can only exercise this right in the 30 days prior to the one
year anniversary of national broadcasting or 15 months of local
insertion of Interactive Programs, whichever comes first.
3. INTEGRATION AND PROGRAMMING
3.1 Wink will distribute the Interactive Programs defined in Exhibit A
through local insertion at participating System Operator's (as defined
in Exhibit D) facilities at the System Operator's discretion until six
months from the effective date of this agreement or until a digital
uplink capability is made available by Wink and accepted by Programmer,
whichever is later. Upon the release of Wink Software enabling digital
uplink of Interactive Programs, and Programmer's acceptance of such
software, which shall not be unreasonably withheld, Programmer will
distribute said programs through it's national uplink or broadcast
facilities. Regardless of the insertion point for the Interactive
Programs, Programmer agrees to provide the Required Interactive Programs
in accordance with Exhibit A.
3.2 Prior to release of digital uplink capability, Wink agrees to encourage
System Operators with whom Programmer already has an agreement for
carriage to insert Programmer's Interactive Programs into the local VBI
of Programmer video programming. Wink makes no guarantee that System
Operators will agree to local insertion or retransmission of
Programmer's Interactive Programs.
3.3 Programmer and Wink agree to collaborate to enable the installation and
integration of the Wink Broadcast Server into Programmer's facilities
within 60 days of release of software upgrade cited above, and to ensure
the reliable transmission of the Interactive Programs. Wink expects that
the Wink Broadcast Server revision supporting digital uplinking will be
delivered and installed within 6 months of the effective date of
agreement.
[Wink] is responsible for providing all equipment necessary to run the
Wink Software on Operator's premises, and to enable insertion of
Interactive Programs into the appropriate video signals. Exhibit E
provides a preliminary list of such equipment, and is subject to a final
site visit by Wink's Operations department. Programmer will be presented
with a final list of equipment no later than 14 days after a site visit
by Wink's technical staff.
-2-
<PAGE> 3
3.4 Wink agrees to provide free weekly reporting to Programmer of all
response traffic-generated by Programmer viewers and collected by Wink's
Data Center. Programmer accepts Wink's terms for all other response
traffic and reporting, as outlined in Exhibit B.
3.5 Included in the license fees outlined in Exhibit C are production
consulting and training service. Wink staff will train Programmer's
personnel on the operation of all tools necessary to operate and create
Programmer's interactive applications.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis in the manner described below.
4.2 At the end of each quarter CourtTV will report to Wink on incremental
gross revenue generated by CourtTV from Wink program and ad
enhancements, and will pay Wink [*] of such gross revenues until the
cumulative accrued license and installation fees are paid. Unrecovered
accrued license and installation fees are added to the next quarter's
accrued license fees. Incremental gross revenues generated by Wink
include ad and sponsorship premiums, gross margins on Wink transactions
and other activity directly attributable to Wink. The method described
in this paragraph is the only way Wink can recover accrued license fees.
4.3 Programmer agrees to provide the Interactive Programs to any
multichannel video operator in the United States or Canada with whom
Programmer already has an agreement for carriage of Programmer's video
programming ("System Operators") under the terms described in Exhibit D,
and agrees that Wink may provide a copy of Exhibits A and D to any
System Operator as evidence of Programmer's agreement to supply the
Interactive Programs under such terms.
4.4 Programmer may choose to utilize other products and services of Wink
from time to time under this Agreement. These services will be extended
by Wink to Programmer at the then prevailing retail rate.
5. PAYMENT TERMS
5.1 Programmer will remit quarterly revenue report along with payment of
appropriate Wink revenue share within 45 days of the close of the
quarter. Wink will send Programmer a statement of license fees
outstanding on a quarterly basis.
- - --------
* Confidential treatment has been requested with respect to
certain portions of this exhibit pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed with the
Commission.
-3-
<PAGE> 4
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a joint press release announcing this
agreement on or before October 8, 1997, unless the parties mutually
agree to delay the press release. Wink will provide Programmer with a
draft of this release by October 6, 1997.
6.2 Wink agrees to provide notice to Programmer of the date by which
individual System(s) shall have enabled their respective subscribers to
receive interactive programming using Wink Software. Wink shall provide
such notice in advance to the extent reasonably practicable, but in no
event shall such notice be received later than the commencement date by
which any such System shall have agreed to first enable its subscribers
to receive the interactive programming.
6.3 Wink agrees to use reasonable efforts to promote and feature
Programmer's Interactive Programs in Wink's cable marketing efforts in
which it lists content or content providers, including during meetings
with cable operators and the press, during industry trade shows and in
printed and other marketing communications materials. This commitment
does not prevent Wink from creating marketing materials, events or
exhibits that highlight particular programming categories or
partnerships. Wink will also use reasonable efforts to assist Programmer
in achieving it's marketing objectives in materials prepared by third
parties, such as cable equipment manufacturers and cable operators.
Programmer agrees to promote it's participation as a charter Wink
programmer to cable operators, and to serve as a press reference for
Wink during the effective term of the agreement.
6.4 During the period in which Progammer's services are not distributed
through Programmer's national uplink, Wink agrees to promote
Programmer's locally inserted Interactive Programs to System Operators
with whom Programmer has existing distribution agreements. These
discussions will take place upon execution of affiliation agreements
between Wink and said System Operators. Programmer also agrees to
provide Programmer's data for such local insertion through Wink's
national data network, as described in Exhibit A. Local insertion of
Programmer's Interactive Programs will be extended at the discretion of
the System Operator.
6.5 Programmer agrees to cooperate with Wink and System Operators in
promoting Programmer's Interactive Programs. Wink and System Operators
may prepare marketing materials relating to the Interactive Programs and
may use Programmer's name, logo and screen shots (collectively,
"Programmer's Marks") from the Interactive Programs, provided that such
materials are submitted to Programmer for review and approval prior to
distribution. Programmer's approval of such materials shall not be
unreasonably withheld. Wink hereby acknowledges and agrees that, as
between Wink and Programmer, Programmer is the sole owner of all right,
title and interest in and to the Programmer's Marks. All uses of the
Programmer's Marks shall inure to the benefit of Programmer. Upon any
expiration or termination of this Agreement, Wink shall delete and
discontinue all use of the Programmer's Marks. At no time during or
after the term of this Agreement shall Wink challenge or assist others
to challenge the Programmer's Marks or the registration thereof or
attempt to assist another in the attempt to register any trademarks,
marks or similar rights for marks the same as or confusingly similar to
the Programmer's Marks.
-4-
<PAGE> 5
6.6 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in collaboration with Programmer.
Programmer shall provide Wink with reasonable assistance at no cost to
Programmer in conducting such research with respect to Programmer's
viewers. Programmer agrees that Wink will have access to all such
research regarding the deployment, launch, and usage of Wink service by
Programmer viewers. Wink agrees to provide copies of final reports from
such research activity to Programmer. Wink will also provide any raw
data specific to Programmer's Interactive Programs upon request.
6.7 Programmer understands and accepts that Wink will be providing reports
on viewer responses to the Interactive Programs to System Operator(s)
for responses that originate from System Operator's subscribers, and to
advertisers and other parties for responses that originate from
Interactive Programs paid for or sponsored by such parties. Wink agrees
that reports providing specific data regarding viewer responses to
Programmer's Interactive Programs, including data on Wink viewer
responses to advertising on Programmer's Programming Services, will not
be made available to other broadcast or cable networks, except in
aggregated form that does not identify Programmer or specific Programmer
viewer data.
7. WARRANTY
Wink hereby represents and warrants to Programmer that the Wink Software
will operate and perform in accordance with all published specifications
with respect thereto and that the Wink Software is capable of enabling
the applications described in Exhibit A.
8. INDEMNIFICATION
Wink shall indemnify, defend and hold harmless Programmer, its parents,
subsidiaries, and affiliates and their respective officers, directors,
employees and agents from and against any and all damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys
fees and amounts paid in settlement) they may suffer or incur which
arises out of or as a result of any, claim, demand, action, suit or
proceeding in which it is alleged that the Wink Software or any part
thereof violates or infringes any patent or copyright or other
intellectual property right of any third party or constitutes a
misappropriation of any third party's trade secrets.
9. NOTICES
All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express deliver, addressed, to the addresses provided in the first
paragraph of this Agreement, and to the attention of:
If to Wink:
Vice President, Content
-5-
<PAGE> 6
If to Programmer:
Senior Vice President, Business Development
The date of such facsimile transmission, telegraphing or personal
delivery or the next day if by express delivery, or the date three (3)
days after mailing, shall be deemed the date on which such notice is
given and effective.
10. WINK TRADEMARKS
All rights, title and interest in and to the Wink Software or other
rights, of whatever nature, related thereto shall remain the property of
Wink. Further, Programmer acknowledges and agrees that all names, logos,
marks, copyright notices or designations utilized by Wink in connection
with the service are the sole and exclusive property of Wink, and no
rights or ownership are intended to be or shall be transferred to
Programmer.
11. REPRESENTATION
11.1 Wink represents and warrants to Programmer that (i) it is a corporation
duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority to enter
into this Agreement and to fully perform its obligations hereunder (iii)
Wink is under no contractual or other legal obligation which in any way
interferes with its ability to fully, promptly and completely perform
hereunder.
11.2 Programmer represents and warrants to Wink that (i) Programmer is a
general partner ship duly organized and validly existing under the laws
of the State of New York; (ii) Programmer has the requisite power and
authority to enter in this Agreement and to fully perform its
obligations hereunder; and (iii) Programmer is under no contractual or
other legal obligation which in any way interferes with its ability to
fully, promptly and completely perform hereunder.
12. CONFIDENTIALITY
Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to
others, any of the other party's Confidential Information (as defined
below). Without limiting the generality of the foregoing, each party
will (i) restrict the disclosure of the other party's Confidential
Information to those of its employees who require such information for
purposes of performing its obligations hereunder, (ii) inform each such
employee of the confidential nature of the information disclosed, (iii)
prevent the use or disclosure by its employees of such Confidential
Information, except as provided herein, and (iv) promptly notify the
other party of any use or disclosure of the Confidential Information,
whether intentional or not, which violates the provisions of this
Paragraph 12. For purposes of this Agreement, the term "Confidential
Information" means all technical, business and other information
disclosed by one party to the other that derives economic value, actual
or potential, from not being generally known to other persons,
including, without limitation, technical and non-technical data,
devices, methods, techniques, drawings, processes, computer programs,
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<PAGE> 7
algorithms, methods of operation, financial data, financial plans,
product plans, and lists of actual or potential customers or suppliers.
Confidential Information does not include information which does not
constitute a trade secret under applicable law after the second
anniversary date of the expiration of this Agreement. The parties agree
to keep the terms of this Agreement confidential, but acknowledge that
certain disclosures may be required by law. Programmer understands and
acknowledges that Wink may provide copies of Exhibits A and D to System
Operators.
13. TERMINATION
13.1 Except as otherwise provided herein, neither Programmer nor Wink may
terminate this Agreement except upon sixty (60) days prior written
notice and then only if the other has made a misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within sixty (60) days of such notice.
13.2 Notwithstanding the above, Wink will have the right to terminate this
Agreement or all or any licenses granted herein if Programmer fails to
comply with any of its material obligations under this Agreement. Should
Wink elect to exercise this right to terminate for nonperformance, it
must be done in writing specifically setting forth those items of
nonperformance. Programmer will then have thirty (30) days from receipt
of notification to remedy the items of nonperformance. Should Programmer
fail to correct these items of nonperformance, then Wink may terminate
this agreement and any license granted herein. Wink's termination of
this Agreement shall be without prejudice to any other remedies Wink may
have, including, without limitation, all remedies with respect to the
unperformed balance of this Agreement; provided, however, that if
Programmer has not made payment of the fees or charges due hereunder and
such nonpayment continues after thirty (30) days prior written notice by
Wink, then Wink may terminate this Agreement or any license granted
herein. Not withstanding the foregoing, the thirty (30) day payment term
does not apply to license and installation fees accrued in the manner
described in paragraph 4.2 herein.
13.3 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the
Wink Software will cease and Programmer will immediately (i) grant to
Wink access to its business premises and the Wink Software and allow
Wink to remove the Wink Software and Wink owned equipment, (ii) purge
all copies of all Wink Software from all computer processors or storage
media on which Programmer has installed or permitted others to install
such Wink Software, and (iii) when requested by Wink, certify to Wink in
writing, signed by an officer of Programmer, that all copies of the Wink
Software have been returned to Wink or destroyed and that no copy of any
Wink Software remains in Programmer's possession or under its control.
13.4 Programmer has the right to suspend the airing of Interactive Programs
if the transmission interferes with the airing of Programmer's video
programming or Wink fails to provide weekly
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<PAGE> 8
reports regarding usage of Programmer's Interactive Programs, and may
continue such suspension until Wink has resolved such problems to
Programmer's satisfaction.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys to
enforce the terms of this Agreement, the prevailing party in any lawsuit shall
be entitled to an award of reasonable attorneys' fees and court costs.
a) This Agreement may not be assigned without prior written mutual consent
of Programmer and Wink.
b) This Agreement may be amended only by an instrument in writing, executed
by Programmer and Wink.
c) This Agreement Will be governed in all respects by the laws of the State
of California.
d) This Agreement represents the entire agreement between the parties and
supersedes and replaces all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof
between Programmer and Wink.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. COURT TV
By: /s/ ALLAN THYGESEN By: /s/ GLENN MOFF
----------------------------- --------------------------------
Name: Allan Thygesen Name: Glenn Moff
---------------------------- -------------------------
Title: Vice President Title: 10/6/97
-------------------------- ------------------------
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<PAGE> 9
EXHIBIT A: PROGRAMMING SERVICES
Description of Programming Services:
<TABLE>
<CAPTION>
START OF WINK VIDEO ICAP VIRTUAL INSERTION
NAME PROGRAMMING (A/D) LOCATION CH? POINT
- - ---- ----------- --------------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Analog (local) TBD No Local
CourtTV On-going digital (nat'l) MPEG PID No National
</TABLE>
Specific Description of Required Interactive Programs:
- - - One video overlay applications displayed on-demand atop Court TV's video
signal, and providing viewers access to enhanced information regarding
trials and other programming without leaving Court TV
- - - Applications will be available on 24 hours a day, 7 days a week
- - - Information will be updated at the editorial discretion of Programmer.
Programmer intends to update information each business day, provided new
information about trials is available.
- - - Court TV will incorporate Wink tags on their World Wide Web site. This data
will be incorporated into an application by Wink and distributed to the
local broadcast servers of System Operators who have agreed to locally
distribute Court TV's interactive programs.
- - - It is expected that the transmission of the Required Interactive Programs
will require band width equivalent to 1 VBI line = 10 kbit/s.
- - - Wink will assist Court TV in the development of additional interactive
programs currently under consideration, such as CLE programs and Legal Cafe
application and breaking news about trials CourtTV is not airing
Contact Information:
<TABLE>
<CAPTION>
ISSUE ADDRESS CONTACT(S) PHONE/FAX/E-MAIL
- - ----- ------- ---------- ----------------
<S> <C> <C> <C>
Actual Contact Info:
TBD
</TABLE>
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<PAGE> 10
EXHIBIT B: WINK RESPONSE CENTER SERVICES
Polls by Zip Code - Report Only
1-100,000 transactions/mo. [
100,000 transactions/mo.
*
Polls by System - Report Only
1-250,000 transactions/mo.
251,000 transactions/mo. ]
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest
price applies to all transactions for the month.
PURCHASE AND REQUEST TRANSACTION FEES INCLUDE/EXCLUDE;
1. Daily name & address lists delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
4. Viewer credit card information if it is "on file" with the WRS. If not,
for [*], Wink will mail a "purchase confirmation" to the viewer to add
the credit card, and provide a list of viewers who did not supply their
credit card.
5. Interface to standard EDI VAN for [*].
FULFILLMENT EDI/API
- - - Standard interface set-up fee
- - - Non-standard Interface
- - - Interface License/Maintenance fee
SET UP FEES-RESPONSE SERVICES
- - - Advertiser [
- - - Content Provider
REPORT GENERATION FEES
RESPONSE DATA CENTER PRODUCTS *
- - - Purchase confirmation mailer
- - - List of responders who do not respond to
- - - purchase confirmation mailers
- - - Branded envelope
- - - Advertiser/Programmer Purchase Points Club ]
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<PAGE> 11
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING
This charter pricing is predicated upon Programmer continuing to participate in
the Wink trials and roll outs through the provisioning of data for the
Interactive Programs described in Exhibit A, and on Programmer airing the first
Interactive Programs through Programmer's national signal within 30 days of
acceptance of the Wink Broadcast Server.
All on-going fees accrue monthly. The installation and integration fees accrue
upon Programmer's acceptance of the successful installation of the Broadcast
Server featuring digital uplinking capability, and transmission and receipt by
Wink testers of one nationally inserted test application defined by Wink ("First
Air Date"). Such acceptance shall not be unreasonably withheld. The Broadcast
Server license fees commence on the first of the month following the First Air
Date, and the WebCore license fees and technical support fees commence on the
one year anniversary of the First Air Date.
<TABLE>
<CAPTION>
ON-GOING FIRST YEAR FIRST YEAR YR. 2 & 3 TOTAL 3-YR
OR ONE-TIME PRICE (PER PRICE PRICE CHARTER
COSTS MONTH) (TOTAL) (PER MONTH) PRICE
----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [
WebCore Module On-going
Tech Support On-going
SUBTOTAL ON-GOING
Installation and integration One-time *
Studio site license (5 seats) One-time
Studio/WebCore training (3x2days)One-time
SUBTOTAL ONE-TIME
TOTAL BOTH ]
</TABLE>
Wink reserves the right to increase license fees annually after the first 12
months of the contract period by the percentage increase in the consumer price
index for goods and services for the prior 12 months.
The above pricing for installation and integration covers all work necessary to
enable Programmer's initial Interactive Programs, as defined in Exhibit A. It
does not cover detailed integration with Programmer's ad insertion system.
OPTIONAL SERVICES
Custom interface work (ad insertion and traffic systems, etc.) [
Phone training and consulting beyond standard package *
Application development
Travel expenses are billed separately at cost ]
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<PAGE> 12
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE PROGRAMS
<TABLE>
<S> <C>
Programmer: Court TV
Programming Service: Court TV
</TABLE>
This Agreement sets forth the terms and conditions for the national distribution
of Wink ITV Applications ("Interactive Programs") to any multichannel video
operator in the United States or Canada with whom Programmer already has an
agreement for carriage of Programmer's video programming ("System Operator").
1. BACKGROUND
Programmer has created one or more Interactive Programs which are compliant with
the Wink Communications, Inc. ("Wink") interactive communications application
protocol. The Interactive Programs are transmitted by Programmer using either
the vertical blanking interval ("VBI") of the corresponding video signal, or
using MPEG private data streams provided concurrently with the corresponding
video signal(s).
System Operator distributes one or more of Programmer's signals through one or
more of the following: cable, satellite and MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this Agreement shall commence on the date of Programmer's execution
of this Agreement and terminate three (3) years thereafter, unless Programmer
and Wink terminate their Charter Programmer Affiliation Agreement in accordance
with the terms of that agreement.
This Agreement will automatically renew for one year periods unless either party
notifies the other at least 90 days prior to the end of the then-current term of
that party's intent not to renew.
3. INTEGRITY OF INTERACTIVE PROGRAMS
Programmer will ensure that the Interactive Programs meet Wink's criteria for
Wink compliant applications (See Attachment 1). Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution.
Programmer understands that failure to meet the above criteria could result in
System Operator suspending the distribution of one or more Interactive Programs
until such time as all Interactive Programs are certified by Wink to be in
compliance.
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<PAGE> 13
4. DISTRIBUTION
Programmer hereby grants System Operator a non-exclusive license to distribute
the Interactive Programs delivered in the VBI or MPEG of Programmer's video
signal or through System Operator's local insertion equipment during the period
prior to Programmer's insertion of such Interactive Programs in it's digitally
uplinked signal. Programmer agrees that each Interactive Program shall have been
either successfully tested by Programmer or certified as compliant by Wink prior
to the Delivery to System Operator for distribution, and shall bear any
associated costs of such testing.
Programmer agrees not to charge System Operator fees associated with Interactive
Programs for the term of this Agreement. Likewise, System Operator agrees that
no fees or charges will be due from carriage or retransmission of the
Interactive Programs as provided for hereunder.
Programmer will provide System Operator written notice at least 30 days prior to
discontinuing national transmission of all Interactive Programs.
It is a condition of System Operator's right to carry the Interactive Programs
that System Operator shall distribute Programmer's Interactive Programs without
modification, and that System Operator may not modify or enhance any VBI lines
described in Exhibit A. Programmer agrees that System Operator may copy the
Interactive Programs for simultaneous transmission in different encoding formats
other than what Programmer currently uses including but not limited to, other
VBI formats, out of band channels, and MPEG2 private data streams; provided such
Interactive Programs are presented together with the original corresponding
video to System Operator's subscribers, and that such copying is done to enable
System Operator's subscribers to properly receive and display the Interactive
Programs on their set top box or television set.
System Operator can, if permitted in Exhibit A, locally insert Interactive
Programs as instructed by Programmer. System Operator is solely responsible for
any costs associated with such local insertion. Programmer will notify System
Operator of changes to any such permissions through amendments to Exhibit A
provided at least 30 days prior to the effective date of such requirements.
System Operator may suspend transmission of the Interactive Program during the
insertion by System Operator of local advertising avails as authorized in any
separate agreements between Programmer and System Operator.
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Programs. Programmer also agrees to use Wink Communication's standard scripts
and guidelines for response applications.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive
Programs and may use Programmer's name, logo, and screen shots from the
Interactive Programs in such marketing materials,
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<PAGE> 14
provided that such materials are submitted to Programmer for review and approval
prior to distribution. Programmer's approval of such marketing materials shall
not be unreasonably withheld or delayed.
7. SCOPE
This Agreement does not interfere with or negate other Agreements between
Programmer and System Operator. This Agreement represents all of the terms and
conditions for Programmer providing Interactive Programs. This Agreement may be
updated from time to time only by express written consent of Programmer.
PROGRAMMER
By: /s/ GLENN MOFF
------------------------------------------
Name: Glenn Moff
----------------------------------------
Title: Associate General Counsel
---------------------------------------
Date: 10/6/97
----------------------------------------
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<PAGE> 15
EXHIBIT D - ATTACHMENT 1
CRITERIA FOR
WINK COMPLIANT APPLICATION
- - - All applications must be registered and contain a unique universal ICAP
code (UIC) prior to being broadcast.
- - - Registered applications have passed a standard set of tests which
validate:
o that the application can be delivered through the VBI or MPEG,
will arrive as appropriate, and can be decoded in the Wink
engine.
o that the application does not generate error messages.
o that the application receives scheduled updates, if applicable.
o that the application passes minimum acceptable latency
standards.
o that the application does not cause System Operator technical or
operational problems.
o that the application, if two-way, generates the appropriate
routing address and usage data.
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<PAGE> 16
EXHIBIT E: PRELIMINARY EQUIPMENT LIST
To be delivered upon the availability of national uplink capability:
Wink Broadcast Server and WebCore
* Sun Sparc 20 or faster, with 64MB RAM, 1 GB+ hard disk, Solaris 2.4 or
2.5, CD-ROM, Ethernet connection to Programmer's LAN, dial-up modem,
tape or other backup mechanism (in Q1 of 1998, Programmer may also use a
Windows NT workstation with similar specifications)
* LAN/serial connections to digital encoder, ftp site (for data), other
hardware as necessary
* PC w/ Windows 95 and Ethernet connection to run WBS remote GUI
Wink Studio
* Pentium Windows PC with 16MB+ RAM, 1GB+ hard disk, 1024x768x256 color
graphics, 17"+ monitor, Ethernet connection to enable electronic
delivery of applications to the WBS, Internet access to enable
electronic access to Wink's Data Center
Test equipment
* GI CFT-2200 set top box, marketing firmware
* High grade video source (Beta SP w/TBC or better)
* Coax Modulator
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<PAGE> 1
EXHIBIT 10.8
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the Eighth day of December, 1997, by and between
Wink Communications, Inc., a California corporation ("Wink"), whose address is
1001 Marina Village Parkway, Alameda, CA 94501, and Cable News Network Inc., a
Georgia corporation ("Programmer"), whose address is One CNN Center, Atlanta, GA
30348.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use Wink
ITV Studio, Server Studio, Wink ITV Broadcast Server, and Wink provided
Server Modules version 1.0 and 1.x updates (hereinafter collectively
referred to as "Wink Software") to deliver interactive program(s)
developed by or on behalf of Programmer which utilize the vertical
blanking interval ("VBI") or an MPEG private data stream provided.
concurrently with the corresponding video signal and are compliant with
the Wink interactive communications application protocol described in
Exhibit D, Attachment 1 attached hereto ("Interactive Programs") to the
subscribers of any multi channel video operator in the United States or
Canada with whom Programmer has an agreement for carriage of
Programmer's First Programming Services, as described in Exhibit A
("System Operators").
1.2 This License is not transferable, nor may any rights hereunder be
transferred, assigned or sub-licensed in whole or in part without Wink's
prior written consent, which consent shall not be unreasonably denied or
withheld.
1.3 Programmer can only use the Wink Software to provide Interactive
Programs with the video programming services listed in Exhibit A.
Programmer must notify Wink in writing at least 30 days prior to
commencing transmission of Interactive Programs with a video programming
service other than the First Programming Service listed in Exhibit A.
Programmer agrees to adhere to the technical specifications for the
insertion of Interactive Programs provided in Exhibit A. Exhibit A,
including the programming services enabled to insert Interactive
Programs in their video signal, may be amended from time to time by
written mutual agreement of the parties.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution of
this Agreement and terminate twelve (12) months after, the first airing
of Programmer's Interactive Programs on the programming service listed
as the First Programming Service in Exhibit A ("First Air Date").
2.2 Programmer has the option to use the Wink Software to provide
Interactive Programs with the Other Programming Services listed in
Exhibit A within twelve months following the First Air Date subject to
the pricing schedule defined in Exhibit F, the programming requirement
defined in section 3.5 below, and provided that such programming would
not be eligible for the payments from Wink defined in section 3.8.
2.3 Programmer may elect to renew this Agreement for additional successive
two (2) year periods on the terms and conditions herein or as otherwise
agreed. Programmer must notify Wink of its intent to renew the Agreement
at least ninety (90) days prior to the end of the then current term.
3. INTEGRATION AND PROGRAMMING
3.1 Unless Wink agrees in writing to waive this requirement, Programmer will
distribute the Interactive Programs with the national feed for the First
Programming Service defined in Exhibit A, or in the absence of a single
national feed, through the feed with the largest household reception
area in the United States and on any additional feeds that reach
CONFIDENTIAL
<PAGE> 2
at least 5% of Programmer's potential audience. Such distribution will
take place through Programmer's national uplink or broadcast facilities.
3.2 Programmer and Wink agree to collaborate in good faith to enable the
installation and integration of the Wink Software into Programmer's
facilities, and to ensure the reliable transmission of the Interactive
Programs. Wink shall provide training to Programmer in accordance with
Exhibit C and, at no cost to Programmer, any additional on-going
training necessary to ensure successful implementation of the
Interactive Programs. Wink is responsible for providing all equipment
necessary to run the Wink ITV Broadcast Server and Wink Server Module to
enable insertion of Interactive Programs into the appropriate Video
signals. This equipment is the property of Wink and must be surrendered
by Programmer upon the termination of this Agreement. Programmer is
responsible for providing the equipment necessary to run Wink ITV Studio
and Server Studio as specified in Exhibit E. Exhibit E provides a
preliminary list of equipment for which Wink and Programmer are
responsible, and is subject to a final site visit by Wink's Operations
department. Programmer will be presented with a final list of equipment
no later than 21 days following the execution of this agreement, subject
to completion of the site visit referred to above. Any additional
equipment that is required shall be provided by Wink at its cost.
3.3 Upon airing of each Programming Service Wink agrees to provide at no
cost to Programmer weekly usage reporting to Programmer of all response
traffic generated by Programmer viewers and collected by Wink's Data
Center. Programmer accepts Wink's terms for all other response traffic
and reporting, including polling by zip code and polling by system as
outlined in Exhibit B.
3.4 Beginning on the First Air Date, Programmer agrees to air Interactive
Programs on the First Programming Service in the following two forms:
(a) a news headline application with an associated "virtual channel"
that viewers access by hyperlinking from Programmer's video
channel or by tuning directly. The virtual channel and headline
application must feature news headlines and stories updated at
least once every two to three hours or as frequently as the
underlying data sources are updated, and be available to viewers
24 hours a-day, 7-days a week. The headline application and
virtual channel will contain content, and if applicable,
advertisements, generated exclusively by Programmer. Programmer
will provide this headline service and this virtual channel in
the VBI or MPEG of either CNN or CNN Headline News, with the
understanding that either application may be inserted on either
channel. Finally, Wink may - at it's sole option, and at its cost
- choose to electronically distribute and locally insert this
virtual channel service in the VBI of either CNN or Headline
News.
(b) program-related enhancements to at least [ * ]. Such [ * ]
enhanced programming may include repeat programming. Programmer
will use reasonable efforts to air at least [ * ] of the
enhanced video programming between 7 PM and midnight Eastern Time
over the course of the week. Programmer has complete discretion
over which programs are enhanced with Interactive Programs.
3.5 Programmer agrees that any Other Programming Services listed in Exhibit
A in connection with which Programmer elects to provide Interactive
Programs must air a minimum of [ * ] of Interactive Programs a week.
Programmer may decide which shows include Interactive Programs, as long
as the total number of hours per week is reached.
3.6 Programmer is responsible for payment, if applicable, to third party
providers of news, content, or sports data to enable the creation or
transmission of Interactive Programs. Wink will, within thirty (30) days
following request, reimburse Programmer for actual expenses incurred by
Programmer to secure the right to transmit such third party
- - ----------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
CONFIDENTIAL
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<PAGE> 3
data as part of Wink Interactive Programs, up to a total amount of
[ * ]. All requests for such reimbursements must be submitted to Wink,
in writing, with actual receipts attached. If Programmer determines,
subsequent to the execution of this Agreement, that such fees Will
exceed the [ * ] maximum, Wink may elect to reimburse those fees or
terminate this Agreement in accordance with the terms set forth in this
Section 3.6. Programmer agrees to use its reasonable efforts to
eliminate or minimize such third party data fees.
Notwithstanding anything herein to the contrary, upon receipt of written
notice by Programmer that Wink intends to terminate the Agreement in
accordance with this Section 3.6, Programmer shall have the right to pay
all fees that exceed the [ * ] maximum and Wink's right to terminate the
Agreement will immediately be withdrawn. Programmer will notify Wink
within thirty (30) days following receipt of such notice as to whether
it intends to pay such fees. If Programmer elects not to pay such fees
and Wink terminates the Agreement prior to the First Air Date, upon
termination (1)[ * ], (ii) Wink shall reimburse Programmer [ * ] per
moth for any actual salary costs (excluding benefits) incurred by
Programmer as a result of employing a full time staff member to work
exclusively on Wink related Interactive Programs, and (iii) Programmer
shall return to Wink all equipment provided by Wink pursuant to Section
3.2. If Programmer elects not to pay such fees and Wink terminates the
Agreement after the First Air Date, upon termination, (i) Programmer
shall retain the [ * ] paid by Wink pursuant to Section 3.8(b), (ii)
Wink shall pay Programmer [ * ] per month for each month that
Interactive Programs aired during the term of the Agreement (Wink shall
receive a credit against such amount for any quarterly payments made by
Wink to Programmer pursuant to Section 3.8(b)), (iii) Wink shall pay
Programmer [ * ] as reimbursement for rights fees incurred by
Programmer, (iv) Wink shall reimburse Programmer [ * ] per month for any
actual salary costs (excluding benefits) incurred by Programmer as a
result of employing a full time staff member to work exclusively on Wink
related Interactive Programs (Wink shall receive credit against such
amount for any payments made by Wink to Programmer pursuant to Section
3.8(a)), and (v) Programmer shall return to Wink all equipment provided
by Wink pursuant to Section 3.2.
3.7 The parties expect that the Interactive Programs defined in 3.4.a and
3.4.b will require bandwidth equivalent to one VBI line for the program
synchronous Interactive Programs described in 3.4.b and one VBI line for
the 24 x 7 headline news and virtual channel application, or two in
total. Programmer agrees to consider the allocation of one additional
VBI line for the virtual channel application at a later date. VBI for
pro-synchronous applications must be allocated on CNN only to enhanced
CNN programming. Virtual channel VBI may be allocated on either CNN or
Headline News, if Programmer determines CNN VBI allocation to be
constrained. Programmer may elect to use additional VBI lines in it's
sole discretion.
3.8 Wink agrees to provide Programmer with:
[ * ]
3.9 Wink agrees that any Interactive Programs created or developed by or on
behalf of Programmer, with or without the assistance of Wink staff
members, will remain the intellectual property of Programmer including,
but not limited to, all copyrights, patents, or trade secrets therein.
Wink agrees that Programmer may license Interactive Programs (or
derivatives thereof) to third parties on any terms that the Programmer
and the third party. can mutually agree upon. Programmer can not
sub-license Wink Software, or act as an agent for Wink.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to provide Interactive Programs in accordance with the
terms of this Agreement.
4.2 If Programmer elects to renew this Agreement, Programmer agrees to remit
the license fees and other payments, if any, as described in Exhibit C,
or as otherwise negotiated, on a timely basis.
CONFIDENTIAL
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<PAGE> 4
4.3 Programmer agrees to provide the Interactive Programs to any System
Operator under the terms described in Exhibit D, and agrees that Wink
may provide a copy of Exhibits A and D to any System Operator as
evidence of Programmer's agreement to supply the Interactive Programs
under such terms.
4.4 Programmer may choose to utilize other products and services of Wink
from time to time. These services will be extended by Wink to Programmer
at the then prevailing retail rate.
5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following receipt of invoice
throughout the term of this Agreement, Programmer shall remit to Wink
all fees owed for licenses provided and services rendered in the
previous month, if any, according to the price schedules provided in
Exhibit C.
5.2 Past due payments shall bear interest at a rate equal to the lesser of
(i) one and one-half percent (1-1/2%) per month or (ii) the maximum
legal rate permitted under law, and Programmer shall be liable for all
reasonable costs and expenses (including, without limitation, reasonable
court costs and attorneys' fees) incurred by Wink in collecting any past
due payments.
6. PROMOTION AND RESEARCH
6.1 The parties agree to use reasonable efforts to issue a press release by
December 10, 1997. Wink will provide Programmer with a draft of this
release by December 3, 1997.
6.2 Wink agrees to provide Programmer with notice within (30) days of new
System Operators having enabled their subscribers to receive
Programmer's Interactive Programs.
6.3 Wink agrees to promote and feature Programmer's Interactive Programs in
Wink's marketing literature, during meetings with cable operators and
the press, and during industry trade shows, provided that any materials
produced by Wink which feature screen shots, logos or video clips
belonging to Programmer or appearing on Programmer's network(s) shall be
subject to Programmer's prior written approval. In addition, Wink agrees
that mention of Programmer's name or mention of Programmer's Interactive
Programs in such meetings and during such industry trade shows will be
in a manner consistent with previously approved announcements and actual
airings of Programmer's Interactive Programs with the understanding that
any written press announcements will be subject to Programmer's written
approval. Wink will also use reasonable efforts to assist Programmer in
achieving it's marketing objectives in materials prepared by third
parties, such as cable equipment manufacturers and cable operators.
Programmer agrees to serve as a press reference for Wink during the
effective term of the agreement.
6.4 Programmer agrees to use reasonable efforts to cooperate with Wink and
System Operators in promoting Programmer's Interactive Programs. Wink
and System Operators may prepare marketing materials relating to the
Interactive Programs and may use Programmer's name, logo and such screen
shots and video clips as may be selected and/or cleared by Programmer
(collectively, "Programmer's Marks") from the Interactive Programs in
accordance with the requirements of Section 6.3 above. Wink hereby
acknowledges and agrees that, as between Wink and Programmer, Programmer
is the sole owner of all right, title and interest in and to the
Programmer's Marks including, but not limited to, trademarks and
copyrights. All uses of the Programmer's Marks shall inure to the
benefit of Programmer. Upon any expiration or termination of this
Agreement, Wink shall delete and discontinue all use of the Programmer's
Marks. At no time during or after the term of this Agreement shall Wink
challenge or assist others to challenge the Programmer's Marks or the
registration thereof or attempt to assist another in the attempt to
register any trademarks, marks or similar rights for marks the same as
or confusingly similar to the Programmer's Marks.
CONFIDENTIAL
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6.5 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in collaboration with Programmer.
Programmer shall provide Wink with reasonable assistance at no cost to
Programmer in conducting such research with respect to Programmer's
viewers. Programmer agrees that Wink will have access to all such
research regarding the deployment, launch, and usage of Wink service by
Programmer viewers. Wink agrees to provide copies of final reports from
such research activity to Programmer at no cost to Programmer.
6.6 Programmer understands and accepts that Wink will be providing summary
reports on viewer responses to the Interactive Programs to System
Operator(s) for responses that originate from such System Operator's
subscribers, and to advertisers and other parties for responses that
solely originate from Interactive Programs paid for or sponsored by such
parties. Wink agrees that reports providing specific data regarding
individual viewer responses to Programmer's Interactive Programs,
including, but not limited to, data on Wink viewer responses to
advertising on Programmer's Programming Services, will not be made
available to other broadcast or cable networks, the press, analysts or
any other third party, except in aggregated form that does not identify
Programmer or specific Programmer viewer data. Individual viewer
responses may be provided to advertisers and other parties for the
purpose of fulfilling viewer requests.
7. WARRANTY
Wink hereby represents and warrants to Programmer that the Wink Software
(and subsequent revisions and upgrades to same provided by Wink to
Programmer) will operate and perform in accordance with all published
specifications with respect thereto.
8. INDEMNIFICATION
Wink shall indemnify, defend and hold harmless Programmer, its parents,
subsidiaries, and affiliates and their respective officers, directors,
employees and agents from and against any and all damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys
fees and amounts paid in settlement) they may suffer or incur which
arises out of or as a result of any, claim, demand, action, suit or
proceeding in which it is alleged that the Wink Software (and subsequent
revisions and upgrades to same provided by Wink to Programmer) or any
part thereof violates or infringes any patent or copyright or other
intellectual property right of any third party or constitutes a
misappropriation of any third party's trade secrets.
9. NOTICES
All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express deliver, addressed, to the addresses provided in the first
paragraph of this Agreement, and to the attention of:
If to Wink:
Vice President, Content
Facsimile: 510-337-2960
If to Programmer:
Louis Lettes
CNN Interactive/10 South
Vice President, Business Development
Facsimile: 404-827-4093
With a copy to:
CONFIDENTIAL
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General Counsel
The date of such facsimile transmission, telegraphing or personal
delivery or the next day if by express delivery, or the date three (3)
days after mailing, shall be deemed the date on which such notice is
given and effective.
10. WINK TRADEMARKS
All rights, title and interest in and to the Wink Software, related
thereto shall remain the property of Wink. Further, Programmer
acknowledges that all names, logos, marks, copyright notices or
designations utilized by Wink in connection with the service are the
sole and exclusive property of Wink, and no rights or ownership are
intended to be or shall be transferred to Programmer.
11. REPRESENTATION
11.1 Wink represents and warrants to Programmer that (i) it is a corporation
duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority to enter
into this Agreement, to fully perform its obligations hereunder and to
grant the rights provided herein to Programmer (iii) Wink is under no
contractual or other legal obligation which in any way interferes with
its ability to fully, promptly and completely perform hereunder.
11.2 Programmer represents and warrants to Wink that (i) Programmer is a
corporation duly organized and validly existing under the laws of the
State of Georgia (ii) Programmer has the requisite power and authority
to enter in this Agreement and to fully perform its obligations
hereunder; and (iii) Programmer is under no contractual or other legal
obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
12. CONFIDENTIALITY
12.1 Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to
others, any of the other party's Confidential Information (as defined
below). Without limiting the generality of the foregoing, each party
will (i) restrict the disclosure of the other party's Confidential
Information to those of its employees who require such information for
purposes of performing its obligations hereunder, (ii) inform each such
employee of the confidential nature of the information disclosed, (iii)
use reasonable efforts to prevent the use or disclosure by its employees
of such Confidential Information, except as provided herein, and (iv)
promptly notify the other party of any use or disclosure of the
Confidential Information whether intentional or not, which violates the
provisions of this Paragraph 12.1 For purposes of this Agreement, the
term "Confidential Information" means all technical, business and other
information disclosed by one party to the other that derives economic
value, actual or potential, from not being generally known to other
persons that is designated confidential, including, without limitation,
technical and non-technical data, devices, methods, techniques,
drawings, processes, computer programs, algorithms, methods of
operation, financial data, financial plans, product plans, and lists of
actual or potential customers or suppliers. Confidential Information
does not include information which does not constitute a trade secret
under applicable law after the second anniversary date of the expiration
of this Agreement. The parties agree to keep the terms of this Agreement
confidential, but acknowledge that certain disclosures may be required
by law.
12.2 [ * ]
12.3 Programmer understands and acknowledges that Wink may provide copies of
Exhibits A and D to System Operators.
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13. TERMINATION
13.1 Except as otherwise provided herein, neither Programmer nor Wink may
terminate this Agreement except upon thirty (30) days prior written
notice and then only if the other has made a misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within thirty (30) days following receipt of such
notice.
13.2 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the
Wink Software will cease and Programmer will immediately and on
reasonable terms and with reasonable notice (i) grant to Wink access to
its business premises and the Wink Software and allow Wink to remove the
hardware (which removal shall be done with as little disturbance as
possible to Programmer's business operations), (ii) purge all copies of
all Wink Software from all computer processors or storage media on which
Programmer has installed or permitted others to install such Wink
Software, and (iii) when requested by Wink, certify to Wink in writing,
signed by an officer of Programmer, that all copies of the Wink Software
have been returned to Wink or destroyed and that no copy of any Wink
Software remains in Programmer's possession or under its control.
13.3 Programmer has the right to suspend the airing of Interactive Programs
if the transmission interferes with the airing of Programmer's video
programming or Wink fails to provide weekly reports regarding usage of
Programmer's Interactive Programs, and may continue such suspension
until Wink has resolved such problems to Programmer's satisfaction.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys
to enforce the terms of this Agreement, the prevailing party in any
lawsuit shall be entitled to an award of reasonable attorneys' fees and
court costs.
a) This Agreement may not be assigned without prior written mutual
consent of Programmer and Wink.
b) This Agreement may be amended only by an instrument in writing,
executed by Programmer and Wink.
c) This Agreement will be governed in all respects by the laws of
the State of Georgia.
d) This Agreement represents the entire agreement between the
parties and supersedes and replaces all prior oral and written
proposals, communications and agreements with regard to the
subject matter hereof between Programmer and Wink.
CONFIDENTIAL
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IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. Cable News Network Inc.,
By: /s/ Maggie Wilderotter By: /s/ Louis Lettes
Name: Maggie Wilderotter Name: Louis Lettes
Title: President, CEO Title: VP Level., CNN Interactive
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EXHIBIT A: PROGRAMMING SERVICES
DESCRIPTION OF PROGRAMMING SERVICES:
<TABLE>
<CAPTION>
NAME START OF WINK VIDEO ICAP VIRTUAL INSERTION
PROGRAMMING* (A/D) LOCATION CH? POINT
<S> <C> <C> <C> <C> <C>
First Programming Service
CNN February-1, 1998 Analog 1 VBI Line* No Atlanta
CNN/HN February 1, 1998 Analog 1 VBI Line* Yes Atlanta
*As described in Paragraph 3.7 of this Agreement
Other Programming Services
CNNfn TBD TBD TBD TBD Atlanta
CNNSi TBD TBD TBD TBD Atlanta
CNN En Espanol TBD TBD TBD TBD Atlanta
</TABLE>
These programming services may be added subject to pricing in Exhibit F under
Wink's standard Charter Programmer terms.
Contact Information:
ISSUE ADDRESS CONTACT(S) PHONE /FAX/E-MAIL
Technical Sardy Bernard
Additional Contact Info: -TBD
*Subject to successful implementation and functioning of the Wink Software
CONFIDENTIAL
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EXHIBIT B: WINK RESPONSE CENTER SERVICES
POLLS BY ZIP - report only [ * ]
1-100,000 [ * ]
100,001 + [ * ]
POLLS BY SYSTEM - report only. [ * ]
[ * ]
1-250,000 [ * ]
250,001 + [ * ]
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest
price applies to all transactions for the month.
PURCHASE AND REQUEST TRANSACTION FEES INCLUDE / EXCLUDE:
1. Daily name & address lists delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
4. Interface to standard EDI VAN for [ * ].
POLL BY SYSTEM FEES:
The fixed charge includes UIC and application registration, and a standard
reporting that summarizes all responses by type by city. If the application asks
the viewer for telephone prefix or zip code, the summary includes those totals.
FULFILLMENT EDI/API:
* Standard interface set-up fee [ * ]
* Non-standard Interface [ * ]
* Interface License/Maintenance fee [ * ]
SET UP FEES-RESPONSE SERVICES:
* Standard Cable System Billing interface [ * ]
-- or-- [ * ]
* Non-standard billing interface [ * ]
REPORT GENERATION FEES: [ * ]
RESPONSE DATA CENTER PRODUCTS:
* Purchase confirmation mailer [ * ]
* List of responders who do not respond
to purchase confirmation mailers [ * ]
* Branded envelope [ * ]
* Advertiser/Programmer Purchase Points Club [ * ]
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EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING
This pricing is available to the First Programming Service only.
All on-going annual fees are paid one twelfth each month, and are due the first
of the month.
<TABLE>
<CAPTION>
On-going Annual First Year Years 2-3 Total
Or One- Retail Price Price/ Savings/
Time-costs Price Network Network
(3 Years)
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [ * ] [ * ] [ * ] [ * ]
Server Module On-going [ * ] [ * ] [ * ] [ * ]
Tech Support On-going [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ON-GOING [ * ] [ * ] [ * ] [ * ]
Server hardware One-time [ * ] [ * ] [ * ] [ * ]
Data Insertion Unit One-time [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ]
Installation and One-time [ * ] [ * ] [ * ] [ * ]
integration
Studio site license One-time [ * ] [ * ] [ * ] [ * ]
(5 seats)
Server Studio site One-time [ * ] [ * ] [ * ] [ * ]
license (5 seats)
Studio/Server One-time [ * ] [ * ] [ * ] [ * ]
training (3x2days)
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ]
TOTAL BOTH [ * ] [ * ] [ * ] [ * ]
</TABLE>
The above pricing for installation and integration covers all work necessary to
enable scheduling and transmission of program enhancements based on Wink Studio
templates. It does not cover detailed integration with Programmer's ad insertion
system for the purpose of enabling enhancements to spot advertising.
OPTIONAL SERVICES
Ad insertion interface [ * ]
Custom Interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses are billed separately at cost.
CONFIDENTIAL
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<PAGE> 12
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE PROGRAMS
Programmer: Cable News Network Inc.
Programming Service: CNN and CNN/Headline News
This Interactive Program Carriage Agreement ("IP Carriage Agreement") sets forth
the terms and conditions for the national distribution of Wink ITV Applications
("Interactive Programs") to any multi channel video operator in the United
States or Canada with whom Programmer has an agreement for carriage of
Programmer's video programming ("System Operator").
1. BACKGROUND
Programmer has created one or more Interactive Programs which are compliant with
the Wink Communications, Inc. ("Wink") interactive communications application
protocol set forth in Attachment 1 hereto. The Interactive Programs are
transmitted by Programmer using either the vertical blanking interval ("VBI") of
the corresponding video signal, or using MPEG private data streams provided
concurrently with the corresponding video signal(s).
System Operator distributes one or more of Programmer's signals through one or
more of the following: cable, satellite or MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this IP Carriage Agreement shall commence on the date of
Programmer's execution of this IP Carriage Agreement and terminate three (3)
years after the First Air Date of Interactive Programs, unless Programmer and
Wink terminate their Charter Programmer Affiliation Agreement in accordance with
the terms of that agreement. This IP Carriage Agreement will automatically
terminate in the event the Charter Programmer Affiliation Agreement between Wink
and Programmer Is terminated.
3. INTEGRITY OF INTERACTIVE PROGRAMS
Programmer will ensure that the Interactive Programs meet Wink's criteria for
Wink compliant applications (See Attachment 1). Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution.
Programmer understands that failure to meet the above criteria could result in
System Operator suspending the distribution of one or more Interactive Programs
until such time as all Interactive Programs are certified by Wink to be in
compliance.
4. DISTRIBUTION
Programmer hereby grants System Operator a non-exclusive license during the term
of this IP Carriage Agreement to distribute the Interactive Programs delivered
in the VBI or MPEG of Programmer's video signal. Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution, and shall bear any associated costs of such testing.
Programmer agrees not to charge System Operator fees associated with Interactive
Programs for the term of this IP Carriage Agreement. Likewise, System Operator
agrees that no fees or charges will be due from Programmer for carriage or
retransmission of the Interactive Programs as provided for hereunder.
Programmer will provide System Operator written notice at least 30 days prior to
discontinuing national transmission of all Interactive Programs.
CONFIDENTIAL
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It is a condition of System Operator's right to carry the Interactive Programs
that System Operator shall distribute Programmers Interactive Programs without
modification, and that System Operator may not modify or enhance any VBI lines
described in Exhibit A. Programmer agrees that System Operator may copy the
Interactive Programs for simultaneous transmission in different encoding formats
other than what Programmer currently uses including but not limited to, other
VBI formats, out of band channels, and MPEG2 private data streams; provided such
Interactive Programs are presented together with the original corresponding
video to System Operator's subscribers, and that such copying is done to enable
System Operator's subscribers to properly receive and display the Interactive
Programs on their set top box or television set.
System Operator can, if permitted in Exhibit A, locally insert Interactive
Programs as instructed by Programmer. System Operator is solely responsible for
any costs associated with such local insertion Programmer will notify System
Operator of changes to any such permissions through amendments to Exhibit A
provided at least 30 days prior to the effective date of such requirements.
System Operator may suspend transmission of the Interactive Program during the
insertion by System Operator of local advertising avails as authorized in any
separate agreements between Programmer and System Operator.
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Programs. Programmer also agrees to use Wink Communication's standard scripts
and guidelines for response applications. Programmer will have the opportunity
to review such scripts.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive
Programs and may use Programmer's name, logo, and screen shots (collectively
"Programmer's Mark") from the Interactive Programs in such marketing materials,
provided that such materials are submitted to Programmer for review and approval
prior to distribution. Such materials may not be used without Programmers prior
written approval. Programmers approval of such marketing materials shall not be
unreasonably withheld or delayed.
7. SCOPE
This IP Carriage Agreement does not interfere with or negate other Agreements
between Programmer and System Operator. This IP Carriage Agreement represents
all of the terms and conditions for Programmer providing Interactive Programs.
This IP Carriage Agreement may be updated and amended from time to time only by
express written consent of Programmer.
PROGRAMMER
By: /s/ Louis Lettes
Name: Louis Lettes
Title: VP Bus. Devel., CNN Interactive
Date: 2-12-98
CONFIDENTIAL
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<PAGE> 14
EXHIBIT D, ATTACHMENT 1: CRITERIA FOR WINK COMPLIANT APPLICATION
* All applications must be registered and contain a unique universal ICAP
code (UIC) prior to being broadcast.
* Registered applications have passed a standard set of tests which
validate:
* that the application can be delivered through the VBI, will
arrive as appropriate, and can be decoded in the Wink engine.
* that the application does not generate error messages.
* that the application receives scheduled updates, if applicable.
* that the application passes minimum acceptable latency standards
determined jointly by Wink and Programmer.
* that the application does not cause System Operator technical or
operational problems.
* that the application, if two-way, generates the appropriate
routing address and usage data.
CONFIDENTIAL
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EXHIBIT E: PRELIMINARY EQUIPMENT LIST
Wink Provided Equipment:
Wink Broadcast Server and Server Modules
* Sun Ultra 1 or faster, with 64MB RAM, 1 GB+ hard disk, 17" monitor,
CD-ROM, Solaris 2.5, CD-ROM, Ethernet connection to Programmer's LAN,
dial-up modem, Sun Silver support package (one per uplink)
* Norpak TES-3 VBI data inserter (One per channel with the capability to
utilize 2 VBI lines on Headline News)
* LAN/serial connections to master control system, ftp site (for data),
other hardware as necessary
Test equipment
* GI CFT-2200 set top box, marketing firmware
Programmer Provided Equipment:
* PC w/ Windows 95 and Ethernet connection to run WBS remote GUI (can run
GUI and Wink Studio on same machine)
* High grade video source (Beta SP or better) for testing
* Coax Modulator for testing
* To run Wink Studio: Pentium Windows PC with 16MB+ RAM, 1 GB+ hard disk,
1024x768x256 color graphics, 17"+ monitor, Ethernet connection to enable
electronic delivery of applications to the WBS, Internet access to
enable electronic access to Wink's Data Center
CONFIDENTIAL
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EXHIBIT F: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 2
This pricing is available to all Programming Services other than the First
Programming Service owned and operated by Programmer, subject to the terms of a
standard Charter Programmer Agreement.
All on-going annual fees are paid one twelfth each month, and are due the first
of the month.
<TABLE>
<CAPTION>
On-going Annual First Year Years 2-3 Total
Or One- Retail Price Price/ Savings/
Time-costs Price Network Network
(3 Years)
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going * ] [ * ] [ * ] [ * ]
Server Module On-going [ * ] [ * ] [ * ] [ * ]
Tech Support On-going [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ON-GOING [ * ] [ * ] [ * ] [ * ]
Server hardware One-time [ * ] [ * ] [ * ] [ * ]
Data Insertion Unit One-time [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ]
Installation and One-time [ * ] [ * ] [ * ] [ * ]
integration
Studio site license One-time [ * ] [ * ] [ * ] [ * ]
(5 seats)
Server Studio site One-time [ * ] [ * ] [ * ] [ * ]
license (5 seats)
Studio/Server One-time [ * ] [ * ] [ * ] [ * ]
training (3x2days)
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ]
TOTAL BOTH [ * ] [ * ] [ * ] [ * ]
</TABLE>
Wink reserves the right to increase license fees annually after the first 12
months of the contract period by the percentage increase in the consumer price
index (CPI) for goods and services for the prior 12 months.
The above pricing for installation and integration covers all work necessary to
enable scheduling and transmission of program enhancements based on Wink Studio
templates. It does not cover detailed integration with Programmer's ad insertion
system for the purpose of enabling enhancements to spot advertising.
OPTIONAL SERVICES
Ad insertion interface [ * ]
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses are billed separately at cost.
CONFIDENTIAL
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EXHIBIT 10.9
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 9th day of December, 1997, by and between Wink
Communications, Inc., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and MTV Networks, a Delaware
corporation ("Programmer"), whose address is 1515 Broadway, New York, NY 10036.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use Wink
ITV Studio, Wink ITV Broadcast Server, and Wink provided Server Modules
version 1.0 and all updates (hereinafter collectively referred to as
"Wink Software") to deliver interactive program(s) which utilize the
vertical blanking interval ("VBI") or an MPEG private data stream
provided concurrently with the corresponding video signal and are
compliant with the Wink interactive communications application protocol-
("Interactive Programs") to all Programmer viewers in the continental
United States, Alaska, Hawaii, and the US territories (the "Territory").
1.2 This License is not transferable by either party, nor may any rights
hereunder be transferred, assigned or sub-licensed in whole or in part
without the other party's prior written consent.
1.3 Programmer can only use the Wink software to provide Interactive
Programs with the Programming Services defined in Exhibit A. Programmer
must notify Wink in writing at least 30 days prior to commencing
transmission of Interactive Programs with a Video Programming service.
Programmer agrees to use best efforts to adhere to the specifications
for the insertion of Interactive Programs provided in Exhibit A. Exhibit
A may be amended from time to time by mutual agreement.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution of
this Agreement and terminate two (2) years thereafter.
2.2 Programmer has the unilateral right to extend the Agreement once for an
additional two years. Programmer agrees to provide Wink with notice of
Programmer's decision to renew or to let the Agreement expire at least
30 days prior to the expiration of the then current term.
2.3 Programmer can elect to notify Wink of it's intent to terminate the
later of December 31, 1998 or twelve (12) months from after the first
airing of Programmer's Interactive Programs ("the Option Date")
Programmer agrees that the option to terminate is only available until
30 days prior to the Option Date, and that Wink will receive at least 45
days notice before Programmer suspends the transmission of Interactive
Programs.
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3. INTEGRATION
3.1 Programmer will distribute the Interactive Programs with the national
feed for the Programming Services defined in Exhibit A, or in the
absence of a single national feed, through the feed with the largest
household reception area in the country and on any additional feeds that
reach at least 5% of Programmer's potential audience. Such distribution
will take place through Programmer's national uplink or broadcast
facilities, and is subject to Wink's deliver to Programmer of all
components necessary to ensure the transmission of Interactive Programs.
3.2 Programmer and Wink agree to collaborate to enable the installation and
integration of the Wink Software into Programmer's facilities, and to
use commercially reasonable efforts to ensure the reliable transmission
of the Interactive Programs. Programmer is responsible for providing all
equipment necessary to run the Wink Software and to enable insertion of
Interactive Programs into the appropriate video signals. Exhibit E
provides a preliminary list of such equipment, and is subject to a final
site visit by Wink's Operations department. Programmer will be presented
with a final list of equipment no later than 21 days following the
execution of this Agreement, subject to completion of the site visit. If
such final list exceeds 5% of the cost set forth in Exhibit E, Wink
agrees to pay for any overages in excess of such amount.
3.3 Programmer agrees to use reasonable efforts to commence transmission of
Interactive Programs on the Programming Services on or before February
15, 1998. Notwithstanding the above, Wink acknowledges that Programmer
projects a First Air Date of April 1, 1998. Wink understands and accepts
that the First Air Date is contingent upon a successful installation of
the Wink Software and associated hardware, upon completion of training
of Programmer staff, and upon completion of design and test of the
initial Interactive Programs for VH1 by the Producer provided by Wink.
The First Air Date is also subject to Programmer obtaining certain third
party rights on reasonable terms as described in 3.8 below.
3.4 Wink agrees to provide weekly reporting to Programmer of all response
traffic generated by Programmer viewers and collected by Wink's Data
Center. Programmer accepts Wink's terms for all other response traffic
and reporting, as outlined in Exhibit B.
3.5 Beginning two weeks after the First Air Date for each Programming
Service, Programmer agrees to air Interactive Programs for an average of
[ * ] measured as an average over each calendar month. In addition,
Programmer agrees to air Interactive Programs an additional [ * ] on the
"VH1" Programming Service and an additional [ * ] for on the
"Nickelodeon/Nick-at-Nite" Programming Service within 90 days of the
First Air Date.
3.6 [ * ]
- - ----------------------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portion shave been filed
with the Commission.
CONFIDENTIAL
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3.7 Wink agrees to provide any technical staff resources necessary to (a)
integrate the Wink Software with Programmers LMS master control system
for purposes of automatic triggering of the timely delivery of
Interactive Programs, based on Programmer's, Video Programming, and (b)
support the development of Programmer's initial applications for both
networks.
3.8 Wink acknowledges that the Video Programming may be broadcast under
license from third parties, and that such third party licenses or the
business relationship with such third parties may, in Programmer's
reasonable judgment, either contractually prevent Programmer from
providing Interactive Programs with respect to particular video
programs, or cause Programmer to incur any additional rights costs, were
Programmer to air Interactive Programs. Programmer agrees to use its
reasonable commercial efforts to obtain rights to provide Interactive
Programs in connection with the Video Programming at no cost such that
the programming commitment defined in 3.4 above can be met. If, despite
such efforts, Programmer's programming services, in Programmers sole and
reasonable judgment, (i) are contractually prevented from providing
Interactive Programs with a majority of the Video Programming, or (ii)
will incur any additional rights costs caused by the airing of the
Interactive Programs, or (iii) would endanger existing important
business relationships with third parties who license programming to
Programmer, Programmer may notify Wink in writing to this effect, and
cease complying with section 3.4 30 days from the date of such written
communication on a programming service by programming service basis. The
parties further agree that the option described in this paragraph is
available through the Option Date. Programmer understands that if it
ceases to comply with 3.4 on the "VH1" programming service, Wink may
withdraw the services of the resident Wink staffer at that time.
Notwithstanding section 3.8 above, Programmer agrees that it is responsible for
payments to third party providers of Video Programming, music, news, images and
other entities that hold rights which Programmer deems necessary to obtain to
enable the airing of Interactive Programs. This shall not be deemed to include
the Wink Software or other elements of the Wink system necessary to enable
transmission of Interactive Programs.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to provide Interactive Programs for the programming
services described in Exhibit A, and subject to the programming
commitment defined in 3.4 above.
4.2 Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis.
4.3 Programmer agrees to provide the Interactive Programs to any multi
channel video operator in the Territory with whom Programmer already has
an agreement for carriage of the MTV Networks services set forth herein
("System Operators") under the terms described in Exhibit D, and agrees
that Wink may provide a copy of Exhibits A and D to any System Operator
as evidence of Programmer's agreement to supply the Interactive Programs
under such terms. Wink shall require System Operators to comply with the
confidentiality provisions of section 12 below.
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4.4 Programmer may choose to utilize other products and services of Wink (as
set forth in Exhibits B or C) from time to time under this Agreement.
These services will be extended by Wink to Programmer at the rates set
forth therein; however, such prices shall at all times be extended on a
most favored nations basis with regard to all other cable programmers
utilizing such Wink services.
4.5 Wink agrees to extend certain license fee and installation terms
described in Exhibit C to other programming services Owned and operated
by Programmer or Programmer's parent company, Viacom. Such programming
services must agree to the same minimum [*] programming
commitment described in section 3.4. Wink is not obligated to provide
[*] production or technical resources, or the termination provisions in
sections 2.3 and 3.7 to such programming services
5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following each month throughout
the term of this Agreement, Programmer shall remit to Wink all fees owed
for licenses provided and services rendered in the previous month,
according to the price schedules provided in Exhibit C.
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Programmer of its obligation to make
any payment in a timely manner consistent with the terms of this
Agreement.
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a mutually-approved press release announcing
this agreement on or before December 9, 1997. Wink will provide
Programmer with a draft of this release by December 3, 1997.
6.2 Wink agrees to provide Programmer with notice within 30 days of new
System Operators having enabled their subscribers to receive
Programmer's Interactive Programs.
6.3 Wink agrees to actively promote and feature Programmer's Interactive
Programs in Wink's marketing literature, during meetings with cable
operators and the press, and during industry trade shows in a manner
that is at least as favorable as the position granted other cable
programmers, subject to Programmer's trademark guidelines and approval
process attached hereto as Exhibit F. Wink's commitment to promote on
such most favored nations basis does not prevent Wink from creating
marketing materials, events or exhibits that highlight particular
programming categories or partnerships. Wink will also use reasonable
efforts to assist Programmer in achieving its marketing objectives in
materials prepared by third parties, such as cable equipment
manufacturers and cable operators. Programmer agrees to promote its
participation as a charter Wink programmer to cable operators, and to
serve as a press reference for Wink during the effective term of the
agreement.
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6.4 Programmer agrees to use reasonable business efforts to cooperate with
Wink and System Operators in promoting Programmer's Interactive
Programs. Wink and System Operators may prepare marketing materials
relating to the Interactive Programs and may use Programmer's name, logo
and screen shots (collectively, "Programmer's Marks") from the
Interactive Programs, provided that such materials are submitted to
Programmer for review and approval prior to distribution subject to
Programmer's trademark guidelines and approval process attached hereto
as Exhibit F. Wink hereby acknowledges and agrees that, as between Wink
and Programmer, Programmer is the sole owner of all right, title and
interest in and to the Programmer's Marks, All uses of the Programmer's
Marks shall inure to the benefit of Programmer. Upon any expiration or
termination of this Agreement, Wink shall delete and discontinue all use
of the Programmer's Marks. At no time during or after the term of this
Agreement shall Wink challenge or assist others to challenge the
Programmer's Marks or the registration thereof or attempt to assist
another in the attempt to register any trademarks, marks or similar
rights for marks the same as or confusingly similar to the Programmer's
Marks.
6.5 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in collaboration with Programmer.
Programmer shall provide Wink with reasonable assistance at no cost to
Programmer in conducting such research with respect to Programmer's
viewers. Programmer agrees that Wink will have access to all such
research regarding the deployment, launch, and usage of Wink service by
Programmer viewers. Wink agrees to provide copies of final reports from
such research activity to Programmer. Wink may only use such data or
share it with third parties with Programmer's prior written approval.
6.6 Programmer understands and accepts that Wink will be providing reports
on viewer usage and responses to the Interactive Programs to System
Operator(s) for responses that originate from System Operator's
subscribers, and to advertisers and other parties for responses that
originate from Interactive Programs paid for or sponsored by such
parties. Wink agrees that reports providing specific data regarding
viewer responses to Programmer's Interactive Programs, including data on
Wink viewer responses to advertising on Programmer's Programming
Services, will not be made available to news and industry organizations,
or other broadcast and cable networks, except in aggregated form that
does not explicitly or implicitly identify Programmer or specific
Programmer viewer data. Wink further agrees that Wink's provision of any
data that identify individual viewers shall be limited to advertisers
and other entities having contracted with Wink for the provision of such
data to enable fulfillment of transactions or other individual viewer
requests made via the Interactive Programs and that such disclosure
shall be subject to applicable consumer privacy laws.
6.7 Programmer agrees that Wink may demonstrate Programmer's Interactive
Programs in customer meetings, at industry trade shows, and in other
meetings or venues deemed important by Wink.
7. WARRANTIES AND REPRESENTATIONS
7.1 Wink hereby represents and warrants that:
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(i) the Wink Software (and subsequent revisions and upgrades to same
provided by Wink to Programmer) will operate and perform in
accordance with all published specifications with respect thereto
as set forth in Wink's then current ICAP specification and other
related documents. Programmer can obtain a copy upon written
request.
(ii) the terms contained herein for licensing of Wink software,
provision of Wink services and Programmer's commitment for
Interactive Programs are, as a whole, as favorable as any other
similar agreement Wink has entered into or will enter into with
other North American cable programming entities.
(iii) it has all necessary rights and authority to execute and deliver
this Agreement and perform its obligations hereunder;
(iv) the Wink Software shall be free from defects and shall be
error-free;
(v) it shall dedicate sufficient resources to fulfill its obligations
hereunder;
(vi) the Wink Software (or any equipment, technologies, processes or
components used in the Wink Software) does not and will not
infringe any intellectual property rights of any third party;
(vii) it will comply with all applicable laws, rules, regulations or
court or administrative decrees to which it is subject;
(viii) it is a corporation duly organized and validly existing under the
laws of the State of California;
(ix) Wink is under no contractual or other legal obligation which in
any way interferes with it's ability to fully, promptly and
completely perform hereunder.
7.2 Programmer represents and warrants to Wink that (i) Programmer is a
corporation duly organized and validly existing under the laws of the
State of Delaware; (ii) to the best of Programmer's knowledge Programmer
has the requisite power and authority to enter in this Agreement and to
fully perform its obligations hereunder; and (iii) to the best of
Programmer's knowledge Programmer is under no contractual or other legal
obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
8. INDEMNIFICATION
Wink shall indemnify, defend and hold harmless Programmer, its parents,
subsidiaries, and affiliates and their respective. officers, directors,
employees and agents from and against any and all damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys
fees and amounts paid in settlement) they may suffer or incur which
arises out of or as a result of any, claim, demand, action, suit or
proceeding in which it is alleged that the Wink Software
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or any part thereof violates or infringes any patent or copyright or
other intellectual property right of any third party or constitutes a
misappropriation of any third party's trade secrets or as a result of
any material breach of Wink's warranties, representations or
undertakings hereunder.
9. NOTICES
All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express deliver, addressed, to the addresses provided in the first
paragraph of this Agreement, and to the attention of:
If to Wink:
Vice President, Content
If to Programmer:
Senior Vice President
MTV Networks Online and Interactive Services
The date of such facsimile transmission, telegraphing or personnel
delivery or the next day if by express delivery, or the date three (3)
days after mailing, shall be deemed the date on which such notice is
given and effective.
10. TRADEMARKS
10.1 All rights, title and interest in and to the Wink Software or other
rights, of whatever nature, related thereto shall remain the property of
Wink. Further, Programmer acknowledges and agrees that all names, logos,
marks, copyright notices or designations utilized by Wink in connection
with the service are the sole and exclusive property of Wink, and no
rights or ownership are intended to be or shall be transferred to
Programmer.
10.2 All rights, title and interest in and to the Programmer's Marks or other
rights, of whatever nature, related thereto shall remain the property of
Programmer. Further, Wink acknowledges and agrees that all names, logos,
marks, copyright notices or designations utilized by Programmer in
connection with the service are the sole and exclusive property of
Programmer, and no rights or ownership are intended to be or shall be
transferred to Wink.
11. CONFIDENTIALITY
Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to
others, any of the other party's Confidential Information (as defined
below). Without limiting the generality of the foregoing, each party
will (i) restrict the disclosure of the other party's Confidential
Information to those of its employees who require such information for
purposes of performing its obligations hereunder, (ii) inform each such
employee of the confidential nature of the information disclosed, (iii)
prevent the use
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or disclosure by its employees of such Confidential Information, except
as provided herein, and (iv) promptly notify the other party of any use
or disclosure of the Confidential Information, whether intentional or
not, which violates the provisions of this Paragraph 11. For purposes of
this Agreement, the term " Confidential Information" means all
technical, business and other information disclosed by one party to the
other that derives economic value, actual or potential, from not being
generally known to other persons, including, without limitation,
technical and non-technical data, devices, methods, techniques,
drawings, processes, computer programs, algorithms, methods of
operation, financial data, financial plans, product plans, lists of
actual or potential customers or suppliers, and Wink usage reports and
viewer responses to Programmer's Interactive Programs (with the
exception that Wink may provide such reports and individual viewer
responses to the parties specifically permitted in paragraph 6.6 above)
Confidential Information does not include information which does not
constitute a trade secret under applicable law after the second
anniversary date of the expiration of this Agreement. The parties agree
to keep the terms of this Agreement confidential, but acknowledge that
certain disclosures may be required by law. Programmer understands and
acknowledges that Wink may provide copies of Exhibits A and D to System
Operators.
12. TERMINATION
12.1 Except as otherwise provided herein, neither Programmer nor Wink may
terminate this Agreement except upon sixty (60) days prior written
notice and then only if the other has made a misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within sixty (60) days of such notice.
12.2 Notwithstanding the above, Wink will have the right to terminate this
Agreement or all or any licenses granted herein if Programmer fails to
comply with any of its material obligations, including but not limited
to timely payment of license fees and other fees due Wink, under this
Agreement. Should Wink elect to exercise this right to terminate for
nonperformance, it must be done in writing specifically setting forth
those items of nonperformance. Programmer will then have thirty (30)
days from receipt of notification to remedy the items of nonperformance.
Should Programmer fail to correct these items of nonperformance, then
Wink may terminate this agreement and any license granted herein. Wink's
termination of this Agreement shall be without prejudice to any other
remedies Wink may have, including, Without limitation, all remedies with
respect to the unperformed balance of this Agreement; provided, however,
that if Programmer has not made payment of the fees or charges due
hereunder and such nonpayment continues after thirty (30) days prior
written notice by Wink, then Wink may terminate this Agreement or any
license granted herein.
12.3 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the
Wink Software will Cease and Programmer will immediately (i) grant to
Wink access to its business premises and the Wink Software and allow
Wink to remove the Wink Software (which removal shall be done with as
little disturbance as possible to
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Programmer's business operations), or Programmer shall return the Wink
Software to Wink, at Programmer's discretion , (ii) purge all copies of
all Wink Software from all computer processors or storage media on which
Programmer has installed or permitted others to install such Wink
Software, and (iii) when requested by Wink, certify to Wink in writing,
signed by an officer of Programmer, that all copies of the Wink Software
have been returned to Wink or destroyed and that no copy of any Product
remains in Programmer's possession or under its control.
12.4 Programmer has the right to suspend the airing of Interactive Programs
if the transmission interferes with the airing of Programmer's Video
Programming or Wink fails to provide weekly reports regarding usage of
Programmer's Interactive Programs, and may continue such suspension
until Wink has resolved such problems to Programmer's satisfaction.
13. INDEPENDENT CONTRACTOR
The Parties hereto are independent contractors and nothing herein
contained shall be construed to constitute a partnership or joint
venture between them. Neither Wink or Programmer shall become bound by
any representation, act or omission of the other.
14. PROMOTIONAL MATERIALS/PRESS RELEASES
Each Party will submit to the other Party, for its prior written
approval, any marketing, advertising, press releases, and all other
promotional materials which reference the other Party and/or its trade
names, trademarks and service marks. Each Party shall solicit and
reasonably consider the views of the other Party in designing and
implementing such materials. Once written approval is obtained, the
materials may be reused in the same manner until such approval is
withdrawn in writing.
15. SURVIVAL
Sections 8, 10, 11 and 14 shall survive the completion, expiration,
termination or cancellation of this Agreement
16. GENERAL
The parties agree that in the event it is necessary to employ attorneys to
enforce the terms of this Agreement, the prevailing party in any lawsuit shall
be entitled to an award of reasonable attorneys' fees and court costs.
a) This Agreement may not be assigned without prior written mutual consent
of Programmer and Wink.
b) This Agreement may be amended only by an instrument in writing, executed
by Programmer and Wink.
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c) This Agreement will be governed in all respects by the laws of the State
of New York.
d) This Agreement represents the entire agreement between the parties and
supersedes and replaces all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof
between Programmer and Wink.
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IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. MTV NETWORKS
By: /s/ Maggie Wilderotter By: /s/ Eugene F. Quinn
---------------------------- ----------------------------
Name: Maggie Wilderotter Name: Eugene F. Quinn
---------------------------- --------------------------
Title: President & CEO Title: SVP
---------------------------- -------------------------
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EXHIBIT A; PROGRAMMING SERVICES
Description of Programming Services:
NAME Start of Wink Video ICAP Virtual Insertion
Program. (A/D) Loc. Ch? Point
VH1 April 1, 1998 (*)Analog TBD No New York
Nick/nick-at-nite April 1, 1998 (*)Analog TBD No New York
(*) Programmer agrees to exert reasonable efforts to commence the transmission
of Interactive Programs by February 15, 1998.
"Video Programming": Any video programming airing on the above Programming
Services, and chosen by Programmer for use with Interactive Programs.
Contact Information:
ISSUE ADDRESS CONTACT(S) PHONE /FAX/E-MAIL
Example:
Content refresh 111 Park Avenue Stephen Jones 212-123-4567
New York, NY 10001 Director, Enhanced 212-765-4321
Broadcasting [email protected]
Actual Contact Info:
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EXHIBIT B; WINK RESPONSE CENTER SERVICES
Polls by Zip Code-Report Only [ * ]
1-100,00 transactions/mo. [ * ]
100,000 transactions/mo. [ * ]
Polls by System-Report Only
1-250,00 transactions/mo. [ * ]
251,000 transactions/mo. [ * ]
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest
price applies to all transactions for the month.
PURCHASE AND REQUEST TRANSACTION FEES INCLUDE/EXCLUDE:
1. Daily name & address lists delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
4. Viewer credit card information if it is "on file" with the WRS. If not,
for the extra [ * ], Wink will mail a "purchase confirmation" to the
viewer to add the credit card, and provide a list of viewers who did not
supply their credit card.
5. Interface to standard EDI VAN for [ * ].
FULFILLMENT EDI/API
- - - Standard interface set-up fee [ * ]
- - - Non-standard Interface [ * ]
- - - Interface License/Maintenance fee [ * ]
SET UP FEES-RESPONSE SERVICES
- - - Advertiser [ * ]
- - - Content Provider [ * ]
REPORT GENERATION FEES [ * ]
RESPONSE DATA CENTER PRODUCTS
- - - Purchase confirmation mailer [ * ]
- - - List of responders who do not respond to
purchase confirmation mailers [ * ]
- - - Branded envelope [ * ]
- - - Advertiser/Programmer Purchase Points Club [ * ]
- - ----------------------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portion shave been filed
with the Commission.
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EXHIBIT C; WINK SOFTWARE AND SERVICES PRICING
All on-going fees are due the first of the month. The installation and
integration fees are due upon Programmer's acceptance of the installation of the
Broadcast Server, and transmission and receipt by Wink testers of one nationally
inserted test application defined by Wink ("First Air Date"). Technical
acceptance shall not be unreasonably withheld. License fees commence on the
first of the 13th month following the First Air Date.
<TABLE>
<CAPTION>
On-going
Or One- First Year First Year Yr. 2 & 3 Total 3-yr
Time Price (Per Price Price (Per Charter
Costs Month) (Total) Month) Price
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [ * ][ * ] [ * ][ * ]
Server Modules On-going [ * ][ * ] [ * ][ * ]
Tech Support On-going [ * ][ * ] [ * ][ * ]
Subtotal On-going [ * ][ * ] [ * ][ * ]
Server hardware (1) One-time [ * ][ * ] [ * ][ * ]
2 Data insertion units One-time [ * ][ * ] [ * ][ * ]
Installation and integration (2) One-time [ * ][ * ] [ * ][ * ]
Studio and Server Studio seat One-time [ * ][ * ] [ * ][ * ]
license (3)
Studio/Server training (3x2days) One-time [ * ][ * ] [ * ][ * ]
SUBTOTAL ONE-TIME [ * ][ * ] [ * ][ * ]
TOTAL BOTH [ * ][ * ] [ * ][ * ]
</TABLE>
(1) includes server, monitor, cables, connectors, modem for remote dial in
(2) The above pricing for Installation and Integration covers all work
necessary to enable scheduling and transmission of program enhancements
based on Wink Studio templates. It does not cover detailed integration
with Programmer's ad insertion system for the purpose of enabling
enhancements to spot advertising.
(3) 5-seat licenses for both
OPTIONAL SOFTWARE AND SERVICES
BROADCAST SERVER, SERVER MODULE, TECH SUPPORT FOR OTHER PROGRAMMING SERVICES
(NOTE A):
MTV and TV Land - same pricing as VH1 and
Nick/Nick-at-Nite
Other MTVN programming services - same, except first year fees = [ * ]
Comedy Central, Viacom program services - same, except first year fees = [ * ]
HARDWARE AND INSTALLATION FEES FOR OTHER PROGRAMMING SERVICES (NOTE A):
MTV and TV Land - [ * ]
Other MTVN programming services - same as MTV and TV Land
Comedy Central, Viacom program services - same as VH1 and Nick/Nick-at-Nite
Note A: if launched within 12 months of First Air Date, US program services only
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Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses are billed separately at cost
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EXHIBIT D; PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE PROGRAMS
Programmer: MTV Networks
Programming Services: VH1 and Nickelodeon/Nick-at-Nite
This Agreement sets forth the terms and conditions for the national distribution
of Wink ITV Applications ("Interactive Programs" ) to any multi channel video
operator in the United States or Canada with whom Programmer already has an
agreement for carriage of the MTV Networks services set forth herein("System
Operator).
1. BACKGROUND
Programmer has created one or more Interactive Programs which are compliant with
the Wink Communications, Inc. ("Wink") interactive communications application
protocol. The Interactive Programs are transmitted by Programmer using either
the vertical blanking interval ("VBI") of the corresponding video signal, or
using MPEG private data streams provided concurrently with the corresponding
video signal(s).
System Operator distributes one or more of Programmer's signals through one or
more of the following: cable, satellite and MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this Agreement shall commence on the date of Programmer's execution
of this Agreement and terminate three (3) years thereafter, unless Programmer
and Wink terminate their Charter Programmer Affiliation Agreement in accordance
with the terms of that agreement.
This Agreement will automatically renew for one year periods unless either party
notifies the other at least 90 days prior to the end of the then current term of
that party's intent not to renew.
3. INTEGRITY OF INTERACTIVE PROGRAMS
Programmer will ensure that the Interactive Programs meet Wink's criteria for
Wink compliant applications (See Attachment 1). Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution.
Programmer understands that failure to meet the above criteria could result in
System Operator suspending the distribution of one or more Interactive Programs
until such time as all Interactive Programs are certified by Wink to be in
compliance.
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4. DISTRIBUTION
Programmer hereby grants System Operator a non-exclusive license to distribute
the Interactive Programs delivered in the VBI or MPEG of Programmer's video
signal. Programmer agrees that each Interactive Program shall have been either
successfully tested by Programmer or certified as compliant by Wink prior to the
Delivery to System Operator for distribution, and shall bear any associated
costs of such testing.
Programmer agrees not to charge System Operator fees associated with Interactive
Programs for the term of this Agreement. Likewise, System Operator agrees that
no fees or charges will be due from carriage or retransmission of the
Interactive Programs as provided for hereunder.
Programmer will provide System Operator written notice at least 30 days prior to
discontinuing national transmission of all Interactive Programs.
It is a condition of System Operator's right to carry the Interactive Programs
that System Operator shall distribute Programmer's Interactive Programs without
modification, and that System Operator may not modify or enhance any VBI lines
described in Exhibit A. Programmer agrees that System Operator may copy the
Interactive Programs for simultaneous transmission in different encoding formats
other than what Programmer currently uses including but not limited to, other
VBI formats, out of band channels, and MPEG2 private data streams; provided such
Interactive Programs are presented together with the original corresponding
video to System Operator's subscribers, and that such copying is done to enable
System Operator's subscribers to properly receive and display the Interactive
Programs on their set top box or television set.
System Operator can, if permitted in Exhibit A, locally insert Interactive
Programs as instructed by Programmer. System Operator is solely responsible for
any costs associated with such local insertion. Programmer will notify System
Operator of changes to any such permissions through amendments to Exhibit A
provided at least 30 days prior to the effective date of such requirements.
System Operator may suspend transmission of the Interactive Program during the
insertion by System Operator of local advertising avails as authorized in any
separate agreements between Programmer and System Operator.
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Programs. Programmer also agrees to use Wink Communication's standard scripts
and guidelines for response applications.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive
Programs and may use Programmer's name, logo, and screen shots from the
Interactive Programs in such marketing materials, provided that such materials
are submitted to Programmer for review and approval prior to distribution.
Programmer's approval of such marketing materials shall not be unreasonably
withheld or delayed.
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7. SCOPE
This Agreement does not interfere with or negate other Agreements between
Programmer and System Operator. This Agreement represents all of the terms and
conditions for Programmer providing Interactive Programs. This Agreement may be
updated from time to time only by express written consent of Programmer.
PROGRAMMER
By: /s/ Eugene F. Quinn
-----------------------------------
Name: Eugene F. Quinn
---------------------------------
Title: Senior Vice President
--------------------------------
Date: 12/12/97
---------------------------------
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EXHIBIT D, ATTACHMENT 1: CRITERIA FOR WINK COMPLIANT APPLICATION
- - - All applications must be registered and contain a unique universal ICAP
code (UIC) prior to being broadcast.
- - - Registered applications have passed a standard set of tests which
validate:
- that the application can be delivered through the VBI or MPEG
private data stream, will arrive as appropriate, and can be
decoded in the Wink engine.
- that the application does not generate error messages.
- that the application receives scheduled updates, if applicable.
- that the application passes minimum acceptable latency standards.
- that the application does not cause System Operator technical or
operational problems.
- that the application, if two-way, generates the appropriate
routing address and usage data.
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EXHIBIT E; PRELIMINARY EQUIPMENT LIST
Wink Broadcast Server and Server Modules
- - - Sun Ultra, with 64MB RAM, 1 GB+ hard disk, Solaris 2.4 or 2.5, CD-ROM,
Ethernet connection to Programmer's LAN, dial-up modem, tape or other
backup mechanism
- - - 2 Norpak TES-3 VBI data inserters with VBI software modules
- - - LAN/serial connections to master control system, ftp site (for data),
other hardware as necessary
Wink Studio, Server Studio and Broadcast Server remote GUI
- - - Pentium Windows PC with 16MB+ RAM, 1 GB+ hard disk, 1024x768x256 color
graphics, 17"+ monitor, Ethernet connection to enable electronic
delivery of applications to the WBS, Internet access to enable
electronic access to Wink's Data Center
Test equipment
- - - GI CFT-2200 set top box, marketing firmware
- - - High grade video source (Beta SP or better)
- - - Coax Modulator
Optional (TBD)
- - - Annex Terminal Server for additional serial ports
CONFIDENTIAL
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<PAGE> 21
EXHIBIT F
TRADEMARK GUIDELINES
Pursuant to the Agreement, Programmer has granted to Wink the non-exclusive
right to use the Programmer name, trademark and logo as provided by Programmer
(the "Mark") solely in connection with this Agreement. Wink will not use the
Mark in any other manner other than as authorized herein.
1. All proprietary rights, title, interest and control of the Mark,
including any goodwill or other value generated in connection with the
use of the Mark, in the Territory, shall at all times rest with
Programmer, but Programmer does not thereby acquire any interest in
Wink's business or revenues derived from that business. At no time shall
Wink attempt to register the Mark or other materials identical,
substantially similar to, or likely to cause confusion with Programmer's
Mark. Wink shall comply with all reasonable requirements of Programmer
for legal, creative or artistic reasons in connection with the use of
the Mark in order to enable Programmer to protect and ensure consistency
in the use of the Mark. Wink shall at all times use its reasonable
endeavors to monitor any other unauthorized uses or misuses
("infringements") of the Mark, and shall promptly notify Programmer of
any such infringements it discovers. Wink agrees to use reasonable
efforts and cooperate with Programmer, upon Programmer's request and at
Programmer's expense, in terminating infringing or unauthorized or
wrongful uses of the Mark and undertakes to furnish any documentary
evidence or evidentiary materials which Programmer may reasonably
require for the purpose of terminating such uses. In addition, Wink
undertakes to use its reasonable efforts to assist and cooperate with
Programmer, at Programmer's expense, in the prosecution of any lawsuits,
legal actions or other proceedings which, in the opinion of Programmer,
are necessary or advisable to protect the Mark. The expense of such
proceedings shall be borne by Programmer. The right to protect the Mark,
as well as the right to determine in all respects the manner of
protection, shall at all times rest exclusively with Programmer.
As between Programmer and Wink, all proprietary right, title and
interest, including, but not limited to copyright in the Mark shall rest
exclusively with Programmer.
2. Wink acknowledges that Programmer is the owner of the Mark and of all
ideas, concepts, trademark and copyrights in copyrightable subject
matter comprised in the Mark. It is understood and agreed that Wink
shall not acquire and shall not claim any title to the Mark by virtue of
the license granted to Wink or through Wink's use of the Mark, the
parties agreeing that all use of the Mark by Wink shall inure for the
benefit of the Programmer. Wink will reasonably undertake to execute any
instruments, acknowledgments, assignments or similar documents
Programmer reasonably deems necessary or advisable to confirm or
effectuate Programmers ownership of said subject matter. Wink further
acknowledges the validity of the Mark and of Programmer's other
trademarks or materials, and agrees not to institute or participate in
any proceedings which challenge the validity of such Mark and/or other
trademark or materials, or of Programmers ownership thereof.
CONFIDENTIAL
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<PAGE> 22
3. Wink will not use the Mark to disparage Programmer, its products or
services, or promotional goods or for products which, in Programmers
reasonable judgment, may diminish or otherwise damage Programmers
goodwill in the Mark, including but not limited to uses which, could be
deemed to be obscene, pornographic, excessively violent, or otherwise in
poor taste or unlawful, or which purpose is to encourage unlawful
activities. Wink will not imitate the Mark in any of Wink materials,
including advertising, product packaging, and promotional materials and
press materials.
4. Wink shall obtain written consent for any advertising, promotions and
press releases using Programmer's Mark. Programmer shall use all
reasonable efforts to provide approval/comments on any submitted
advertising and promotions within three (3) business days or in less
time as the circumstances reasonably warrant.
CONFIDENTIAL
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<PAGE> 1
EXHIBIT 10.10
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 27th day of October, 1997, by and between Wink
Communications, Inc., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and CBS Cable, a division of
Westinghouse Electric Corporation, a Pennsylvania corporation ("Programmer"),
whose address is 250 Harbor Drive, Stamford, Connecticut 06904.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use
Wink ITV Studio, Wink ITV Broadcast Server, and Wink provided Server
Modules version 1.0 and 1.x updates (hereinafter collectively referred
to as "Wink Software") to deliver interactive program(s) which utilize
the vertical blanking interval ("VBI") or an MPEG private data stream
provided concurrently with the corresponding video signal and are
compliant with the Wink interactive communications application protocol
("Interactive Programs") to all Programmer viewers in the continental
United States, Alaska, Hawaii, the US territories in the Caribbean and
Canada.
1.2 This License is not transferable, nor may any rights hereunder be
transferred, assigned or sub- licensed in whole or in part without Winks
prior written consent.
1.3 Programmer is licensed to use the Wink software only to provide
Interactive Programs with the video programming service listed in
Exhibit A. Programmer must notify Wink in writing at least 30 days prior
to commencing transmission of Interactive Programs with a video
programming service. Programmer agrees to adhere to the technical
specifications for the insertion of Interactive Programs provided in
Exhibit A. Exhibit A may be amended from time to time by Programmer upon
30 days prior written notice, except that insertion points outside of
Programmer's facilities, including but not limited to local insertion by
participating cable operators, requires the mutual consent of the
parties.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution
of this Agreement and terminate three (3) years thereafter.
2.2 This Agreement will automatically renew for one year periods unless
either party notifies the other at least 90 days prior to the end of the
then-current term of that party's intent not to renew.
CONFIDENTIAL - PAGE 1
<PAGE> 2
2.3 Programmer can elect to terminate the sooner of June 30, 1999 or
eighteen (18) months after the first airing of Programmer's Interactive
Programs ("the Option Date"). Programmer must notify Wink of it's intent
to terminate at least 90 days prior to the Option Date.
3. INTEGRATION
3.1 Programmer's distribution of the Interactive Programs for each
Programming Service (as defined in Exhibit A) shall be through its
national uplink or broadcast facilities.
3.2 Programmer and Wink agree to collaborate to enable the installation
and integration of the Wink Software into Programmer's facilities, and
to ensure the reliable transmission of the Interactive Programs.
Programmer is responsible for providing all necessary equipment to run
the Wink Software and to enable insertion of Interactive Programs into
the appropriate video signals. Exhibit E provides a preliminary list of
such equipment, and is subject to a final site visit by Wink's
Operations department. Programmer will be presented with a final list of
equipment no later than November 15, 1997.
3.3 Wink agrees to provide weekly reporting to Programmer of all
response traffic generated by Programmer viewers and collected by Wink's
Data Center. Programmer accepts Wink's terms for all other response
traffic and reporting, as outlined in Exhibit B.
3.4 [ * ]
3.5 Programmer is responsible for payment to third party providers of
sports data or news, leagues, and other entities to which Programmer
deems it necessary to make payments to enable the creation or
transmission of Interactive Programs.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to provide Interactive Programs as described in
Exhibit A.
4.2 Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis.
4.3 Programmer agrees to provide the Interactive Programs to any multi
channel video operator in the United States or Canada with whom
Programmer already has an agreement for carriage of
- - ----------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
CONFIDENTIAL - PAGE 2
<PAGE> 3
Programmer's video programming ("System Operators") to the extent
permitted by such agreement. The Interactive Programs will be provided
under the terms described in Exhibit D, and Programmer agrees that Wink
may provide a copy of Exhibits A and D to System Operators as evidence
of Programmer's agreement to supply the Interactive Programs under such
terms and any additional terms imposed by the agreement for carriage of
Programmer's video programming.
4.4 Programmer may choose to utilize other products and services of Wink
from time to time under this Agreement. These services will be extended
by Wink to Programmer at the then prevailing retail rate.
5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following each month
throughout the term of this Agreement, Programmer shall remit to Wink
all fees owed for licenses provided and services rendered in the
previous month, according to the price schedules provided in Exhibit C.
5.2 Past due payments shall bear interest at a rate equal to the lesser
of (i) one and one-half percent (1-1/2%) per month or (ii) the maximum
rate permitted under law, and Programmer shall be liable for all
reasonable costs and expenses (including, without limitation, reasonable
court costs and attorneys' fees) incurred by Wink in collecting any past
due payments.
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a press release approved by each of them
announcing this agreement on or before October 21, 1997. Wink will
provide Programmer with a draft of this release by October 15, 1997.
6.2 Wink agrees to provide Programmer with notice within 30 days of
System Operators having enabled their subscribers to receive
Programmer's Interactive Programs.
6.3 Wink agrees to promote and feature Programmer's Interactive Programs
in Wink's marketing literature, during meetings with cable operators and
the press, and during industry trade shows. Wink will also use
reasonable efforts to assist Programmer in achieving its marketing
objectives in materials prepared by third parties, such as cable
equipment manufacturers and cable operators. Programmer agrees to
promote its participation as a charter Wink programmer to cable
operators, and to serve as a press reference for Wink during the term of
the agreement.
6.4 Programmer agrees to cooperate with Wink and System Operators in
promoting Programmer's Interactive Programs. Wink and System Operators
may prepare marketing materials relating to the Interactive Programs and
shall have a license to use Programmer's name, logo and screen shots
(collectively, "Programmer's Marks") from the Interactive Programs,
provided that such materials are submitted to Programmer for review and
approval prior to distribution.
CONFIDENTIAL - PAGE 3
<PAGE> 4
Programmer's approval of such materials shall not be unreasonably
withheld. Wink hereby acknowledges and agrees that, as between Wink and
Programmer, Programmer is the sole owner of all right, title and
interest in and to the Programmer's Marks. All uses of the Programmer's
Marks shall inure to the benefit of Programmer. Upon any expiration or
termination of this Agreement, Wink shall delete and discontinue all use
of the Programmer's Marks. At no time during or after the term of this
Agreement shall Wink challenge or assist others to challenge the
Programmer's Marks or the registration thereof or attempt to assist
another in the attempt to register any trademarks, marks or similar
rights for marks the same as or confusingly similar to the Programmer's
Marks.
6.5 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in collaboration with Programmer. To the
extent it is permitted to do so, Programmer shall provide Wink with
reasonable assistance at no cost to Programmer in conducting such
research with respect to Programmer's viewers. Programmer agrees that
Wink will have access, to such extent, to all such research regarding
the deployment, launch, and usage of Wink service by Programmer viewers.
Wink agrees to provide copies of final reports from such research
activity to Programmer.
6.6 Programmer understands and accepts that Wink will be providing reports
on viewer responses to the Interactive Programs to System Operator(s)
for responses that originate from System Operator's subscribers, and to
advertisers and other parties for responses that originate from
Interactive Programs paid for or sponsored by such parties. Wink agrees
that reports providing specific data regarding viewer responses to
Programmer's Interactive Programs, including data on Wink viewer
responses to advertising Programming Services, will not be made
available to other broadcast or cable networks or to the press, except
in aggregated form that does not identify Programmer or specific
Programmer viewer data. Wink also agrees to use all reasonable efforts
to restrict the distribution of reports provided to System Operators to
the System Operator organization and affiliates, and to prevent
distribution to any Programming Services wholly or partially owned by
the System Operator.
7. WARRANTY
7.1 Wink hereby represents and warrants to Programmer that the Wink
Software will operate and perform in accordance with all published
specifications with respect thereto.
7.2 Wink hereby warrants and represents that the terms contained herein
for licensing of Wink software, provisioning of Wink services and
Programmer's commitment for Interactive Programs are, as a whole, as
favorable as any other similar agreement Wink has entered into with
other North American cable programming entities.
CONFIDENTIAL - PAGE 4
<PAGE> 5
8. INDEMNIFICATION
Wink shall indemnify, defend and hold harmless Programmer, its
parents, subsidiaries, and affiliates and their respective
officers, directors, employees and agents from and against any
and all damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys fees and amounts paid
in settlement) they may suffer or incur which arises out of or
as a result of any, claim, demand, action, suit or proceeding in
which it is alleged that the Wink Software or any part thereof
violates or infringes any patent or copyright or other
intellectual property right of any third party or constitutes a
misappropriation of any third party's trade secrets, or which
arise out of Wink's negligence.
9. NOTICES
All notices, statements, and other communications given
hereunder shall be in writing and shall be delivered by
facsimile transmission, personal delivery, certified mail,
return receipt requested, or by next day express delivery,
addressed to the addresses provided in the first paragraph of
this Agreement, and to the attention of:
If to Wink:
Vice President, Content
If to Programmer:
Lloyd Werner, Executive Vice President
with a copy to: Law Department
The date of such facsimile transmission or personal delivery or
the next day if by express delivery, or the date three (3) days
after mailing, shall be deemed the date on which such notice is
given and effective.
10. WINK TRADEMARKS
All rights, title and interest in and to the Wink Software or
other rights, of whatever nature, related thereto shall remain
the property of Wink. Further, Programmer acknowledges and
agrees that all names, logos, marks, copyright notices or
designations utilized by Wink in connection with the service are
the sole and exclusive property of Wink, and no rights or
ownership are intended to be or shall be transferred to
Programmer.
11. REPRESENTATION
11.1 Wink represents and warrants to Programmer that (i) it is a
corporation duly organized and validly existing under the laws
of the State of California; (ii) Wink has the corporate power
and authority to enter into this Agreement and to fully perform
its obligations hereunder (iii)
CONFIDENTIAL - PAGE 5
<PAGE> 6
Wink is under no contractual or other legal obligation which in any way
interferes with its ability to fully, promptly and completely perform
hereunder.
11.2 Programmer represents and warrants to Wink that (i) Programmer is a
division of a corporation duly organized and validly existing under the
laws of the State of Pennsylvania; (ii) Programmer has the requisite
power and authority to enter into this Agreement and to fully perform
its obligations hereunder; and (iii) Programmer is under no contractual
or other legal obligation which in any way interferes with its ability
to fully, promptly and completely perform hereunder.
12. CONFIDENTIALITY
Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to
others, any of the other party's Confidential Information (as defined
below). Without limiting the generality of the foregoing, each party
will (i) restrict the disclosure of the other party's Confidential
Information to those of its employees who require such information for
purposes of performing its obligations hereunder, (ii) inform each such
employee of the confidential nature of the information disclosed, (iii)
prevent the use or disclosure by its employees of such Confidential
Information, except as provided herein, and (iv) promptly notify the
other party of any use or disclosure of the Confidential Information,
whether intentional or not, which violates the provisions of this
Paragraph 12. For purposes of this Agreement, the term "Confidential
Information" means all technical, business and other information
disclosed by one party to the other that derives economic value, actual
or potential, from not being generally known to other persons, and may
include without limitation, technical and non-technical data, devices,
methods, techniques, drawings, processes, computer programs, algorithms,
methods of operation, financial data, financial plans, product plans,
and lists of actual or potential customers or suppliers. Confidential
Information does not include information which does not constitute a
trade secret under applicable law. The parties agree to keep the terms
of this Agreement confidential, but acknowledge that certain disclosures
may be required by law. Programmer understands and acknowledges that
Wink may provide copies of Exhibits A and D to System Operators.
13. TERMINATION
13.1 Except as otherwise provided herein, neither Programmer nor Wink may
terminate this Agreement except upon sixty (60) days prior written
notice and then only if the other has made a misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within sixty (60) days of such notice.
13.2 Without prejudice to the generality of the foregoing, Wink will have the
right to terminate this Agreement or all or any licenses granted herein
if Programmer fails to make timely payment of
CONFIDENTIAL - PAGE 6
<PAGE> 7
license fees and other fees due Wink under this Agreement, or fails to
comply with the commitment to the frequency of Interactive Programs
defined in paragraph 3.4 of this Agreement. Should Wink elect to
exercise this right to terminate for nonperformance, it must be done in
writing specifically setting forth the items of nonperformance.
Programmer will then have fifteen (15) days from receipt of notification
to remedy the items of nonperformance. Should Programmer fail to correct
these items of nonperformance, then Wink may terminate this agreement
and any license granted. Notwithstanding the foregoing, any balance
accrued and due Wink under this Agreement as of the effective date of
termination remain obligations of Programmer. Wink shall have no other
remedy.
13.3 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the
Wink Software will cease and Programmer will immediately and on
reasonable terms (i) grant to Wink access to its business premises and
the Wink Software and allow Wink to remove the Wink Software (which
removal shall be done with as little disturbance as possible to
Programmers business operations), (ii) purge all copies of all Wink
Software from all computer processors or storage media on which
Programmer has installed or permitted others to install such Wink
Software, and (iii) when requested by Wink, certify to Wink in writing,
signed by an officer of Programmer, that all copies of the Wink Software
have been returned to Wink or destroyed and that no copy of any Wink
Software remains in Programmer's possession or under its control.
13.4 Programmer has the right to suspend the airing of Interactive Programs
if the transmission interferes with the airing of Programmer's video
programming or Wink fails to provide weekly reports regarding usage of
Programmer's Interactive Programs, and may continue such suspension
until Wink has resolved such problems to Programmers satisfaction.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys to
enforce the terms of this Agreement, the prevailing party in any lawsuit shall
be entitled to an award of reasonable attorneys' fees and court costs.
a) This Agreement may not be assigned without prior written mutual consent
of Programmer and Wink. Consent shall not be required for assignment to
a corporate affiliate, assuming that the programming services providing
Interactive Program's remain as defined in Exhibit A.
b) This Agreement may be amended only by an instrument in writing, executed
by Programmer and Wink.
c) This Agreement will be governed in all respects by the laws of the State
of New York.
d) This Agreement represents the entire agreement between the parties and
supersedes and replaces all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof
between Programmer and Wink.
CONFIDENTIAL - PAGE 7
<PAGE> 8
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. CBS CABLE
By: /s/ Maggie Wilderotter By: /s/ Donald Mitzner
Name: Maggie Wilderotter Name: Donald Mitzner
Title: President and CEO Title: President
CONFIDENTIAL - PAGE 8
<PAGE> 9
EXHIBIT A: PROGRAMMING SERVICES
Description of Programming Services:
NAME START OF WINK VIDEO ICAP VIRTUAL
INSERTION
PROGRAMMING (A/D) LOCATION CH?
POINT
TNN December 15,1997 Analog TBD No
Nashville
Contact Information:
ISSUE ADDRESS CONTACT(S) PHONE /FAX/E-MAIL
Example:
Content refresh 111 Park Avenue Stephen Jones 212-123-4567
New York, NY 10001 Director, Enhanced 212-765-4321
Broadcasting [email protected]
Actual Contact Info:
CONFIDENTIAL - PAGE 9
<PAGE> 10
EXHIBIT B: WINK RESPONSE CENTER SERVICES
Polls by Zip Code - Report Only [ * ]
1-100,000 transactions/mo. [ * ]
100,000 + transactions/mo. [ * ]
Polls by Systems-Report Only [ * ]
[ * ]
1-250,000 transactions/mo. [ * ]
251,000 + transactions/mo. [ * ]
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest
price applies to all transactions for the month.
PURCHASE AND REQUEST TRANSACTION FEES INCLUDE / EXCLUDE;
1. Daily name & address lists delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
4. Viewer credit card information if it is "on file" with the WRS. If not,
for the extra [ * ], Wink will mail a "purchase confirmation" to the
viewer to add the credit card, and provide a list of viewers who did not
supply their credit card.
5. Interface to standard EDI VAN for [ * ].
FULFILLMENT EDI/API
* Standard interface set-up fee [ * ]
* Non-standard Interface Quoted
* Interface License/Maintenance fee [ * ]
SET UP FEES-RESPONSE SERVICES
* Advertiser [ * ]
* Content Provider [ * ]
CONFIDENTIAL - PAGE 10
<PAGE> 11
REPORT GENERATION FEES [ * ]
RESPONSE DATA CENTER PRODUCTS
* Purchase confirmation mailer [ * ]
* List of responders who do not respond to
* purchase confirmation mailers [ * ]
* Branded envelope [ * ]
* Advertiser/Programmer Purchase Points Club [ * ]
CONFIDENTIAL - PAGE 11
<PAGE> 12
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING
All on-going fees are due the first of the month. The installation and
integration fees are due upon Programmer's acceptance of the successful
installation of the Broadcast Server, and transmission and receipt by Wink
testers of one nationally inserted test application defined by Wink ("First Air
Date"). Such acceptance shall not be unreasonably withheld. The Broadcast Server
license fees commence on the first of the month following the First Air Date,
and the WebCore license fees and technical support fees commence on the one year
anniversary of the First Air Date.
<TABLE>
<CAPTION>
ON- FIRST FIRST YR. 2&3 TOTAL 3-
GOING YEAR YEAR PRICE YR
OR ONE- PRICE PRICE (PER CHARTER
TIME (PER (TOTAL) MONTH) PRICE
COSTS MONTH)
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [ * ] [ * ] [ * ] [ * ]
WebCore Module On-going [ * ] [ * ] [ * ] [ * ]
Tech Support On-going [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ON-GOING [ * ] [ * ] [ * ] [ * ]
Server hardware One-time [ * ] [ * ] [ * ] [ * ]
Data insertion unit One-time [ * ] [ * ] [ * ] [ * ]
Install. and
integration One-time [ * ] [ * ] [ * ] [ * ]
Studio site One-time [ * ] [ * ] [ * ] [ * ]
license (5 seats)
Studio/WebCore One-time [ * ] [ * ] [ * ] [ * ]
training (3x2days)
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ]
TOTAL BOTH [ * ] [ * ] [ * ] [ * ]
</TABLE>
Wink reserves the right to increase license fees annually after the first 12
months of the contract period by the percentage increase in the consumer price
index for goods and services for the prior 12 months.
The above pricing for installation and integration covers all work necessary to
enable scheduling and transmission of program enhancements based on Wink Studio
templates. It does not cover detailed integration with Programmer's ad insertion
system for the purpose of enabling enhancements to spot advertising.
CONFIDENTIAL - PAGE 12
<PAGE> 13
OPTIONAL SERVICES
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses are billed separately at cost
CONFIDENTIAL - PAGE 13
<PAGE> 14
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE PROGRAMS
Programmer: CBS Cable
Programming Service: The Nashville Network
This Agreement sets forth the terms and conditions for the national distribution
of Wink ITV Applications ("Interactive Programs") to any multi channel video
operator in the United States or Canada with whom Programmer already has an
agreement for carriage of Programmer's video programming ("System Operator").
1. BACKGROUND
Programmer has created one or more Interactive Programs which are compliant with
the Wink Communications, Inc. ('Wink") interactive communications application
protocol. The Interactive Programs are transmitted by Programmer using either
the vertical blanking interval ("VBI") of the corresponding video signal, or
using MPEG private data streams provided concurrently with the corresponding
video signal(s).
System Operator distributes one or more of Programmers signals through one or
more of the following: cable, satellite and MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this Agreement shall commence on the date of Programmer's execution
of this Agreement and terminate three (3) years thereafter, unless Programmer
and Wink terminate their Charter Programmer Affiliation Agreement in accordance
with the terms of that agreement.
This Agreement will automatically renew for one year periods unless either party
notifies the other at least 90 days prior to the end of the then-current term of
that party's intent not to renew.
3. INTEGRITY OF INTERACTIVE PROGRAMS
Programmer will ensure that the Interactive Programs meet Wink's criteria for
Wink compliant applications (See Attachment 1). Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution.
Programmer understands that failure to meet the above criteria could result in
System Operator suspending the distribution of one or more Interactive Programs
until such time as all Interactive Programs are certified by Wink to be in
compliance.
CONFIDENTIAL - PAGE 14
<PAGE> 15
4. DISTRIBUTION
Programmer hereby grants System Operator a non-exclusive license to distribute
the Interactive Programs delivered in the VBI or MPEG of Programmer's video
signal. Programmer agrees that each Interactive Program shall have been either
successfully tested by Programmer or certified as compliant by Wink prior to the
Delivery to System Operator for distribution, and shall bear any associated
costs of such testing.
Programmer agrees not to charge System Operator fees associated with Interactive
Programs for the term of this Agreement. Likewise, System Operator agrees that
no fees or charges will be due from carriage or retransmission of the
Interactive Programs as provided for hereunder.
Programmer will provide System Operator written notice at least 30 days prior to
discontinuing national transmission of all Interactive Programs.
It is a condition of System Operator's right to carry the Interactive Programs
that System Operator shall distribute Programmer's Interactive Programs without
modification, and that System Operator may not modify or enhance any VBI lines
described in Exhibit A. Programmer agrees that System Operator may copy the
Interactive Programs for simultaneous transmission in different encoding formats
other than what Programmer currently uses including but not limited to, other
VBI formats, out of band channels, and MPEG2 private data streams; provided such
Interactive Programs are presented together with the original corresponding
video to System Operator's subscribers, and that such copying is done to enable
System Operator's subscribers to properly receive and display the Interactive
Programs on their set top box or television set.
System Operator may, if permitted in Exhibit A, locally insert Interactive
Programs as instructed by Programmer. System Operator is solely responsible for
any costs associated with such local insertion. Programmer will notify System
Operator of changes to any such permissions through amendments to Exhibit A
provided at least 30 days prior to the effective date of such amendments. System
Operator may suspend transmission of the Interactive Program during the
insertion by System Operator of local advertising avails as authorized in any
separate agreements between Programmer and System Operator.
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Programs. Programmer also agrees to use Wink Communication's standard scripts
and guidelines for response applications.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive
Programs and may use Programmer's name, logo, and screen shots from the
Interactive Programs in such marketing materials,
CONFIDENTIAL - PAGE 15
<PAGE> 16
provided that such materials are submitted to Programmer for review and approval
prior to distribution. Programmer's approval of such marketing materials shall
not be unreasonably withheld or delayed.
7. SCOPE
This Agreement does not interfere with or negate other Agreements between
Programmer and System Operator. This Agreement represents all of the terms and
conditions for Programmer providing Interactive Programs. This Agreement may be
updated from time to only by express written consent of Programmer.
PROGRAMMER
By: /s/ Donald Mitzner
Name: Donald Mitzner
Title: President
Date: October 27, 1997
CONFIDENTIAL - PAGE 16
<PAGE> 17
EXHIBIT D, ATTACHMENT 1: CRITERIA FOR WINK COMPLIANT APPLICATION
* All applications must be registered and contain a unique
universal ICAP code (UIC) prior to being broadcast.
* Registered applications have passed a standard set of tests
which validate:
* that the application can be delivered through the VBI,
will arrive as appropriate, and can be decoded in the
Wink engine.
* that the application does not generate error messages.
* that the application receives scheduled updates, if
applicable.
* that the application passes minimum acceptable latency
standards.
* that the application does not cause System Operator
technical or operational problems.
* that the application, if two-way, generates the
appropriate routing address and usage data.
CONFIDENTIAL - PAGE 17
<PAGE> 18
EXHIBIT E: PRELIMINARY EQUIPMENT LIST
Wink Broadcast Server and WebCore
* Sun Sparc 20 or faster, with 64MB RAM, 1 GB+ hard disk, Solaris 2.4 or
2.5, CD-ROM, Ethernet connection to Programmer's LAN, dial-up modem,
tape or other backup mechanism
* Norpak TES-3 VBI data inserter
* LAN/serial connections to master control system, ftp site (for data),
other hardware as necessary
* Later this fall: PC with Windows 95 and Ethernet connection to run WBS
remote GUI
Wink Studio
* Pentium Windows PC with 16MB+ RAM, I GB+ hard disk, 1024x768x256 color
graphics, 17"+ monitor, Ethernet connection to enable electronic
delivery of applications to the WBS, Internet access to enable
electronic access to Wink's Data Center
Test equipment
* GI CFT-2200 set top box, marketing firmware
* High grade video source (Beta SP or better)
* Coax Modulator
CONFIDENTIAL - PAGE 18
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EXHIBIT 10.11
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the Twelfth day of December, 1997, by and between
Wink Communications, Inc., a California corporation ("Wink"), whose address is
1001 Marina Village Parkway, Alameda, CA 94501 and Turner Entertainment Group,
("Programmer"), whose address is 1050 Techwood Drive N.W., Atlanta, GA 30318.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use Wink ITV
Studio, Wink Server Studio, Wink ITV Broadcast Server, and Wink provided
Server Modules version 1.0 and 1.x updates (hereinafter collectively
referred to as "Wink Software") to deliver interactive program(s) which
utilize the vertical blanking interval ("VBI") or an MPEG private data
stream provided concurrently with the corresponding video signal and are
compliant with the Wink interactive communications application protocol
("Interactive Programs") to all Programmer viewers in the continental
United States, Alaska, Hawaii, and the US territories in the Caribbean and
Canada.
1.2 This License is not transferable, nor may any rights hereunder be
transferred, assigned or sub-licensed in whole or in part without Wink's
prior written consent except to Programmer's parent, subsidiary or
affiliated companies.
1.3 Programmer can only use the Wink software to provide Interactive Programs
with the video programming service(s) listed in Exhibit A. Programmer must
notify Wink in writing at least 30 days prior to commencing transmission
of Interactive Programs with a video programming service. Programmer
agrees to adhere to the technical specifications for the insertion of
Interactive Programs provided in Exhibit A. Exhibit A, including the
programming services enabled to insert Interactive Programs in
Programmer's video signal, may be amended from time to time by mutual
agreement.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution and
terminate three (3) years after the first broadcast of Interactive
Programs to a commercial audience ("First Air Date") unless previously
terminated in accordance with the terms hereof.
2.2 Notwithstanding anything herein to the contrary, Programmer can elect to
terminate this Agreement twelve (12) months after the First Air Date (the
"Option Date.) Programmer agrees to use reasonable efforts to define its
audience and business objectives (the "Audience Objectives") and notify
Wink of said objectives within thirty (30) days following the execution of
this Agreement as a
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guide for Wink's performance under this Agreement. Programmer agrees in
good faith to consider Wink's success in meeting the Audience Objectives
as a factor in whether it will exercise its option to terminate. To effect
the option to terminate, Wink shall notify Programmer in writing of said
option no later than (30) days prior to the Option Date. This Agreement
will automatically terminate in the event Programmer fails to provide
written confirmation to Wink of Programmer's intent to continue its
obligations hereunder, subject to the license fees set forth in Exhibit C
and all other terms and conditions hereof, by the Option Date. Without
limiting the foregoing, Programmer will have the right to suspend the
airing of Interactive Programs under the conditions described in Paragraph
13.4 of this Agreement.
3. INTEGRATION AND PROGRAMMING
3.1 Programmer will distribute the interactive Programs with the national feed
for each Programming Service defined in Exhibit A, or in the absence of a
single national feed, through the feed with the largest household
reception area in the country and on any additional feeds that reach at
least 5% of Programmer's existing subscribers. Such distribution will take
place through Programmer's national uplink or broadcast facilities.
Programmer shall not be obligated to distribute the Interactive Programs
on any feed other than Programmer's primary national feed in the event
that such distribution requires the extension of manpower above and beyond
the requirements the parties have previously discussed.
3.2 Programmer and Wink agree to collaborate to enable the installation and
integration of the Wink Software into Programmer's facilities, and to
ensure the reliable transmission of the Interactive Programs. Programmer
is responsible for providing all equipment necessary to run the Wink
Software and to enable insertion of Interactive Programs into the
appropriate video signal. Exhibit E provides a preliminary list of such
equipment, and is subject to a final site visit by Wink's Operations
department. Programmer will be presented with a final list of equipment no
later than 21 days following the execution of this agreement subject to
completion of the site visit referenced above. Wink will bear the cost of
any equipment that is above and beyond the equipment cost estimate
provided in Exhibit C.
3.3 Wink agrees to provide to Programmer, at no cost to Programmer, weekly
reporting of all response traffic generated by Programmer viewers and
collected by Wink's Data Center. Wink will use reasonable efforts to
provide Programmer the opportunity to influence the format of and data
included in such reports as a Charter Programmer. [ * ]
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Notwithstanding the foregoing, the parties agree in good faith to review
the Response Routing Terms no later than six (6) months following
execution hereof, and to modify such Response Routing Terms as may be
deemed reasonably necessary by mutual agreement of the parties. Wink
further agrees that the Response Routing Terms contained herein, are, as a
whole, as favorable or more favorable than the terms of any agreement Wink
has entered into with other North American cable programming entities.
3.4 Beginning on the First Air Date, Programmer agrees to air Interactive
Programs [ * ] on each enrolled Programming Service (as herein defined).
Programmer understands and accepts that any additional programming
services which take advantage of the terms provided in this Agreement must
air a minimum of [ * ]. Programmer may decide which shows include
Interactive Programs and the nature of such enhancements, as long as the
total number of hours per week is reached. No later than six (6) months
following the First Air Date, Programmer will extend reasonable efforts to
air at least [ * ], subject to the availability of Programmer's internal
resources.
3.5 Programmer is responsible for payment to third party providers of sports
data or news, leagues, and other entities to which Programmer deems it
necessary to make payments to enable the creation or transmission of
Interactive Programs.
3.6 The parties expect that the Interactive Programs will require bandwidth
equivalent to one dedicated line of VBI on each programming service.
Programmer may elect to use additional VBI lines in it's sole discretion.
3.7 All rights, including, without limitation, all copyrights, in and to the
Interactive Programs and all derivatives thereof shall belong at all times
to Programmer, and nothing herein shall be construed to convey to Wink any
right, title or interest in or to such Interactive Programs. Programmer
may license, exploit or otherwise use such Interactive Programs in any
manner Programmer may deem appropriate, whether internally or in
connection with any third party. Notwithstanding the foregoing, Programmer
may not sub-license Wink Software, or act as agent for Wink.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to provide Interactive Programs as described in this
Agreement for the programming services listed in Exhibit A.
4.2 Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis.
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4.3 Programmer agrees to provide the Interactive Programs to any multichannel
video operator in the United States or Canada with whom Programmer already
has an agreement for carriage of Programmer's video programming ("System
Operators") under the terms described in Exhibit D to the extent permitted
by such agreement, and agrees, that Wink may provide a copy of Exhibits A
and D to any System Operator as evidence of Programmer's agreement to
supply the Interactive Programs under such terms and any additional terms
imposed by the agreement for carriage of Programmer's video programming.
4.4 Programmer may choose to utilize other products and services of Wink from
time to time under this Agreement. These services will be extended by Wink
to Programmer at the then prevailing retail rate.
5. PAYMENT TERMS
5.1 Within sixty (60) days following receipt of detailed invoice therefor,
Programmer shall remit to Wink all fees owed for licenses provided and
services rendered in the previous month, according to the price schedules
provided in Exhibit C.
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Programmer of its obligation to make any
payment in a timely manner consistent with the terms of this Agreement.
Past due payments shall bear interest at a rate equal to the lesser of (i)
one and one-half percent (1.5%) per Month or (ii) the maximum legal rate
permitted under law, and Programmer shall be liable for all reasonable
costs and expenses (including, without limitation, reasonable court costs
and attorneys' fees) incurred by Wink in collecting any past due payments.
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a press release announcing this agreement on or
before December 10, 1997. Wink will provide Programmer with a draft of
this release by December 3, 1997.
6.2 Wink agrees to provide Programmer with notice within 30 days of new System
Operators having enabled their subscribers to receive Programmer's
Interactive Programs.
6.3 Wink agrees to promote and feature Programmer's Interactive Programs in
Wink's marketing literature, during meetings with cable operators and the
press, and during industry trade shows, provided that any materials
produced by Wink which feature screen shots, trademarks, tradenames,
logos, or video clips or other copyrightable works belonging to or
controlled by Programmer, as well as any press releases issued by Wink
featuring Programmer or any Programming Service, shall be subject to
Programmer's prior written approval.
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Wink will also use reasonable efforts to assist Programmer in achieving
it's marketing objectives in materials prepared by third parties, such as
cable equipment manufacturers and cable operators. Programmer agrees to
serve, where possible and subject to Programmer's internal policies and
any potential conflicts of interest, as a press reference for Wink during
the effective term of the agreement.
6.4 Wink and System Operators may prepare marketing materials relating to the
Interactive Programs and may use Programmer's name, logo and such screen
shots and video clips as may be selected and/or cleared by Programmer
(collectively, "Programmer's Marks") from the Interactive Programs, which
Programmer's Marks will be made reasonably available to Wink by
Programmer, provided that such materials are submitted to Programmer for
review and written approval prior to distribution. Wink hereby
acknowledges and agrees that, as between Wink and Programmer, Programmer
is the sole owner of all right, title and interest in and to the
Programmer's Marks, the Interactive Programs and any data used in
connection therewith. All uses of the Programmer's Marks shall inure to
the benefit of Programmer. Upon any expiration or termination of this
Agreement, Wink shall delete and discontinue all use of the Programmer's
Marks. At no time during or after the term of this Agreement shall Wink
challenge or assist others to challenge the Programmer's Marks or the
registration thereof or attempt to assist another in the attempt to
register any trademarks, marks or similar rights for marks the same as or
confusingly similar to the Programmer's Marks.
6.5 Wink may, from time to time, undertake marketing tests and surveys, rating
polls and other research in collaboration with Programmer. Programmer
shall provide Wink with reasonable assistance at no cost to Programmer in
conducting such research with respect to Programmer's viewers subject to
Programmer's internal policies and guidelines governing privacy and data
collection. Programmer agrees that Wink will have access to all such
research regarding the deployment, launch, and usage of Wink service by
Programmer viewers. Wink agrees to provide copies of final reports from
such research activity to Programmer.
6.6 Programmer understands and accepts that Wink will be providing reports on
viewer responses to the Interactive Programs to System Operator(s) for
responses that originate from System Operator's subscribers, and to
advertisers and other parties for responses that originate from
Interactive Programs paid for or sponsored by such parties. Wink agrees
that reports providing specific data regarding viewer responses to
Programmer's Interactive Programs, including data on Wink viewer responses
to advertising on Programmer's Programming Services, will not be made
available to other broadcast or cable networks, except in aggregated form
that does not identify Programmer or specific Programmer viewer data.
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7. WARRANTY
Wink hereby represents and warrants to Programmer that (i) the Wink
Software (and subsequent revisions and upgrades to same provided by Wink
to Programmer) will operate and perform in accordance with all published
specifications with respect thereto; (ii) the use by Programmer of the
Wink Software or any other rights granted by Wink hereunder will not
infringe upon the patent, copyright, trademark, or other intellectual
property rights of any third party; (iii) Wink will perform all
obligations and render all services hereunder in a professional and
workmanlike manner to the best of its abilities; (iv) Wink will throughout
the Term continue to aggressively promote and license its products and
services to cable system operators and broadcasters, and will use all
reasonable efforts to achieve the Audience Objectives and (v) the terms
contained herein, including, without limitation, all license, reporting,
installation and integration fees set forth on Exhibits B and C hereto,
are, as a whole, as favorable or more favorable than the terms of any
agreement Wink has entered into with other North American cable
programming entities agreeing to a similar programming commitment for the
provision of similar services and the granting of similar rights and
licenses, it being acknowledged and agreed that nominal differences in the
agreed number of programming hours does not constitute a "dissimilar"
programming commitment for purposes of this section.
8. INDEMNIFICATION
Wink shall indemnify, defend and hold harmless Programmer, its parents,
subsidiaries, and affiliates and their respective officers, directors,
employees and agents from and against any and all damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys
fees and amounts paid in settlement) they may suffer or incur which arises
out of or as a result of any, claim, demand, action, suit or proceeding in
which it is alleged that the Wink Software or any part thereof violates or
infringes any patent or copyright or other intellectual property right of
any third party or constitutes a misappropriation of any third party's
trade secrets or otherwise arising out of any negligent action of Wink in
connection with this Agreement.
9. NOTICES
All notices, statements, and other communications given hereunder shall be
in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day express
deliver, addressed, to the addresses provided in the first paragraph of
this Agreement, and to the attention of:
If to Wink:
Vice President, Content
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If to Programmer:
Blake Lewin
The date of such facsimile transmission, telegraphing or personal delivery
or the next day if by express delivery, or the date three (3) days after
mailing, shall be deemed the date on which such notice is given and
effective.
10. WINK TRADEMARKS
All rights, title and interest in and to the Wink Software or other
rights, of whatever nature, related thereto shall remain the property of
Wink. Further, Programmer acknowledges and agrees that all names, logos,
marks, copyright notices or designations utilized by Wink in connection
with the service are the sole and exclusive property of Wink, and no
rights or ownership are intended to be or shall be transferred to
Programmer. Notwithstanding the foregoing, Programmer may use the
intellectual property of Wink referenced in this Section in any marketing
or promotional materials produced by Programmer, subject in all instances
to Wink's prior written approval.
11. REPRESENTATION
11.1 Wink represents and warrants to Programmer that (i) it is a corporation
duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority to enter into
this Agreement and to fully perform its obligations hereunder (iii) Wink
is under no contractual or other legal obligation which in any way
interferes with its ability to fully, promptly and completely perform
hereunder.
11.2 Programmer represents and warrants to Wink that (i) Programmer is a
corporation duly organized and validly existing under the laws of the
State of Georgia; (ii) Programmer has the requisite power and authority to
enter in this Agreement and to fully perform its obligations hereunder;
and (iii) Programmer is under no contractual or other legal obligation
which in any way interferes with its ability to fully, promptly and
completely perform hereunder.
12. CONFIDENTIALITY
12.1. Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to others,
any of the other party's Confidential Information (as defined below).
Without limiting the generality of the foregoing, each party will (i)
restrict the disclosure of the other party's Confidential Information to
those of its employees who require such information for purposes of
performing its obligations hereunder, (ii) inform each such employee of
the confidential nature of the information
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disclosed, (iii) prevent the use or disclosure by its employees of such
Confidential Information, except as provided herein, and (iv) promptly
notify the other party of any use or disclosure of the Confidential
Information, whether intentional or not, which violates the provisions of
this Paragraph 12.1. For purposes of this Agreement, the term
"Confidential Information" means all technical, business and other
information disclosed by one party to the other that derives economic
value, actual or potential, from not being generally known to other
persons, including, without limitation, technical and non-technical data,
devices, methods, techniques, drawings, processes, computer programs,
algorithms, methods of operation, financial data, financial plans, product
plans, and lists of actual or potential customers or suppliers.
Confidential Information does not include information which does not
constitute a trade secret under applicable law after the second
anniversary date of this Agreement, for which is made available by Wink or
becomes available to the general public during the term. The parties agree
to keep the terms of this Agreement confidential, but acknowledge that
certain disclosures may be required by law. Programmer understands and
acknowledges that Wink may provide copies of Exhibits A and D to System
Operators.
12.2. Programmer acknowledges and agrees that any terms extended by Wink to
Cable News Network, Inc. in an agreement with that party ("The CNN
Agreement"), and specifically the Payment Terms of the CNN Agreement, of
which employees of Turner Entertainment Group may become aware in the
course of their work are also considered by Wink to be "Confidential
Information" and are subject to the confidentiality agreement in 12.1.
13. TERMINATION
13.1 Except as otherwise provided herein, neither Programmer nor Wink may
terminate this Agreement except upon sixty (60) days prior written notice
and then only if the other has made a misrepresentation herein or breaches
any of its material obligations hereunder and such misrepresentation or
breach (which shall be specified in such notice) is not or cannot be cured
within sixty (60) days of such notice.
13.2 Notwithstanding the above, either party will have the right to terminate
this Agreement or all or any licenses granted herein if the other party
fails to comply with any of its material obligations, including but not
limited to timely payment of license fees and other fees due Wink, under
this Agreement. Should either party elect to exercise this right to
terminate for nonperformance, it must be done in writing specifically
setting forth those items of nonperformance. The other party will then
have fifteen (15) days from receipt of notification to remedy the items of
nonperformance. Should such other party fail to correct these items of
nonperformance, then terminating party may terminate this agreement and
any license granted herein. The termination of this Agreement shall be
without prejudice to any other remedies the parties may have, including,
without
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limitation, all remedies with respect to the unperformed balance of this
Agreement; provided, however, that if Programmer has not made payment of
the fees or charges due hereunder and such nonpayment continues after
thirty (30) days prior written notice by Wink, then Wink may terminate
this Agreement or any license granted herein.
13.3 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the Wink
Software will cease and Programmer will immediately and on reasonable
terms (i) grant to Wink access to its business premises and the Wink
Software and allow Wink to remove the Wink Software (which removal shall
be done with as little disturbance as possible to Programmer's business
operations), (ii) purge all copies of all Wink Software from all computer
processors or storage media on which Programmer has installed or permitted
others to install such Wink Software, and (iii) when requested by Wink,
certify to Wink in writing, signed by an officer of Programmer, that all
copies of the Wink Software have been returned to Wink or destroyed and
that no copy of any Wink Software remains in Programmer's possession or
under its control.
13.4 Programmer has the right to suspend the airing of Interactive Programs if
(i) utilization of the Wink Software and Wink services interferes in any
way with the airing of Programmer's programming, (iii) Wink fails to
provide weekly reports regarding usage of Programmer's Interactive
Programs, or (iii) Wink breaches any other of its obligations hereunder.
Any suspension hereunder will not extend the term of the Agreement.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys to
enforce the terms of this Agreement, the prevailing party in any lawsuit
shall be entitled to an award of reasonable attorneys' fees and court
costs.
a) This Agreement may not be assigned without prior written mutual consent of
Programmer and Wink except Programmer may assign this Agreement without
consent to any of Programmer's parent, subsidiary or affiliated companies
or in the event of a sale or redistribution of all or substantially all of
the assets of any Programmer Service in which case such assignment will
apply only to such Programmer Service.
b) This Agreement may be amended only by an instrument in writing, executed
by Programmer and Wink.
c) This Agreement will be governed in all respects by the laws of the State
of California.
d) This Agreement represents the entire agreement between the parties and
supersedes and replaces all prior oral and written proposals,
communications
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and agreements with regard to the subject matter hereof between Programmer
and Wink.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. TURNER ENTERTAINMENT GROUP
By: /s/ Maggie Wilderotter By: /s/ Victoria W. Miller
Name: Maggie Wilderotter Name: Victoria W. Miller
Title: President & CEO Title: EVP Finance & Admin
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EXHIBIT A: PROGRAMMING SERVICES
- - -------------------------------
Description of Programming Services:
- - -------------------------------------
<TABLE>
<CAPTION>
NAME START OF WINK
VIRTUAL
INSERTION
PROGRAMMING VIDEO ICAP
CHANNEL? POINT (A/D) LOCATION
<S> <C> <C> <C> <C> <C>
TNT February 1998 Analog TBD No Atlanta
TBS February l998 Analog TBD No Atlanta
</TABLE>
Each programming service must air a minimum of [ * ] of Interactive
Programs per week
Contact Information:
ISSUE ADDRESS CONTACT(S) PHONE/FAX/E-MAIL
Actual Contact Info:
TBD
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EXHIBIT B: WINK RESPONSE CENTER SERVICES
<TABLE>
<CAPTION>
Purchase Transaction Fees Price/Transaction
(Viewer name, address, credit card) [ * ]
- - ----------------------------------- -----------------------
<S> <C>
1 - 5,000 transactions/mo [ * ]
5,001 - 25,000 transactions/mo [ * ]
25,001 - 100,000 transactions/mo [ * ]
100,001 - 250,000 transactions/mo [ * ]
250,001 - 500,000 transactions/mo [ * ]
500,001 - up transactions/mo [ * ]
Credit Card Registration [ * ]
Request Transaction Fees [ * ]
(Viewer name, address only)
1 - 5,000 transactions/mo [ * ]
5,001 - 25,000 transactions/mo [ * ]
25,001 - 100,000 transactions/mo [ * ]
100,001 - 250,000 transactions/mo [ * ]
250,001 - 500,000 transactions/mo [ * ]
500,001 - up transactions/mo [ * ]
Polls by Zip Code - Report Only [ * ]
1 - 100,000 transactions/mo [ * ]
100,000 + transactions/mo [ * ]
</TABLE>
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Polls by System - Report Only [ * ]
[ * ]
1 - 250,000 transactions/mo [ * ]
251,000 + transactions/mo [ * ]
1. Minimum monthly charges per application include UIC (Universal ICAP code)
registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest price
applies to all transactions for the month.
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EXHIBIT B: WINK RESPONSE CENTER SERVICES (CONTINUED)
PURCHASE AND REQUEST TRANSACTION FEES INCLUDE / EXCLUDE;
1. Daily name & address lists delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
4. Viewer credit card information if it is "on file" with the WRS. If not,
for the [ * ], Wink will mail a "purchase confirmation" to the viewer to
add the credit card, and provide a list of viewers who did not supply
their credit card.
5. Interface to standard EDI VAN for [ * ].
FULFILLMENT EDI/API
* Standard interface set-up fee [ * ]
* Non-standard Interface
* Interface License/Maintenance fee [ * ]
SETUP FEES-RESPONSE SERVICES
* Advertiser
* Content Provider [ * ]
REPORT GENERATION FEES [ * ]
RESPONSE DATA CENTER PRODUCTS
* Purchase confirmation mailer [ * ]
* List of responders who do not respond to
* purchase confirmation mailers [ * ]
* Branded envelope [ * ]
* Advertiser/Programmer Purchase Points Club [ * ]
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EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING
All on-going fees are due within sixty (60) days following receipt of detailed
invoice therefor. The installation and integration fees are due upon successful
transmission and receipt by Wink testers of one nationally inserted test
application defined by Wink.
<TABLE>
<CAPTION>
FIRST
ON-GOING ANNUAL TOTAL 3-YR YEAR ANNUAL TOTAL 3-YR TOTAL
OR ONE- RETAIL RETAIL TURNER PRICE FOR TURNER TURNER
TIME COSTS PRICE PRICE PRICE YR 2 & 3 PRICE SAVINGS
<S> <C> <C> <C> <C> <C> <C> <C>
Broadcast Server (1) On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Broadcast Server On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
(2)
Server Module On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Tech Support On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ON-GOING [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Server Hardware One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
2 Data Insertion One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Units
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Installation and One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
integration (2 ch) [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Studio site license One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
(5 seats)
Server Studio site one-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
license (5 seats)
Studio/WebCore One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
training (3x2days)
SUBTOTAL (EST.) ONE-TIME [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
TOTAL BOTH [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
</TABLE>
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(1) TNT, (2) TBS
Installation and integration will be charged at the price of time and materials,
as set forth on detailed invoice issued to Programmer by Wink, provided the
aggregate cost is no less than [ * ] and no greater than [ * ]
Additional networks may also be added subject to the following per network price
schedule:
<TABLE>
<CAPTION>
FIRST
ON-GOING ANNUAL TOTAL 3-YR YEAR ANNUAL TOTAL 3-YR TOTAL
OR ONE- RETAIL RETAIL TURNER PRICE FOR TURNER TURNER
TIME COSTS PRICE PRICE PRICE YR 2 & 3 PRICE SAVINGS
<S> <C> <C> <C> <C> <C> <C> <C>
Broadcast Server On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Server Module On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Tech Support On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ON-GOING [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Data Insertion Unit One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Installation and One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
integration
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
TOTAL BOTH [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
</TABLE>
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<PAGE> 17
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING, CONTINUED
Wink reserves the right to increase license fees annually after the first 12
months of the contract period by the percentage increase in the consumer price
index (CPI) for goods and services for the prior 12 months.
The pricing for installation and integration covers all work necessary to enable
scheduling and transmission of program enhancements based on Wink Studio
templates. It does not cover detailed integration with Programmer's ad insertion
system for the purpose of enabling enhancements to spot advertising.
OPTIONAL SERVICES
<TABLE>
<S> <C>
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
</TABLE>
Travel expenses are billed separately at cost
15
<PAGE> 18
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE PROGRAMS
Programmer:
Turner Entertainment Networks
Programming Services: TNT, TBS
This Agreement sets forth the terms and conditions for the national distribution
of Wink ITV Applications ("Interactive Programs") to any multichannel video
operator in the United States or Canada with whom Programmer already has an
agreement for carriage of Programmer's video programming ("System Operator").
1. BACKGROUND
Programmer has created one or more Interactive Programs which are compliant with
the Wink Communications, Inc. ('Wink") interactive communications application
protocol. The Interactive Programs are transmitted by Programmer using either
the vertical blanking interval ("VBI")of the corresponding video signal(s), or
using MPEG private data streams provided concurrently with the corresponding
video signal(s).
System Operator distributes one or more of Programmer's signals through one or
more of the following: cable, satellite and MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this Agreement shall commence on the date of Programmer's first
airing of Interactive Programs of this Agreement and terminate three (3) years
thereafter.
This Agreement will automatically renew for one year periods unless either party
notifies the other at least 90 days prior to the end of the then-current term of
that party's intent not to renew. THIS AGREEMENT WILL AUTOMATICALLY TERMINATE IN
THE EVENT THE CHARTER PROGRAMMER AFFILIATION AGREEMENT BETWEEN WINK AND
PROGRAMMER IS TERMINATED.
3. Integrity of Interactive Programs
Programmer will ensure that the Interactive Programs meet Wink's criteria for
Wink compliant applications (See Attachment 1). Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution.
Programmer understands that failure to meet the above criteria could result in
System Operator suspending the distribution of one or more Interactive Programs
until such time as all Interactive Programs are certified by Wink to be in
compliance.
16
<PAGE> 19
4. Distribution
Programmer hereby grants System Operator a non-exclusive license to distribute
the Interactive Programs delivered in the VBI or MPEG of Programmer's video
signal. Programmer agrees that each Interactive Program shall have been either
successfully tested by Programmer or certified as compliant by Wink prior to the
Delivery to System Operator for distribution, and shall bear any associated
costs of such testing.
Programmer agrees not to charge System Operator fees associated with Interactive
Programs for the term of this Agreement. Likewise, System Operator agrees that
no fees or charges will be due from carriage or retransmission of the
Interactive Programs as provided for hereunder.
WINK will provide System Operator written notice at least 30 days prior to
discontinuing national transmission of all Interactive Programs.
It is a condition of System Operator's right to carry the Interactive Programs
that System Operator shall distribute Programmer's Interactive Programs without
modification, and that System Operator may not modify or enhance any VBI lines
described in Exhibit A. Programmer agrees that System Operator may copy the
Interactive Programs for simultaneous transmission in different encoding formats
other than what Programmer currently uses including but not limited to, other
VBI formats, out of band channels, and MPEG2 private data streams; provided such
Interactive Programs are presented together with the original corresponding
video to System Operator's subscribers, and that such copying is done to enable
System Operators subscribers to properly receive and display the Interactive
Programs on their set top box or television set.
System Operator can, if permitted in Exhibit A, locally insert Interactive
Programs as instructed by Programmer. System Operator is solely responsible for
any costs associated with such local insertion. Programmer will notify System
Operator of changes to any such permissions through amendments to Exhibit A
provided at least 30 days prior to the effective date of such requirements.
System Operator may suspend transmission of the Interactive Program during the
insertion by System Operator of local advertising avails as authorized in any
separate agreements between Programmer and System Operator.
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Programs. Programmer also agrees to use Wink Communication's standard scripts
and guidelines for response applications.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive
Programs and may use Programmer's name, logo, and screen shots from the
Interactive Programs in such marketing materials, provided that such materials
are
17
<PAGE> 20
submitted to Programmer for review and approval prior to distribution.
Programmer's approval of such marketing materials shall not be unreasonably
withheld or delayed.
7. SCOPE
This Agreement does not interfere with or negate other Agreements between
Programmer and System Operator. This Agreement represents all of the terms and
conditions for Programmer providing Interactive Programs. This Agreement may be
updated from time to time only by express written consent of Programmer.
PROGRAMMER
By: ____________________________
Name: ____________________________
Title: ____________________________
Date: ____________________________
18
<PAGE> 21
EXHIBIT D, ATTACHMENT 1: CRITERIA FOR WINK COMPLIANT APPLICATION
* All applications must be registered and contain a unique universal ICAP
code (UIC) prior to being broadcast.
* Registered applications have passed a standard set of tests which
validate:
* that the application can be delivered through the VBI, will arrive
as appropriate, and can be decoded in the Wink engine.
* that the application does not generate error messages.
* that the application receives scheduled updates, if applicable.
* that the application passes minimum acceptable latency standards.
* that the application does not cause System Operator technical or
operational problems.
* that the application, if two-way, generates the appropriate routing
address and usage data.
19
<PAGE> 22
EXHIBIT E: PRELIMINARY EQUIPMENT LIST
Wink Broadcast Server and Server Module
* Sun Ultra 1 or faster, with 64MB RAM, 1GB+ hard disk, TGX Graphics Sbus
Adapter, 17" Color Monitor, Sun 1.44 Internal Floppy Drive, Sun CD 12
Internal CD ROM, Sun Country Kit - UNIX (Keyboard, Mouse, Power Cords),
Sun Silver Server Support, Solaris 2.5.1, CD-ROM, Ethernet connection to
Programmer's LAN, dial-up modem (US Robotics Courier V. Everything)
* Norpak TES-3 VBI data inserters
* LAN/serial connections to master control system, ftp site (for data),
other hardware as necessary
* PC w/ Windows 95 and Ethernet connection to run WBS remote GUI
Wink Studio and Server Studio
* Pentium Windows PC with 16MB+ RAM, 1GB+ hard disk, 1024x768x256 color
graphics, 17"+ monitor, Ethernet connection to enable electronic delivery
of applications to the WBS, Internet access to enable electronic access to
Wink's Data Center
Test equipment
* GI CFT-2200 set top box, marketing firmware
* High grade video source (Beta SP with a time based corrector or better)
* Coax Modulator
20
<PAGE> 1
EXHIBIT 10.12
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 25 day of February 1998, by and between Wink
Communications, Inc., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and Showtime Networks Inc. a Delaware
corporation ("Programmer"), whose address is 1633 Broadway, New York, NY 10019.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use Wink
ITV Studio, Wink ITV Broadcast Server, and Wink provided Server Modules
version 1.0 and all revisions, enhancements and updates (hereinafter
collectively referred to as "Wink Software") to allow Programmer to
deliver interactive program(s) which utilize the vertical blanking
interval ("VBI") or an MPEG private data stream provided concurrently
with the corresponding video signal in a manner compliant with the Wink
interactive communications application protocol, as defined in Exhibit
D, Attachment 1 ("Interactive Programs") to all Programmer viewers in
the continental United States, Alaska, Hawaii, and the US territories,
Commonwealths and Possessions (the "Territory").
1.2 This License is not transferable by either party, nor may any rights
hereunder be transferred, assigned or sub-licensed in whole or in part
without the other party's. prior written consent, provided, however,
that Programmer shall have the right, without the requirement to obtain
Wink's consent, to assign this Agreement to (i) a successor entity
resulting from a merger, acquisition of all or substantially all of
Programmer's assets or a consolidation by Programmer, or (ii) an entity
under common control, controlled by or in control of Programmer.
1.3 Programmer can only use the Wink Software to provide Interactive
Programs with the Programming Service(s) defined in Exhibit A.
Programmer agrees to use commercially reasonable efforts to adhere to
the technical specifications for the insertion of Interactive Programs
provided in Exhibit A. Exhibit A may be amended from time to time by
mutual agreement.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution of
this Agreement and terminate one (1) year thereafter.
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<PAGE> 2
2.2 Programmer shall have the right to renew this Agreement for a one year
period by notifying Wink at least 90 days prior to the end of the
then-current term of Programmer's intent to renew.
3. INTEGRATION AND PROGRAMMING
3.1 Programmer will distribute the Interactive Programs with the primary
East and West Coast feeds for the Programming Service(s) defined in
Exhibit A. Such distribution will take place through Programmer's
national uplink or broadcast facilities, and is subject to Wink's
delivery to Programmer of all components necessary to ensure the
transmission of Interactive Programs.
3.2 Programmer and Wink agree to collaborate to enable the installation and
integration of the Wink Software into Programmers facilities, and to use
commercially reasonable efforts to ensure the reliable transmission of
the Interactive Programs. Programmer is responsible for providing the
equipment necessary to run the Wink Software and to enable insertion of
Interactive Programs into the appropriate video signals as set forth on
Exhibit E. Exhibit E provides a preliminary list of such equipment, and
may be amended by mutual agreement after afinal site visit by Wink's
Operations department. Programmer will be presented with a final list of
equipment no later then 21 days following the execution of this
Agreement, subject to completion of the site visit.
3.3 Programmer agrees to use reasonable efforts to commence transmission of
Interactive Wink Programs on or before February 15, 1998. For purposes
of this Agreement, the "First Air Date" shall mean the date Programmer
commences transmission of Interactive Programs as part of Programmer's
Programming Service. Wink understands and accepts that the First Air
Date is contingent upon a successful installation of. the Wink Software
and associated hardware, upon completion of training of Programmer
staff, and upon completion of design and test of the initial Interactive
Programs.
3.4 Wink agrees to provide weekly reporting to Programmer of all response
traffic generated by Programmer viewers using the Wink Response Network
and collected by Wink's Data Center. [ * ] .
- - --------
* Confidential treatment has been requested with respect to
certain portions of this exhibit pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed with the Commission.
-2-
<PAGE> 3
3.5 Beginning on the First Air Date, but subject to the other provisions of
the Agreement, Programmer agrees to air Interactive Programs for an
average of [ * ] measured as an average over each calendar month.
Programmer further agrees to air Interactive Programs an [ * ] within
120 days after the First Air Date. Notwithstanding the foregoing, in the
event Programmer fails to air the requisite number of hours as measured
over a calendar month period, Wink's sole and exclusive remedy shall be
to terminate this Agreement on thirty (30) days prior written notice to
Programmer.
3.6 Wink acknowledges that the Video Programming may be broadcast under
license from third parties, and that such third party licenses or the
business relationship with such third parties may, in Programmer's sole
but reasonable judgment, either contractually prevent Programmer from
providing, or limit the circumstances under which Programmer can
provide, Interactive Programs with respect to particular video programs,
limit the type of Interactive Programs that Programmer can provide, or
cause Programmer to incur additional rights costs, were Programmer to
air Interactive Programs. If Programmer's Programming Services, in
Programmer's sole and reasonable judgment, (i) are contractually
prevented from providing Interactive Programs with a majority of the
Video Programming, or will incur additional rights costs caused by the
Interactive Programs, or (ii) seeking such rights would endanger
existing important business relationships with third parties who license
programming to Programmer, Programmer may notify Wink in writing to this
effect, and postpone complying with section 3.5 promptly after the date
of such written communication. Programmer agrees that postponing the
airing of the Interactive Programs during this period does not relieve
Programmer of the obligation to air Interactive Programs for a total of
at least twelve (12) months.
3.7 Notwithstanding section 3.6 above, Programmer agrees that it is
responsible for payments to third party providers of Video Programming,
music, news, images and other entities that hold rights which Programmer
deems necessary to obtain to enable the airing of Interactive Programs.
This shall not be deemed to include the Wink Software or other elements
of the Wink system necessary to enable transmission of Interactive
Programs.
3.8 Wink further acknowledges that the Programming Service is broadcast by
Programmer's distributors (e.g., cable operators, DBS operators, MMDS
operators, etc) pursuant to license agreements between Programmer and
such distributors, and that nothing in this Agreement
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<PAGE> 4
shall in any way be deemed to require Programmer to take or omit to take
any action or exhibit or utilize any Interactive Program that Programmer
deems, in its sole but reasonable judgment, would (i) be contractually
or otherwise prevented under any distribution agreement between
Programmer and any distributor of the Programming Service, (ii) endanger
or damage Programmer's relationships with any distributor of the
Programming Service, or (iii) cause Programmer to incur additional
costs.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis.
4.2 Programmer agrees to provide the Interactive Programs to any multi
channel video operator in the Territory with whom Programmer has a valid
and binding agreement for carriage of the Programming Service set forth
herein ("System Operators") under the terms described in Exhibit D, and
agrees that Wink may provide a copy of Exhibits A and D to any System
Operator as evidence of Programmer's agreement to supply the Interactive
Programs under such terms. Wink shall require System Operators to comply
with the confidentiality provisions of section 11 below.
4.3 Programmer may choose to utilize other products and services of Wink (as
set forth in Exhibits B or C) from time to time under this Agreement.
These services will be extended by Wink to Programmer at the rates set
forth therein; however, such prices shall at all times be extended on a
most favored nations basis with regard to all other cable programmers
utilizing such Wink services. In addition, Wink acknowledges and agrees
that premium and pay-per-view service transactions will be processed on
behalf of Programmer at no charge.
5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following each month throughout
the term of this Agreement, Programmer shall remit to Wink all fees owed
for licenses provided and services rendered in the previous month,
according to the price schedules provided in Exhibit C.
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Programmer of its obligation to make
any payment in a timely manner consistent with the terms of this
Agreement.
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<PAGE> 5
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a mutually-approved press release announcing
this Agreement on or before Tuesday, 1998. Wink will provide Programmer
with a draft of this release by January 30, 1998.
6.2 Wink agrees to provide Programmer with notice within 30 days of new
System Operators having enabled their subscribers to receive
Programmer's Interactive Programs.
6.3 Wink agrees to actively promote and feature Programmer's Interactive
Programs in Wink's marketing literature, during meetings with cable
operators and other distributors of the Programming Service and the
press, and during industry trade shows, subject to Programmer's
trademark guidelines and approval process attached hereto as Exhibit F.
Wink will also use reasonable efforts to assist Programmer in achieving
its marketing objectives in materials prepared by third parties, such as
cable equipment manufacturers, cable operators and other distributors of
the Programming Service. Programmer agrees, where reasonable, to promote
its participation as a charter Wink programmer to cable operators and
other distributors of the Programming Service, and to serve as a press
reference for Wink during the term of this Agreement.
6.4 Programmer agrees to use commercially reasonable efforts to cooperate
with Wink and System Operators in promoting Programmer's Interactive
Programs. Wink and System Operators may prepare marketing materials
relating to the Interactive Programs and may use Programmer's name, logo
and screen shots (collectively, "Programmer's Marks") from the
Interactive Programs, provided that such materials are submitted to
Programmer for review and approval prior to any distribution of such
materials and subject to Programmers trademark guidelines and approval
process attached hereto as Exhibit F. Wink shall inform System Operator
that System Operator is required to obtain Programmer's clearance prior
to distribution of such materials. Wink hereby acknowledges and agrees
that, as between Wink and Programmer, Programmer is the sole owner of
all right, title and interest in and to the Programmers Marks. All uses
of the Programmers Marks shall inure to the benefit of Programmer. Upon
any expiration or termination of this Agreement, Wink shall delete and
discontinue all use of the Programmer's Marks. At no time during or
after the term of this Agreement shall Wink challenge or assist others
to challenge the Programmer's Marks or the registration thereof or
attempt to assist another in the attempt to register any trademarks,
marks or similar rights for marks the same as or confusingly similar to
the Programmer's Marks.
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<PAGE> 6
6.5 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in collaboration with Programmer.
Programmer shall, if reasonably possible, provide Wink with reasonable
assistance at no cost to Programmer in conducting such research with
respect to Programmer's viewers. Programmer agrees that Wink will have
access to all such research regarding the deployment, launch, and usage
of Wink service by Programmer viewers. Wink agrees to provide copies of
final reports from such research activity to Programmer. Wink may only
use such data or share it with third parties with Programmer's prior
written approval.
6.6 Programmer understands and accepts that Wink will be providing reports
on viewer usage and responses to the Interactive Programs to System
Operator(s) for responses that originate from System Operator's
subscribers, and to advertisers and other parties acting on behalf of
advertisers or Programmer for the purpose of fulfilling requests for
responses that originate from Interactive Programs paid for or sponsored
by such parties. Wink agrees that reports providing specific data
regarding viewer responses to Programmer's Interactive Programs,
including data on Wink viewer responses to advertising on Programmer's
Programming Services, will not be made available to news and industry
organizations, or other broadcast and cable networks, except in
aggregated form that does not explicitly or implicitly identify
Programmer or specific Programmer viewer data. Wink further agrees that
Wink's provision of any data that identify individual viewers shall be
limited to advertisers and other entities having contracted with Wink
for the provision of such data to enable fulfillment of individual
viewer requests, and that such disclosure shall be subject to, and Wink
shall be responsible for ensuring compliance with, all applicable laws
(including without limitation applicable privacy laws).
6.7 Programmer agrees that Wink may demonstrate Programmer's Interactive
Programs in customer meetings and other private meetings deemed
important by Wink.
6.8 Programmer agrees to assist Wink in its marketing efforts by providing
[ * ] subscriptions ("Promotional Subscriptions") to subscribers
of certain System Operators with whom Wink has agreements
for carriage of Interactive Programs. Wink and Programmer agree to
jointly determine the appropriate System Operators and markets in which
such Promotional Subscriptions will be made available. Programmer may,
at its sole discretion, decline the provision of such Promotional
Subscriptions to certain System Operators, if the provision of such
Promotional Subscriptions is determined to be contrary to Programmer's
marketing and business
-6-
<PAGE> 7
objectives, provided that such action does not prohibit Wink from
delivering the number of Promotional Subscriptions agreed to herein.
Wink acknowledges that the Promotional Subscriptions may be substituted
for another mutually acceptable promotional offer of similar value to
Wink's System Operators, viewers and Programmer.
6.9 Subject to the other provisions of this Agreement, including but not
limited to Sections 3.6 and 3.8, Programmer further agrees to use
Interactive Programs to (i) promote orders of the Programming Service
(as defined in Exhibit A) during free weekend and other national or
local promotions (ii) to promote orders of the Programming Service in
advertising spots on other cable and broadcast channels on a trial basis
and (iii) to enable impulse purchases and program enhancements during
interstitial advertising and promotion.
7. WARRANTIES AND REPRESENTATIONS
7.1. Wink hereby represents and warrants that:
(i) the Wink Software (and subsequent revisions, upgrades and
enhancements to same provided by Wink to Programmer) will
operate and perform in accordance with all published
specifications with respect thereto as set forth in Wink's then
current ICAP specification and other related documents.
(ii) it has all necessary rights and authority to execute and
deliver this Agreement and perform its obligations hereunder;
(iii) the Wink Software shall be free from defects and shall be
error-free;
(iv) it shall dedicate sufficient resources to fulfill its
obligations hereunder;
(v) the Wink Software (or any equipment, technologies, processes or
components used in the Wink Software) does not and will not
infringe any intellectual property rights of any third party;
(vi) it will comply with all applicable laws, rules, regulations or
court or administrative decrees to which it is subject;
(vii) it is a corporation duly organized and validly existing under
the laws of the State of California;
(viii) Wink is under no contractual or other legal obligation which in
any way interferes with its ability to fully, promptly and
completely perform hereunder.
-7-
<PAGE> 8
7.2 Programmer represents and warrants to Wink that (i) Programmer is a
corporation duly organized and validly existing under the laws of the
State of Delaware; (ii) to the best of Programmer's knowledge Programmer
has the requisite power and authority to enter in this Agreement and to
fully perform its obligations hereunder; and (iii) to the best of
Programmer's knowledge, except as otherwise expressly contemplated
elsewhere in this Agreement, Programmer is under no contractual or other
legal obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
8. INDEMNIFICATION
Wink shall indemnify, defend and hold harmless Programmer, its parents,
subsidiaries, and affiliates and their respective officers, directors,
employees and agents from and against any and all damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys
fees, court costs and amounts paid in settlement) they may suffer or
incur which arises out of or as a result of any, claim, demand, action,
suit or proceeding (a) in which it is alleged that (i) Wink's equipment,
the Wink Software (or any equipment, technologies, processes or
component used in such equipment or software) violates or infringes any
patent or copyright or other intellectual property right of any third
party or constitutes a misappropriation of any third party's trade
secrets, or (ii) Wink or Wink's equipment or the Wink Software (or any
equipment, technologies, processes or component used in such equipment
or software) is not in compliance with any law, rule, regulation or
court or administrative decree to which it is subject or (b) as a result
of any material breach of Wink's warranties, representations or
undertakings under this Agreement.
9. NOTICES
All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express deliver, addressed, to the addresses provided in the first
paragraph of this Agreement, and to the attention of:
If to Wink:
Vice President, Content
Wink Communications
1001 Marina Village Parkway
Alameda, CA 94501
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<PAGE> 9
If to Programmer:
Showtime Networks Inc.
1633 Broadway
New York, NY 10019
Attention: Law Department
The date of such facsimile transmission, telegraphing or personal
delivery or the next day if by express delivery, or the date three (3)
days after mailing, shall be deemed the date on which such notice is
given and effective.
10. TRADEMARKS
10.1 All rights, title and interest in and to the Wink Software or other
rights, of whatever nature, related thereto shall remain the property of
Wink. Further, Programmer acknowledges and agrees that all names, logos,
marks, copyright notices or designations utilized by Wink in connection
with the service are the sole and exclusive property of Wink, and no
rights of ownership therein are intended to be or shall be transferred
to Programmer.
10.2 All rights, title and interest in and to the Programmer's Marks or other
rights, of whatever nature, related thereto shall remain the property of
Programmer. Further, Wink acknowledges and agrees that all names, logos,
marks, copyright notices or designations utilized by Programmer in
connection with the Programming Service are the sole and exclusive
property of Programmer, and no rights of ownership therein are intended
to be or shall be transferred to Wink. Wink agrees to utilize
Programmer's Marks only as authorized in Exhibit F.
11. CONFIDENTIALITY
Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to
others, any of the other party's Confidential Information (as defined
below). Without limiting the generality of the foregoing, each party
will (i) restrict the disclosure of the other party's Confidential
Information to those of its employees who require such information for
purposes of performing its obligations hereunder, (ii) inform each such
employee of the confidential nature of the information disclosed, and
(iii) take reasonable steps to prevent the use or disclosure by its
employees of such Confidential Information, except as provided herein.
For purposes of this Agreement, the term "Confidential Information"
means all technical, business and other information disclosed by one
party to the other that derives economic value, actual or potential,
from not being generally known to other persons, including, without
limitation,
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<PAGE> 10
technical and non-technical data, devices, methods, techniques,
drawings, processes, computer programs, algorithms, methods of
operation, financial data, financial plans, product plans, lists of
actual or potential customers or suppliers, and Wink usage reports and
viewer responses to Programmer's Interactive Programs (with the
exception that Wink may provide such reports and individual viewer
responses to the parties specifically permitted in, and subject to the
terms of, paragraph 6.6 above). Confidential Information does not
include information which does not constitute a trade secret under
applicable law after the second anniversary date of the expiration of
this Agreement. The parties agree to keep the terms of this Agreement
confidential, but acknowledge that certain disclosures may be required
by law. Programmer understands and acknowledges that Wink may provide
copies of Exhibits A and D to System Operators.
12. TERMINATION
12.1 Except as otherwise provided herein, neither Programmer nor Wink may
terminate this Agreement except upon sixty (60)days prior written notice
and then only if the other has made a misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within sixty (60) days of such notice.
12.2 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the
Wink Software will cease and Programmer will promptly (i) grant to Wink
reasonable access during ordinary business hours to its business
premises and the Wink Software and allow Wink to remove the Wink
Software (which removal shall be done with as little disturbance as
possible to Programmer's business operations), or Programmer shall
return the Wink Software to Wink, at Programmer's discretion , (ii)
purge all copies of all Wink Software from all computer processors or
storage media on which Programmer has installed or permitted others to
install such Wink Software, and (iii) when requested by Wink, certify to
Wink in writing, signed by an officer of Programmer, that all copies of
the Wink Software have been returned to Wink or destroyed and that no
copy of any Product remains in Programmer's possession or under its
control.
12.3 Programmer has the right to suspend the airing of Interactive Programs
if the transmission interferes with the airing of Programmer's Video
Programming or Wink fails to provide weekly reports regarding usage of
Programmer's Interactive Programs, and may continue such suspension
until Wink has resolved such problems to Programmers satisfaction.
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13. PROMOTIONAL MATERIALS/PRESS RELEASES
Without limiting the requirements of Exhibit F, each Party will submit
to the other Party, for its prior written approval, any marketing,
advertising, press releases, and all other promotional materials which
reference the other Party and/or its trade names, trademarks and service
marks. Each Party shall solicit and reasonably consider the views of the
other Party in designing and implementing such materials. Once written
approval is obtained, unless such approval states otherwise, the
materials may be reused in the same manner and under the same
circumstances until such approval is withdrawn in writing, provided,
however, that if any materials involve or depict any video programming
from the Programming Service, such materials shall not be reused without
first obtaining Programmer's prior written consent to such reuse.
14. SURVIVAL
Sections 8, 10, 11 and 13 shall survive the completion, expiration,
termination or cancellation of this Agreement
15. GENERAL
The parties agree that in the event it is necessary to employ attorneys
to enforce the terms of this Agreement, the prevailing party in any
lawsuit shall be entitled to an award of reasonable attorneys fees and
court costs.
a) Nothing contained herein shall be deemed to create, and the
parties do not intend to create, a joint venture, partnership,
principal/agent relationship or other fiduciary relationship
between the parties hereto, and neither party is authorized to
or shall act toward third parties or the public in any manner
that would indicate any such relationship with the other. The
provisions of this Agreement are for the exclusive benefit of
the parties who are signatories hereto and their permitted
successors and assigns, and no third party shall be a
beneficiary of, or have any rights by virtue of, this Agreement.
b) This Agreement may be amended only by an instrument in writing,
executed by Programmer and Wink.
c) This Agreement will be governed in all respects by the laws of
the State of New York.
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<PAGE> 12
d) This Agreement represents the entire agreement between the
parties and supersedes and replaces all prior oral and written
proposals, communications and agreements with regard to the
subject matter hereof between Programmer and Wink.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. SHOWTIME NETWORKS INC.
By: /s/ Maggie Wilderotter By: /s/ Jefferson Morris
Name: Maggie Wilderotter Name: Jefferson Morris
Title: President, CEO Title: SVP, New Media
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<PAGE> 13
EXHIBIT A: PROGRAMMING SERVICES
Description of Programming Service:
<TABLE>
<CAPTION>
NAME START OF WINK VIDEO ICAP VIRTUAL INSERTION
PROGRAM. (A/D) LOC. CH? POINT
<S> <C> <C> <C> <C>
Showtime February 15, 1998 Analog TBD No New York
</TABLE>
Contact Information:
<TABLE>
<CAPTION>
ISSUE ADDRESS CONTACT(S) PHONE /FAX/E-MAIL
<S> <C> <C> <C>
Example:
Content refresh 111 Park Avenue Stephen Jones 212-123-4567
New York, NY 10001 Director, Enhanced 212-765-4321
Broadcasting [email protected]
</TABLE>
Actual Contact Info: TBD
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<PAGE> 14
EXHIBIT B: WINK RESPONSE CENTER SERVICES
Purchase Transaction Fees Price/Transaction
(Viewer name, address, credit card) [ * ]
Charter Price Per transaction [ * ]
Request (RFT) Transaction Fees
(Viewer name, address only) [ * ]
1-5,000 transactions/mo. [ * ]
5,001-25,000 transactions/mo. [ * ]
$25,001-100,000 transactions/mo. [ * ]
$100,001-250,000 transactions/mo. [ * ]
250,001-500,000 transactions/mo. [ * ]
500,001-up transactions/mo. [ * ]
Polls by Zip Code-Report Only [ * ]
1-100,000 transactions/mo. [ * ]
100,000 + transactions/mo. [ * ]
Polls by System-Report Only [ * ]
[ * ]
1-250,000 transactions/mo. [ * ]
251,000 + transactions/mo. [ * ]
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest
price applies to all transactions for the month.
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<PAGE> 15
EXHIBIT B: WINK RESPONSE CENTER SERVICES (CONTINUED)
Purchase and Request Transaction Fees Include / Exclude:
1 Daily name & address list delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
4. Viewer credit card information if it is "on file" with the WRS. If not,
for the extra [ * ] response. Wink will mail a "purchase confirmation"
to the viewer to add the credit card, and provide a list of viewers who
did not supply their credit card.
5. Interface to standard EDI VAN for [ * ].
FULFILLMENT EDI/API
* Standard interface set-up fee [ * ]
* Non-standard Interface [ * ]
* Interface License/Maintenance fee [ * ]
SET UP FEES-RESPONSE SERVICE
* Advertiser [ * ]
* Content Provider [ * ]
REPORT GENERATION FEES [ * ]
RESPONSE DATA CENTER PRODUCTS
* Purchase confirmation mailer [ * ]
* List of responders who do not respond to
* purchase confirmation mailers [ * ]
* Branded envelope [ * ]
* Advertiser/programmer Purchase Points Club [ * ]
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<PAGE> 16
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING
The installation and integration fees (if any) are due upon Programmer's
acceptance of the installation of the Broadcast Server, and transmission and
receipt by Wink testers of one nationally inserted test application defined by
Wink License fees commence on the first of the 13th month following the First
Air Date.
<TABLE>
<CAPTION>
ON- ANNUAL TOTAL FIRST ANNUAL TOTAL 3- TOTAL
GOING RETAIL 3-YR YEAR PRICE FOR YR PRICE SAVINGS
OR ONE- PRICE RETAIL PRICE YR 2&3
TIME PRICE
COSTS
<S> <C> <C> <C> <C> <C> <C> <C>
Studio site license One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
(5 seats)
Studio/Server One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Module training
(3x2days)
SUBTOTAL [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Broadcast Server On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Server Module On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Tech Support On-going [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
SUBTOTAL ON-GOING [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Server hardware (*) One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Data Insertion Unit One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Other Equipment One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Installation and One-time [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Integration
SUBTOTAL ONE-TIME [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
TOTAL BOTH [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
(*) To be shared with MTV Networks, with their permission.
</TABLE>
The above pricing for installation and integration cover's all work necessary to
enable scheduling and transmission of program enhancements based on Wink Studio
templates. It does not cover detailed integration with Programmer's ad insertion
system for the purpose of enabling enhancements to spot advertising.
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<PAGE> 17
OPTIONAL SOFTWARE AND SERVICES
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses are billed separately at cost
-17-
<PAGE> 18
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE PROGRAMS
Programmer: Showtime Networks Inc.
Programming Service: Showtime
This Agreement sets forth the terms and conditions for the national
distribution of Wink ITV Applications ("Interactive Programs") to any
multi channel video operator in the United States or Canada with whom
Programmer already has a valid and binding agreement for carriage of the
Showtime service ("System Operator").
1. BACKGROUND
Programmer has created one or more Interactive Programs which are compliant with
the Wink Communications, Inc. ('Wink") interactive communications application
protocol. The Interactive Programs are transmitted by Programmer using either
the vertical blanking interval ("VBI") of the corresponding video signal, or
using MPEG private data streams provided concurrently with the corresponding
video signal(s).
System Operator distributes one or more of Programmer's signals through one or
more of the following: cable, satellite and MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this Agreement shall commence on the date of Programmer's execution
of this Agreement and terminate three (3) years thereafter, unless Programmer
and Wink earlier terminate their Charter Programmer Affiliation Agreement dated
as of __________, 1998 in accordance with the terms of that agreement in which
case this Agreement shall automatically and immediately terminate.
This Agreement will automatically renew for one year periods unless Programmer
and Wink earlier terminate their Charter Programmer Affiliation Agreement dated
as of ______, 1998 in accordance with the terms of that agreement, in which case
this Agreement shall automatically and immediately terminate.
3. INTEGRITY OF INTERACTIVE PROGRAMS
Wink's license to Programmer will ensure that the Interactive Programs meet
Wink's criteria for Wink compliant applications (See Attachment 1). Programmer
agrees that each Interactive Program shall have been either successfully tested
by Programmer or certified as compliant by Wink prior to the Delivery to System
Operator for distribution, provided that failure of any Interactive Program
shall result in no liability of any kind to Programmer except that . System
Operator shall have the right to suspend the distribution of one or more
Interactive Programs until such time as all Interactive Programs are certified
by Wink to be in compliance.
4. DISTRIBUTION
Programmer hereby grants System Operator a non-exclusive license to distribute
the Interactive Programs delivered in the VBI or MPEG of Programmer's video
signal.
Programmer agrees not to charge System Operator fees associated with Interactive
Programs for the term of this Agreement. Likewise, System Operator agrees that
no fees or charges of any kind will be due from Programmer to System Operator or
Wink on account of the carriage or retransmission of the Interactive Programs as
provided for hereunder.
Programmer will provide System Operator written notice at least 30 days prior to
discontinuing national transmission of all Interactive Programs.
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<PAGE> 19
It is a condition of System Operator's right to carry the Interactive Programs
that System Operator shall distribute Programmer's Interactive Programs without
modification, alteration or addition of any kind and that System Operator may
not modify or enhance any VBI lines described in Exhibit A. Programmer agrees
that System Operator may copy the Interactive Programs for simultaneous
transmission in different encoding formats other than what Programmer currently
uses including but not limited to, other VBI formats, out of band channels, and
MPEG2 private data streams; provided such Interactive Programs are presented
together with the original corresponding video to System Operators subscribers,
and that such copying is done to enable System Operator's subscribers to
properly receive and display the Interactive Programs on their set top box or
television set, provided that nothing herein shall be deemed to grant to System
Operator any right to alter the signal of the Programming Service in any manner
not expressly granted in System Operator's carriage agreement with Programmer.
System Operator can locally insert Interactive Programs only if and as
instructed by Programmer. System Operator is solely responsible for any costs
associated with such local insertion. Programmer will notify System Operator of
changes to any such permissions through amendments to Exhibit A provided at
least 30 days prior to the effective date of such requirements.
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Programs. Programmer also agrees to use Wink Communication's standard scripts
and guidelines for response applications.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive
Programs and may use Programmer's name, logo, and screen shots from the
Interactive Programs in such marketing materials, provided that all such
materials shall first be submitted to Programmer for Programmer's review and
approval prior to any use or distribution of such materials. Programmer's
approval of such marketing materials shall not be unreasonably withheld or
delayed.
7. SCOPE
This Agreement does not and shall not interfere with, negate or expand any other
Agreements between Programmer and System Operator. This Agreement represents all
of the terms and conditions for Programmer providing Interactive Programs. This
Agreement may be updated from time to time only by express written consent of
Programmer.
PROGRAMMER
By: /s/ Jefferson Morris
Name: Jefferson Morris
Title: SVP, New Media
Date: 2/25/98
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<PAGE> 20
EXHIBIT D. ATTACHMENT 1: CRITERIA FOR WINK COMPLIANT APPLICATION
* All applications must be registered and contain a unique universal ICAP
code (UIC) prior to being broadcast.
* Registered applications have passed a standard set of tests which
validate:
* that the application can be delivered through the VBI or
MPEG private data stream, will arrive as appropriate,
and can be decoded in the Wink engine.
* that the application does not generate error messages.
* that the application receives scheduled updates, if
applicable.
* that the application passes minimum acceptable latency
standards.
* that the application does not cause System Operator
technical or operational problems.
* that the application, if two-way, generates the
appropriate routing address and usage data.
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<PAGE> 21
EXHIBIT E: PRELIMINARY EQUIPMENT LIST
Wink Broadcast Server and Server Modules*
* Norpak TES-3 VBI data inserter with VBI software modules
* PC w/ Windows 95 and Ethernet connection to run WBS remote GUI
* LAN/serial connections to master control system, ftp site (for data),
other hardware as necessary
Wink Studio, Server Studio and Broadcast Server remote GUI
* Pentium Windows PC with 16MB+ RAM, 1 GB+ hard disk, 1024x768x256 color
graphics, 17"+ monitor, Ethernet connection to enable electronic
delivery of applications to the WBS, Internet access to enable
electronic access to Wink's Data Center
Test equipment
* GI CFT-2200 set top box, marketing firmware
* High grade video source (Beta SP or better)
* Coax Modulator
* Assumes Showtime will share Broadcast Server hardware with MTV Networks at
Viacom National Operations Center.
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<PAGE> 22
3. Wink will not use the Mark to disparage Programmer, its products or
services, or promotional goods or for products which, in Programmer's
reasonable judgment, may diminish or otherwise damage Programmer's
goodwill in the Mark, including but not limited to uses which could be
deemed to be obscene, pornographic, excessively violent, or otherwise in
poor taste or unlawful, or which purpose is to encourage unlawful
activities. Wink will not imitate the Mark in any of Wink materials,
including advertising, product packaging, and promotional materials and
press materials.
4. Wink shall obtain written consent for any advertising, promotions and
press releases using Programmer's Mark. Programmer shall use all
reasonable efforts to provide approval/comments on any submitted
advertising and promotions within three (3) business days or in less
time as the circumstances reasonably warrant.
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<PAGE> 23
ADDENDUM TO CHARTER PROGRAMMER AFFILIATION AGREEMENT BETWEEN WINK
COMMUNICATIONS, INC. AND SHOWTIME NETWORKS INC. ("THE AGREEMENT")
This Addendum is made as of the 25 day of February, 1998.
The parties hereby agree to replace section 4.3 of the Agreement:
"Programmer may choose to utilize other products and services of Wink
(as set forth in Exhibit B or C) from time to time under this Agreement.
These services will be extended by Wink to Programmer at the rates set
forth therein; however, such prices shall at all times be extended on a
most favored nations basis with regard to all other cable programmers
utilizing such Wink services. In addition, Wink acknowledges and agrees
that premium and pay-per-view service transactions will be processed on
behalf of Programmer at no charge"
with the following paragraph, to be numbered 4.3:
"Programmer may choose to utilize other products and services of Wink
(as set forth in Exhibits B or C) from time to time Under this
Agreement. These services will be extended by Wink to Programmer at the
rates set forth therein; however, such prices shall at all times be
extended an a most favored nations basis with regard to all other cable
programmers utilizing such Wink services. Notwithstanding the foregoing,
Wink acknowledges and agrees that viewer requests for premium and
pay-per-view service generated by Interactive Wink Programs and
fulfilled by System Operators will be processed at no charge to
Programmer. The parties further agree that during the initial term of
this Agreement, Programmer may receive copies of reports provided to
System Operators that reflect viewer requests for premium and
pay-per-view service generated by Interactive Wink Programs, and which
provide each subscriber's name, address and telephone number at no
charge to Programmer. Programmer agrees that all other reports of viewer
responses to Interactive Wink Programs that reflect individual
subscriber names, addresses and phone numbers shall be subject to Wink's
rates for request for Information responses ("RFI Response") and
purchase responses ("Purchase Response"), as defined in Exhibit B, and
subject to the above mentioned most favored nations clause.
WINK COMMUNICATIONS, INC. SHOWTIME NETWORKS INC.
By: /s/ Allen Thygsen. By: /s/ Jefferson Morris
Name: Allen Thygsen Name: Jefferson Morris
Title: Vice President, (illegible) Title: SVP, New Media
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<PAGE> 1
EXHIBIT 10.13
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 18th day of July, 1997, by and between Wink
Communications, Inc., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and The Weather Channel Enterprises, a
Georgia corporation ("Programmer"), whose address is 300 Interstate North
Parkway, Atlanta, Georgia 30339.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Programmer the non-exclusive license to use
Wink ITV Studio, Wink ITV Broadcast Server, and Wink provided Server Modules
version 1.0 and 1.x updates (hereinafter collectively referred to as "Wink
Software") to deliver interactive program(s) which utilize the vertical
blanking interval ("VBI") or an MPEG private data stream provided concurrently
with the corresponding video signal and are compliant with the Wink interactive
communications application protocol ("Interactive Programs") to all Programmer
viewers in the continental United States, Alaska, Hawaii, the US territories in
the Caribbean and Canada.
1.2 This License is not transferable, nor may any rights hereunder be
transferred, assigned or sub-licensed in whole or in part without Wink's prior
written consent.
1.3 Programmer can only use the Wink software to provide Interactive
Programs with the video programming service listed in Exhibit A. Programmer
must notify Wink in writing at least 30 days prior to commencing transmission
of Interactive Programs with a video programming service. Programmer agrees to
adhere to the technical specifications for the insertion of Interactive
Programs provided in Exhibit A. Exhibit A may be amended from time to time by
Programmer upon 30 days prior written notice, except that insertion points
outside of Programmer's facilities, including but not limited to local
insertion by participating cable operators, requires the mutual consent of the
parties.
1.4 During the term of this agreement, Wink agrees to grant Programmer a
right of first refusal to license the Wink Software for other video programming
services than those listed in Exhibit A, or for territories other than those
listed in paragraph 1.1 above. Such license would be granted on Wink's then
prevailing standard commercial terms.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution
of this Agreement and terminate three (3) years thereafter.
2.2 This Agreement will automatically renew for one year periods unless
either party notifies the other at least 90 days prior to the end of the
then-current term of that party's intent not to renew.
2.3 Programmer can elect to terminate eighteen (18) months after the
date of execution of this agreement ("the Option Date"), provided Programmer's
interactive application have not met
PROPRIETARY AND CONFIDENTIAL
<PAGE> 2
the audience objectives outlined in Exhibit E, which will be completed by the
parties prior to airing of the first Interactive Programs by Programmer.
Programmer and Wink agree to meet to review performance against such objectives
within 30 days of the Option Date, and Programmer agrees that the option to
notice Wink of Programmer's intent to terminate is only available for 30 days
following that meeting. The parties agree to optionally implement such mutually
agreeable objectives for each new 12 month period following the Option Date.
2.4 The parties agree to review paragraph 4 of Exhibit D in the 30-day
period immediately following the Option Date. No other aspect of this agreement
shall be the subject of review or negotiation during the initial three year term
of this agreement. If the parties can not agree on the current or either party's
proposed wording of paragraph 4 of Exhibit D at that time, either party may
terminate this agreement.
2.5 Programmer can elect to terminate with 30 days written notice if any
of the following occur: (i) the commencing by Wink of a voluntary case under
applicable bankruptcy laws; (ii) the adjudication that Wink is bankrupt or
insolvent; or (iii) the filing by Wink of a petition seeking to take advantage
of any other law providing for the relief of debtors.
3. INTEGRATION AND PROGRAMMING
3.1 Programmer will distribute the Interactive Programs for each
Programming Service (as defined in Exhibit A) through it's national uplink or
broadcast facilities. Programmer agrees to provide the Required Interactive
Programs in accordance with Exhibit A.
3.2 Programmer and Wink agree to collaborate to enable the installation
and integration of the Wink Software into Programmer's facilities, and to ensure
the reliable transmission of the Interactive Programs. Programmer is responsible
for providing all necessary equipment necessary to run the Wink Software and to
enable insertion of Interactive Programs into the appropriate video signals.
Exhibit F provides a preliminary list of such equipment, and is subject to a
final site visit by Wink's Operations department. Programmer will be presented
with a final list of equipment no later than August 31st, 1997.
3.3 Wink agrees to provide weekly reporting to Programmer of all
response traffic generated by Programmer viewers and collected by Wink's Data
Center. Programmer accepts Wink's terms for all other response traffic and
reporting, as outlined in Exhibit B.
4. RATES AND DEPLOYMENT
4.1 Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis.
4.2 Programmer agrees to provide the Interactive Programs to any
multichannel video operator in the United States or Canada with whom Programmer
already has an agreement for carriage of Programmer's video programming ("System
Operators") under the terms described in Exhibit D, and
PROPRIETARY AND CONFIDENTIAL
-2-
<PAGE> 3
agrees that Wink may provide a copy of Exhibits A and D to any System Operator
as evidence of Programmer's agreement to supply the Interactive Programs under
such terms.
4.3 Programmer may choose to utilize other products and services of Wink
from time to time under this Agreement. These services will be extended by Wink
to Programmer at the then prevailing retail rate.
5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following each month
throughout the term of this Agreement, Programmer shall remit to Wink all fees
owed for licenses provided and services rendered in the previous month,
according to the price schedules provided in Exhibit C.
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Programmer of its obligation to make any
payment in a timely manner consistent with the terms of this Agreement. Past due
payments shall bear interest at a rate equal to the lesser of (i) one and
one-half percent (1 - 1/2%) per month or (ii) the maximum legal rate permitted
under law, and Programmer shall be liable for all reasonable costs and expenses
(including, without limitation, reasonable court costs and attorneys' fees)
incurred by Wink in collecting any past due payments.
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a joint press release announcing this
agreement on or before July 21, 1997, unless the parties mutually agree to delay
the press release. Wink will provide Programmer with a draft of this release by
July 16th.
6.2 Wink agrees to provide Programmer with notice within 30 days of new
System Operators having enabled their subscribers to receive Programmer's
Interactive Programs.
6.3 Wink agrees to use reasonable efforts to promote and feature
Programmer's Interactive Programs prominently in all of Wink's marketing
efforts, in which it lists content or content providers, including during
meetings with cable operators and the press, during industry trade shows and in
printed and other marketing communications materials. This commitment does not
prevent Wink from creating marketing materials, events or exhibits that
highlight particular programming categories or partnerships. Wink will also use
reasonable efforts to assist Programmer in achieving it's marketing objectives
in materials prepared by third parties, such as cable equipment manufacturers
and cable operators. Programmer agrees to promote it's participation as a
charter Wink programmer to cable operators, and to serve as a press reference
for Wink during the effective term of the agreement.
6.4 Programmer agrees to cooperate with Wink and System Operators in
promoting Programmer's Interactive Programs. Wink and System Operators may
prepare marketing materials relating to the Interactive Programs and may use
Programmer's name, logo and screen shots (collectively, "Programmer's Marks")
from the Interactive Programs, provided that such materials are
PROPRIETARY AND CONFIDENTIAL
-3-
<PAGE> 4
submitted to Programmer for review and approval prior to distribution.
Programmer's approval of such materials shall not be unreasonably withheld. Wink
hereby acknowledges and agrees that, as between Wink and Programmer, Programmer
is the sole owner of all right, title and interest in and to the Programmer's
Marks. All uses of the Programmer's Marks shall inure to the benefit of
Programmer. Upon any expiration or termination of this Agreement, Wink shall
delete and discontinue all use of the Programmer's Marks. At no time during or
after the term of this Agreement shall Wink challenge or assist others to
challenge the Programmer's Marks or the registration thereof or attempt to
assist another in the attempt to register any trademarks, marks or similar
rights for marks the same as or confusingly similar to the Programmer's Marks.
6.5 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in collaboration with Programmer. Programmer
shall provide Wink with reasonable assistance at no cost to Programmer in
conducting such research with respect to Programmer's viewers. Programmer agrees
that Wink will have access to all such research regarding the deployment,
launch, and usage of Wink service by Programmer viewers. Wink agrees to provide
copies of final reports from such research activity to Programmer.
6.6 Programmer understands and accepts that Wink will be providing
reports on viewer responses to the Interactive Programs to System Operator(s)
for responses that originate from System Operator's subscribers, and to
advertisers and other parties for responses that originate from Interactive
Programs paid for or sponsored by such parties. Wink agrees that reports
providing specific data regarding viewer responses to Programmer's Interactive
Programs, including data on Wink viewer responses to advertising on Programmer's
Programming Services, will not be made available to other broadcast or cable
networks, except in aggregated form that does not identify Programmer or
specific Programmer viewer data.
7. WARRANTY
Wink hereby represents and warrants to Programmer that the Wink Software
will operate and perform in accordance with all published specifications with
respect thereto and that the Wink Software is capable of enabling the
applications described in Exhibit A.
8. INDEMNIFICATION
Wink shall indemnify, defend and hold harmless Programmer, its parents,
subsidiaries, and affiliates and their respective officers, directors, employees
and agents from and against any and all damages, liabilities, costs and expenses
(including, without limitation, reasonable attorneys fees and amounts paid in
settlement they may suffer or incur which arises out of or as a result of any,
claim, demand, action, suit or proceeding in which it is alleged that the Wink
Software or any part thereof violates or infringes any patent or copyright or
other intellectual property right of any third party or constitutes a
misappropriation of any third party's trade secrets.
9. NOTICES
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 5
All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day express
deliver, addressed, to the addresses provided in the first paragraph of this
Agreement, and to the attention of:
If to Wink:
Vice President, Content
If to Programmer:
Senior Vice President, New Media
The date of such facsimile transmission, telegraphing or personal delivery or
the next day if by express deliver, or the date three (3) days after mailing,
shall be deemed the date on which such notice is given and effective.
10. WINK TRADEMARKS
All rights, title and interest in and to the Wink Software or other
rights, of whatever nature, related thereto shall remain the property of Wink.
Further, Programmer acknowledges and agrees that all names, logos, marks,
copyright notices or designations utilized by Wink in connection with the
service are the sole and exclusive property of Wink, and no rights or ownership
are intended to be or shall be transferred to Programmer.
11. REPRESENTATION
11.1 Wink represents and warrants to Programmer that (i) it is a
corporation duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority to enter into this
Agreement and to fully perform its obligations hereunder (iii) Wink is under no
contractual or other legal obligation which in any way interferes with its
ability to fully, promptly and completely perform hereunder.
11.2 Programmer represents and warrants to Wink that (i) Programmer is a
corporation duly organized and validly existing under the laws of the State of
Virginia; (ii) Programmer has the requisite power and authority to enter in this
Agreement and to fully perform its obligations hereunder; and (iii) Programmer
is under no contractual or other legal obligation which in any way interferes
with its ability to fully, promptly and completely perform hereunder.
12. CONFIDENTIALITY
Each party agrees that it will not use, except in the performance of its
obligations under this Agreement, and will not disclose or give to others, any
of the other party's Confidential Information (as defined below). Without
limiting the generality of the foregoing, each party will (1) restrict the
disclosure of the other party's Confidential Information to those of its
employees who require such information for purposes of performing its
obligations hereunder, (ii) inform each such employee of
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 6
the confidential nature of the information disclosed, (iii) prevent the use or
disclosure by its employees of such Confidential Information, except as provided
herein, and (iv) promptly notify the other party of any use or disclosure of the
Confidential Information, whether intentional or not, which violates the
provisions of this Paragraph 12. For purposes of this Agreement, the term
"Confidential Information" means all technical, business and other information
disclosed by one party to the other that derives economic value, actual or
potential, from not being generally known to other persons, including, without
limitation, technical and non-technical data, devices, methods, techniques,
drawings, processes, computer programs, algorithms, methods of operation,
financial data, financial plans, product plans, and lists of actual or potential
customers or suppliers. Confidential Information does not include information
which does not constitute a trade secret under applicable law after the second
anniversary date of the expiration of this Agreement. The parties agree to keep
the terms of this Agreement confidential, but acknowledge that certain
disclosures may be required by law. Programmer understands and acknowledges that
Wink may provide copies of Exhibits A and D to System Operators.
13. TERMINATION
13.1 Except as otherwise provided herein, neither Programmer nor Wink
may terminate this Agreement except upon sixty (60) days prior written notice
and then only if the other has made a misrepresentation herein or breaches any
of its material obligations hereunder and such misrepresentation or breach
(which shall be specified in such notice) is not or cannot be cured within sixty
(60) days of such notice.
13.2 Notwithstanding the above, Wink will have the right to terminate
this Agreement or all or any licenses granted herein if Programmer fails to
comply with any of its material obligations under this Agreement. Should Wink
elect to exercise this right to terminate for nonperformance, it must be done in
writing specifically setting forth those items of nonperformance. Programmer
will then have thirty (30) days from receipt of notification to remedy the items
of nonperformance. Should Programmer fail to correct these items of
nonperformance, then Wink may terminate this agreement and any license granted
herein. Wink's termination of this Agreement shall be without prejudice to any
other remedies Wink may have, including, without limitation, all remedies with
respect to the unperformed balance of this Agreement; provided, however, that if
Programmer has not made payment of the fees or charges due hereunder and such
nonpayment continues after thirty (30) days prior written notice by Wink, then
Wink may terminate this Agreement or any license granted herein.
13.3 Upon expiration of the term (including any extensions thereof) of
this Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Programmer to use the Products
will cease and Programmer will immediately (i) grant to Wink access to its
business premises and the Products and allow Wink to remove the Products, (ii)
purge all copies of all Products from all computer processors or storage media
on which Programmer has installed or permitted others to install such Products,
and (iii) when requested by Wink, certify to Wink in writing, signed by an
officer of Programmer, that all copies of the Products have been returned to
Wink or destroyed and that no copy of any Product remains in Programmer's
possession or under its control.
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 7
13.4 Programmer has the right to suspend the airing of Interactive
Programs if the transmission interferes with the airing of Programmer's video
programming or Wink fails to provide weekly reports regarding usage of
Programmer's Interactive Programs, and may continue such suspension until Wink
has resolved such problems to Programmer's satisfaction.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys
to enforce the terms of this Agreement, the prevailing party in any lawsuit
shall be entitled to an award of reasonable attorneys' fees and court costs.
a) This Agreement may not be assigned without prior written
mutual consent of Programmer and Wink.
b) This Agreement may be amended only by an instrument in
writing, executed by Programmer and Wink.
c) This Agreement will be governed in all respects by the laws
of the State of California.
d) This Agreement represents the entire agreement between the
parties and supersedes and replaces all prior oral and written
proposals, communications and agreements with regard to the subject
matter hereof between Programmer and Wink.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. THE WEATHER CHANNEL
By: /s/ Maggie Wilderotter By: /s/ Debora J. Wilson
Name: MAGGIE WILDEROTTER Name: DEBORA J. WILSON
Title: President & CEO Title: PRESIDENT PROD & DIST
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 8
EXHIBIT A: PROGRAMMING SERVICES
Description of Programming Services
<TABLE>
<CAPTION>
VIRTUAL
START OF WINK VIDEO ICAP INSERTION
NAME PROGRAMMING (A/D) LOCATION CH? POINT
<S> <C> <C> <C> <C> <C>
Example: October 1, 1997 Analog VBI line 15 No New
Overlay
York
</TABLE>
Specific Description of Required Interactive Programs:
* One video overlay application displayed on-demand atop The Weather
Channel's video signal, and providing viewers access to current weather
conditions and forecasts without leaving The Weather Channel
* One "virtual channel" (full screen graphics + text) application
providing on-demand access to current weather conditions and 5-day
forecasts for at least 60 major cities. Branded with "The Weather
Channel" name and logo.
* Both applications must be available 24 hours/day, 7 days/week.
* It is expected that the transmission of the Required Interactive
Programs will require the allocation of 2 national VBI lines.
Contact information:
<TABLE>
<CAPTION>
ISSUE ADDRESS CONTACT(S) PHONE /FAX/E-MAIL
Example:
<S> <C> <C>
Content refresh 111 Park Avenue Stephen Jones 212-123-4567
New York, NY 10001 Director, Enhanced 212-765-4321
Broadcasting [email protected]
</TABLE>
Actual Contact Info:
PROPRIETARY AND CONFIDENTIAL
-8-
<PAGE> 9
EXHIBIT B: WINK RESPONSE CENTER SERVICES
<TABLE>
<S> <C>
Polls by Zip Code - Report Only [ * ]*
1-100,000 transactions/mo. [ * ]
100,000 + transactions/mo. [ * ]
Polls by System - Report Only [ * ]
[ * ]
1-250,000 transactions/mo. [ * ]
251,000 + transactions/mo. [ * ]
</TABLE>
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on total monthly transaction volume by
advertiser registering for the Wink Response Network service. The price
breaks are based on the "average" for the month. That is, the lowest
price applies to all transactions for the month.
PURCHASE AND REQUEST TRANSACTION FEES INCLUDE / EXCLUDE;
1. Daily name & address lists delivered by fax, email, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of responses per day per ad per city.
4. Viewer credit card information if it is "on file" with the WRS. If not,
for the extra [ * ] response, Wink will mail a "purchase confirmation"
to the viewer to add the credit card, and provide a list of viewers who
did not supply their credit card.
5. Interface to standard EDI VAN for [ * ].
FULFILLMENT EDI/API
* Standard interface set-up fee [ * ]
- - --------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for Confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 10
* Non-standard Interface [ * ]
* Interface License/Maintenance fee [ * ]
SET UP FEES-RESPONSE SERVICE
* Advertiser [ * ]
* Content Provider [ * ]
REPORT GENERATION FEES [ * ]
RESPONSE DATA CENTER PRODUCTS
* Purchase confirmation mailer [ * ]
* List of responders who do not respond to
purchase confirmation mailers [ * ]
* Branded envelope [ * ]
* Advertiser/Programmer Purchase Points Club [ * ]
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 11
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING
This charter pricing is predicated upon Programmer airing the first Interactive
Programs on or before September 30, 1997. If Programmer fails to air any
Interactive Programs on or before this date, the pricing for Wink Software and
Services reverts to Wink's then current retail price list.
All on-going fees are due the first of the month. The installation and
integration fees are due upon Programmer's acceptance of the successful
installation of the Broadcast Server, and transmission and receipt by Wink
testers of one nationally inserted test application defined by Wink ("First Air
Date"). Such acceptance shall not be unreasonably withheld. The Broadcast Server
license fees commence on the first of the month following the First Air Date,
and the WebCore license fees and technical support fees commence on the one year
anniversary of the First Air Date.
<TABLE>
<CAPTION>
FIRST
ON-GOING YEAR FIRST YR. 2&3 TOTAL 3-
OR ONE- PRICE YEAR PRICE YR
TIME (PER PRICE (PER CHARTER
COSTS MONTH) (TOTAL) MONTH) PRICE
<S> <C> <C> <C> <C> <C>
Broadcast Server On-going [ * ] [ * ] [ * ] [ * ]
WebCore Module On-going [ * ] [ * ] [ * ] [ * ]
Tech Support On-going [ * ] [ * ] [ * ]
SUBTOTAL [ * ] [ * ] [ * ] [ * ]
Installation and One-time [ * ] [ * ] [ * ] [ * ]
integration
Studio site One-time [ * ] [ * ] [ * ] [ * ]
license (5 seats)
Studio/WebCore One-time [ * ] [ * ] [ * ] [ * ]
training (3X2days)
SUBTOTAL [ * ] [ * ] [ * ] [ * ]
TOTAL BOTH [ * ] [ * ] [ * ] [ * ]
</TABLE>
PROPRIETARY AND CONFIDENTIAL
-11-
<PAGE> 12
Wink reserves the right to increase license fees annually after the first 12
months of the contract period by the percentage increase in the consumer price
index for goods and services for the prior 12 months.
The above pricing for installation and integration covers all work necessary to
enable Programmer's two initial Interactive Programs, as defined in Exhibit A.
It specifically includes the ability to suspend delivery of Interactive Programs
during ad breaks. It does not cover detailed integration with Programmer's ad
insertion system for the purpose of enabling enhancements to spot advertising.
OPTIONAL SERVICES
Custom interface work (ad insertion and traffic systems, etc.) [ * ]
Phone training and consulting beyond standard package [ * ]
Application development [ * ]
Travel expenses are billed separately at cost
PROPRIETARY AND CONFIDENTIAL
-12-
<PAGE> 13
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE PROGRAMS
Programmer: Landmark Communications, Inc.
Programming Service: The Weather Channel
This Agreement sets forth the terms and conditions for the national distribution
of Wink ITV Applications ("Interactive Programs") to any multichannel video
operator in the United States or Canada with whom Programmer already has an
agreement for carriage of Programmer's video programming ("System Operator").
1. BACKGROUND
Programmer has created one or more Interactive Programs which are compliant with
the Wink Communications, Inc. ('Wink") interactive communications application
protocol. The Interactive Programs are transmitted by Programmer using either
the vertical blanking interval ("VBI") of the corresponding video signal, or
using MPEG private data streams provided concurrently with the corresponding
video signal(s).
System Operator distributes one or more of Programmer's signals through one or
more of the following: cable, satellite and MMDS (wireless cable).
2. EFFECTIVE DATE AND TERM
The term of this Agreement shall commence on the date of Programmer's execution
of this Agreement and terminate three (3) years thereafter, unless Programmer
and Wink terminate their Charter Programmer Affiliation Agreement in accordance
with the terms of that agreement.
This Agreement will automatically renew for one year periods unless either party
notifies the other at least 90 days prior to the end of the then-current term of
that party's intent not to renew.
3. INTEGRITY OF INTERACTIVE PROGRAMS
Programmer will ensure that the Interactive Programs meet Wink's criteria for
Wink compliant applications (See Attachment 1). Programmer agrees that each
Interactive Program shall have been either successfully tested by Programmer or
certified as compliant by Wink prior to the Delivery to System Operator for
distribution.
Programmer understands that failure to meet the above criteria could result in
System Operator suspending the distribution of one or more Interactive Programs
until such time as all Interactive Programs are certified by Wink to be in
compliance.
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 14
4. DISTRIBUTION
Programmer hereby grants System Operator a non-exclusive license to distribute
the Interactive Programs delivered in the VBI or MPEG of Programmer's video
signal. Programmer agrees that each Interactive Program shall have been either
successfully tested by Programmer or certified as compliant by Wink prior to the
Delivery to System Operator for distribution, and shall bear any associated
costs of such testing.
Programmer agrees not to charge System Operator fees associated with Interactive
Programs for the term of this Agreement. Likewise, System Operator agrees that
no fees or charges will be due from carriage or retransmission of the
Interactive Programs as provided for hereunder.
Programmer will provide System Operator written notice at least 30 days prior to
discontinuing national transmission of all Interactive Programs.
It is a condition of System Operator's right to carry the Interactive Programs
that System Operator shall distribute Programmer's Interactive Programs without
modification, and that System Operator may not modify or enhance any VBI lines
described in Exhibit A. Programmer agrees that System Operator may copy the
Interactive Programs for simultaneous transmission in different encoding formats
other than what Programmer currently uses including but not limited to, other
VBI formats, out of band channels, and MPEG2 private data streams; provided such
Interactive Programs are presented together with the original corresponding
video to System Operator's subscribers, and that such copying is done to enable
System Operator's subscribers to properly receive and display the
Interactive-Programs on their set top box or television set.
System Operator can, if permitted in Exhibit A, locally insert Interactive
Programs as instructed by Programmer. System Operator is solely responsible for
any costs associated With such local insertion. Programmer will notify System
Operator of changes to any such permissions through amendments to Exhibit A
provided at least 30 days prior to the effective date of such requirements.
System Operator may suspend transmission of the Interactive Program during the
insertion by System Operator of local advertising avails as authorized in any
separate agreements between Programmer and System Operator.
5. RESPONSE NETWORK
Programmer agrees to utilize the Wink Response Network for two-way Interactive
Programs. Programmer also agrees to use Wink Communication's standard scripts
and guidelines for response applications.
6. MARKETING MATERIALS
System Operator may prepare marketing materials relating to the Interactive
Programs and may use Programmer's name, logo, and screen shots from the
Interactive Programs in such marketing materials, provided that such materials
are submitted to Programmer for review and approval prior to distribution.
Programmer's approval of such marketing materials shall not be unreasonably
withheld or delayed.
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<PAGE> 15
7. SCOPE
This Agreement does not interfere with or negate other Agreements between
Programmer and System Operator. This Agreement represents all of the terms and
conditions for Programmer providing Interactive Programs. this Agreement may be
updated from time to time only by express written consent of Programmer.
PROGRAMMER
By: /s/ Debora J. Wilson
Name: DEBORA J. WILSON
Title: PRESIDENT-PROD & DIST
Date: 7/18/97
PROPRIETARY AND CONFIDENTIAL
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<PAGE> 16
EXHIBIT D - ATTACHMENT 1
CRITERIA FOR
WINK COMPLIANT APPLICATION
* All applications must be registered and contain a unique universal ICAP
code (UIC) prior to being broadcast.
* Registered applications have passed a standard set of tests which
validate:
* that the application can be delivered through the VBI,
will arrive as appropriate, and can be decoded in the
Wink engine.
* that the application does not generate error messages.
* that the application receives scheduled updates, if
applicable.
* that the application passes minimum acceptable latency
standards.
* that the application does not cause System Operator
technical or operational problems.
* that the application, if two-way, generates the
appropriate routing address and usage data.
PROPRIETARY AND CONFIDENTIAL
-16-
<PAGE> 17
EXHIBIT E: FIRST YEAR PERFORMANCE OBJECTIVES
(To be agreed upon between the parties prior to airing of the first Interactive
Programs)
Programmer's Interactive Programs generate at least "x" number of viewer
impressions during the first six months of 1998:
x=
An impression is defined as follows:
Viewer is
(a) exposed to Wink's attract icon while being tuned to Programmer's video
signal for the Programming Service described in A or
(b) tunes to Programmer's virtual channel.
PROPRIETARY AND CONFIDENTIAL
-17-
<PAGE> 18
EXHIBIT F: PRELIMINARY EQUIPMENT LIST
Wink Broadcast Server and WebCore
* Sun Sparc 20 or faster, with 64MB RAM, 1 GB+ hard disk, Solaris 2.4 or 2.5,
CD-ROM, Ethernet connection to Programmer's LAN, dial-up modem, tape or other
backup mechanism
*Norpak TES-3 VBI data inserter
*LAN/serial connections to Lauth system, ftp site (for data), other hardware as
necessary
* Later this fall: PC w/ Windows 95 and Ethernet connection to run WBS remote
GUI
Wink Studio
* Pentium Windows PC with 16MB+ RAM, 1 GB+ hard disk, 1024x768x256 color
graphics, 17"+ monitor, Ethernet connection, to enable electronic delivery of
applications to the WBS, Internet access to enable electronic access to Wink's
Data Center
Test equipment
* GI CFT-2200 set top box, marketing firmware
* High grade video source (Beta SP or better)
* Coax Modulator
PROPRIETARY AND CONFIDENTIAL
-18-
<PAGE> 1
EXHIBIT 10.14
June 3, 1997
Martin Yudkovitz
Vice President
NBC
30 Rockefeller Plaza
New York, NY 10112
Gentlemen:
This letter sets forth the agreement between Wink Communications, Inc.
("Wink") and NBC Multimedia, Inc. dba NBC Interactive Media ("NBC"), among other
things, provision of certain programming by NBC and its affiliates containing
Wink Enhancements (as defined below). This agreement is referred to as the
"Letter Agreement" in the Warrant Purchase Agreement between Wink and General
Electric Capital Corporation.
Whereas, Wink is engaged in the business of producing, licensing and
distributing software and technology for placement in consumer electronic
devices and in network, cable, satellite and other facilities;
Whereas, such software and technology will permit television and cable
viewers to interact with television programming enhanced with content which
utilizes such software and technology in order to obtain additional information
and conduct transactions through a television; and
Whereas, Wink intends to aggressively market such software and
technology to cable set top box and television manufacturers, program
broadcasters and cable system operators and desires to expand the amount of
available television programming that contains such Wink enhancements in order
to aid it in initial deployment of its product and service offerings.
Now therefore, the parties hereto hereby agree as follows:
1. Processing Fee. (a) Wink shall pay NBC [ * ] of the Net Transaction
Processing Response Revenues (as defined in paragraph I (c)) (the
"Processing Fee") through the period ending December 31, 2002. Wink and
NBC shall negotiate in good faith regarding the appropriate Processing
Fee, if any, to be used for any years following 2002 beginning no later
than 90 days prior to the end of 2002. Payments of the Processing Fee
shall be made by Wink to NBC by no later than thirty (30) days following
the end of each calendar quarter and shall be accompanied by a report
providing all information involved in the calculation of such Processing
Fee as well as any other information reasonably requested by NBC. NBC or
its
- - --------
* Confidential treatment has been requested with respect to
certain portions of this exhibit pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed with the Commission.
<PAGE> 2
independent accounting firm shall have the right to audit and inspect
the books and records of Wink upon reasonable notice and during regular
business hours to confirm payments are properly made, provided that such
audit and inspection by NBC personnel will be limited to aggregated
financial information but will not include any information which is
directly applicable to any television network or broadcaster or cable
programming provider other then NBC and its affiliates.
(b) Wink agrees that the Processing Fee arrangement with NBC is the
most favorable fee arrangement granted by Wink to any cable programming
provider or television network or broadcaster for transmissions
originated and received in the United States whether such network or
broadcaster distributes it signals via terrestrial antennas, cable or
satellite. Wink further agrees that if it enters into a Processing Fee
arrangement more favorable to another such similarly situated company in
the future, Wink shall notify NBC of the terms of such arrangement and
then, if requested by NBC, the Processing Fee arrangement with NBC shall
be adjusted to match such more favorable arrangement from and after that
date, provided that NBC agrees to assume all comparable terms and
conditions of such arrangement,
(c) The term "Net Transaction Processing Response Revenues" shall
mean the gross amounts received by or on behalf of Wink in connection
with transactions attributable to Wink- enhanced programming for which
the broadcast signal originates with NBC and NBC TV (as defined in 5
below) in the United States and is received in the United States or is
distributed by its cable programming affiliates in the United States and
received in the United States less only discounts, bad debts, sales
taxes, actual returns and any direct and identifiable reasonable
expenses and out-of-pocket costs attributable to Wink's operation of the
Wink Response Processing Data Center which processes such transactions,
which expenses and costs are applicable to such transactions.
2. License to Wink Material. For as long as NBC and its affiliates elect to
continue its programming commitment as described in paragraph 4, Wink
will provide [ * ] license for one Wink Broadcast Server, one Wink
WebCore server module, and one Wink Ad Insertion Server Module. In
addition during such period, Wink will provide free maintenance releases
as necessary. Wink will also provide [ * ] copies of Wink Studio, and
will provide copies of all Studio 1.0 templates created by Wink [ * ].
For as long as it broadcasts or distributes Wink Programs as described
in paragraph 4, NBC will be responsible for providing all necessary
hardware which NBC requires to create Wink Programs for the purposes
hereof, which may include, but not be limited to, a Sun server, data
insertion equipment, network interfaces, and PCs for Wink Studio.
3. Resources. For as long as NBC and its affiliates broadcast or distribute
Wink Programs as described in Section 4, Wink will commit reasonable
production and engineering resources to support NBC specific content
development, including support for authoring, scripting, and server
module creation. During the same period Wink will also dedicate
engineering resources reasonably necessary to create interfaces to
important NBC equipment, including
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<PAGE> 3
serial digital playout systems, live data feeds, ad scheduling and
billing systems. For as long as it broadcasts or distributes Wink
Programs as described in paragraph 4, NBC agrees to make the appropriate
technical personnel, including broadcast operations staff, reasonably
available for consultation during this process, and NBC and Wink intend
to make reasonable efforts to make appropriate management personnel
available (such personnel to be determined by each party in its sole
discretion) on a regular basis to discuss Wink-related creative,
technical and commercial projects.
4. Wink Programming. (a) NBC will make reasonable efforts to cause the
broadcast or distribution of one or more Wink Programs as soon as
possible after Wink has provided NBC with all software, materials,
training and support described herein which are necessary to begin
broadcasting and distribution of Wink Programs or otherwise reasonably
requested by NBC. For purposes hereof, (i) any television program that
is broadcast by NBC and NBC TV in their sole discretion or (ii) any
cable program as mutually agreed in each case by Wink and NBC and which
is distributed by NBC and NBC cable programming affiliates and contains
some form of enhancement which utilizes any of the Wink software and
technology provided hereunder to NBC or made available to cable set top
box or television manufacturers (a "Wink Enhancement") and appears on
the television screen in some form during the time that such program is
broadcast or distributed (within the program itself but not including
within the advertising accompanying such program) and relates in some
manner to the content of the program shall be deemed a "Wink Program".
NBC shall provide Wink with written notice when it and its affiliates
have broadcast or distributed the first Wink Program for purposes
hereof.
(b) NBC agrees to make reasonable efforts to cause the broadcast
and/or distribution of an average of [ * ] of Wink Programs, which may
include some entertainment and sports programming, (any week in which at
least [ * ] of Wink Programs are broadcast by NBC and NBC TV or
distributed by NBC and NBC cable programming affiliates to the extent
agreed upon as provided in paragraph 4(a)(ii) is referred to as a "Wink
Programming Week") for a period of one year from the date that the first
Wink Program is broadcast or distributed; provided, however, that NBC
and its affiliates shall have sole discretion in choosing (i) which
entertainment and sports programming will be enhanced to create Wink
Programs, (ii) the mix of particular Wink Programs in any week and (iii)
the actual content and placement of the Wink Enhancements within the
Wink Programs. NBC shall provide Wink with written notice after it has
broadcast or distributed its twenty-sixth (26th) Wink Programming Week
pursuant hereto.
(c) After NBC and its affiliates have broadcast or distributed Wink
Programs for a period of one year, NBC shall make a decision in its sole
discretion regarding whether it intends to continue to broadcast or
distribute Wink Programs. Wink agrees that NBC, NBC TV, NBC cable
affiliates and NBC licensors shall retain all rights, including the
right to assign or transfer such rights, in the Wink Programs and in any
Wink Enhancements that they create or obtain, and shall retain all
revenues derived by NBC, NBC TV, NBC cable affiliates or its
-3-
<PAGE> 4
NBC licensors from the Wink Programs, including the advertising
appearing within the Wink Programs, and the Wink Enhancements, Finally,
NBC reserves the right to alter or discontinue any Wink Enhancements or
Wink Programs in its sole discretion.
5. Distribution. In any market where Wink will be deploying cable set top
boxes or televisions containing Wink engines, NBC agrees that Wink
Enhancements shall be made available as part of the standard signal for
any of the Wink Programs chosen by NBC pursuant to Section 4 which are
broadcast by the NBC Television Network ("NBC TV") and provided by NBC
TV to the NBC TV's affiliates or which are distributed by NBC TV or NBC
cable affiliates to cable operators which carry NBC TV programming.
NBC's inclusion of Wink Enhancements in the standard signal broadcast or
distributed by NBC TV or the NBC cable affiliates in connection with any
program shall meet the requirements for the broadcast or distribution of
a Wink Program for purposes of paragraph 4. Notwithstanding the
foregoing, Wink acknowledges that the NBC TV affiliates or cable
operators may block out, fail to transmit or be unable to properly
receive that portion of the NBC TV or NBC cable affiliates' signals
which contain a Wink Program. If any affiliates or cable operators
choose to block out, fail to transmit or are unable to properly receive
that portion of the NBC TV or NBC cable affiliates' signals which
contains a Wink Program and NBC is made aware of it by the affiliates or
the cable operators, NBC will use reasonable efforts to notify Wink of
such fact within a reasonable time following such discovery, and such
action by an affiliate or cable operator shall not be deemed to be a
breach by NBC of any of the terms hereof. The obligations contained in
this paragraph shall run for as long as NBC broadcasts or distributes
Wink Programs as described in paragraph 4.
6. Training. NBC will commit a minimum of two full-time staff members to a
two-day training program on Wink Studio, and a minimum of one staff
member to a two-day training program on server administration and Wink's
Server Module API. The training shall be held in Alameda or in New York,
with the final choice of location subject to the mutual agreement of the
parties,
7. Press-Releases. NBC shall have approval rights regarding any references
in any press release that concern NBC or its obligations or interests in
the contemplated transactions. NBC and Wink agree to issue a joint press
release containing a mutually acceptable description of the content
arrangement described herein within thirty (30) days of such closing,
provided that NBC and Wink agree to make reasonable efforts to agree
upon the content of the joint press release within fourteen (14) days of
such closing, NBC and Wink intend to create some form of mutually
agreeable public relations material for distribution in the following
two stages: (1) an early stage aimed at the broadcast and cable industry
and (2) a second stage timed with the launch of Wink Programming Weeks
and aimed at mass market consumer media. In addition, unless the parties
agree to the contrary, within thirty (30) days following NBC's first
Wink Programming Week, NBC and Wink will hold a mutually agreeable joint
press conference to kick off the consumer press activity.
Notwithstanding the foregoing, it is understood and agreed that Wink may
not use or deploy, in any manner or for any purpose,
-4-
<PAGE> 5
any NBC (or its affiliates) logos, tradenames, trademarks, or other
intellectual property without NBC's express prior consent.
8. Sales Calls. NBC will consider pursuing opportunities in support of
Wink's business development efforts in the television set manufacturing
industry as may be mutually agreed from time to time.
9. Confidentiality. (a) NBC and Wink each acknowledge that it may receive
"Confidential Information" of the other party. "Confidential
Information" means any information, technical data, or know-how,
including, but not limited to, that which relates to research, product
plans, products, services, customers, markets, software, software source
code, developments, inventions, processes, designs, drawings,
engineering, hardware configuration information, marketing or finances,
or other business or technical information which the disclosing party
treats confidentially or which the recipient has reason to believe is so
treated, this Letter Agreement and the terms of this Letter Agreement.
Confidential Information does not include information that: (i) is in
the possession of the receiving party at the time of disclosure; (ii)
prior or after the time of disclosure, becomes public knowledge or
literature, not as a result of any inaction or action of the receiving
party, (iii) is approved by the disclosing party, in writing, for
release in violation hereof, (iv) becomes available to the receiving
party from a third party source which receiving party reasonably
believes is not bound by any obligation of confidentiality with respect
to such information; (v) is independently developed by receiving patty
without reference to the Confidential Information and/or (vi) is
required to be disclosed by law, regulation (including the rules and
regulations of the Securities and Exchange Commission or of any
securities exchange) or legal process, including any deposition,
interrogatory, request for documents, subpoena, civil investigative
demand, SEC filing or similar process or pursuant to advice of counsel
to disclose any of the Confidential Information. in case of such
required disclosure the disclosing party will use reasonable efforts to
seek a protective order or confidential treatment request for the
Confidential Information.
(b) NBC and Wink each agree not to use the Confidential Information
disclosed to it by the other party for any purpose except to carry out
its obligations or exercise its rights under this Letter Agreement,
other agreements relating to the transactions referred to herein, the
Wink Warrants (each entered into by Wink and GE Capital Corporation)
(the "Warrants"), or the Wink Investors Rights Agreement or Co-Sale
Agreement, each among Wink and each other party thereto as well as the
letter agreement between the parties related to Visitation Rights and
the Confidentiality and Nondisclosure Agreement related thereto. No
party will disclose the Confidential Information of the other to any
third party, provided that a party may disclose confidential information
to is employees, agents and affiliates who are required to have the
information in order to carry out such party's obligations hereunder.
Each party agrees that it will take all reasonable measures to protect
the secrecy of and avoid disclosure or use of Confidential Information
of the other in order to prevent it from falling into the public domain
or the possession of persons other than those persons authorized
hereunder to
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<PAGE> 6
have any such information, which measures shall include the degree of
care that the receiving party utilizes to protect its own Confidential
Information of a similar nature. Each party's obligation with respect to
Confidential Information shall terminate 7 years following the date of
disclosure thereof.
10. LIMITATION OF LIABILITY. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY
LOSS OF PROSPECTIVE PROFITS OR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES BY REASON OF ANY FAILURE BY SUCH PARTY TO PERFORM
ITS OBLIGATIONS PURSUANT TO THIS LETTER AGREEMENT.
11. TERM AND TERMINATION (a) Except as otherwise provided herein, the period
during which this Letter Agreement will be in effect (the "Term") begins
on the date of the execution of this Letter Agreement and shall end on
December 31, 2002. By no later than ninety (90) days prior to December
31, 2002, the parties agree to enter into the discussions referred to in
paragraph I (a) and as part of such discussions shall negotiate
regarding the possibility of an extension of this agreement or of a new
agreement.
(b) Any party will have the right to cancel this Letter Agreement
(subject to any accrued rights or obligations) at any time by giving
written notice that the other party has breached a material term or
condition of this Letter Agreement provided the breaching party fails to
cure such breach within thirty (30) days from the date of the written
notice.
(c) NBC shall have the right to cancel this Letter Agreement
immediately, in its sole discretion, if any of the following occur: (i)
the commencing by Wink or Wink's intention to commence a voluntary case
under any applicable bankruptcy laws (as now or hereafter may be in
effect); (ii) the adjudication that Wink is bankrupt or insolvent; or
(iii) the filing by Wink or the intent to file by Wink of a petition
seeking to take advantage of any other law providing for the relief of
debtors.
12. Governing Law. This Letter Agreement shall be governed and construed in
accordance with the laws of the State of New York (excluding the laws
regarding conflict of laws questions). The parties hereby submit to the
jurisdiction of the federal and state courts located in the State of New
York, and any action or suit under this Letter Agreement shall only be
brought by the parties in any federal or state court with appropriate
jurisdiction over the subject matter established or settled in the State
of New York. The parties shall not raise in connection therewith, and
hereby waive, trial by jury and/or any defenses based upon the venue,
the inconvenience of the forum, the lack of personal jurisdiction, the
sufficiency of service of process or the like in any action or suit
brought pursuant to this Letter Agreement.
13. Relationship of the Parties: It is understood that this Letter Agreement
does not create any partnership, agency, joint venture or employment
relationship between the parties, that the parties are acting as
independent contractors with respect to each other, and that none of the
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<PAGE> 7
employees of any party shall be deemed to be employees of the other
party for any purpose. Each party shall pay and be solely responsible
for all contributions, taxes and premiums payable under any and all
applicable, laws, rules or regulations with respect to employees.
14. Severability. If any provision of this Letter Agreement shall be found
by a court of competent jurisdiction to be invalid or unenforceable,
such finding shall not affect the validity or enforceability of this
Letter Agreement as a whole or of any other part of this Letter
Agreement. Any such provision shall be enforced to the maximum extent
permissible. In the event such provision is considered an essential
element of this Letter Agreement, the parties agree to promptly
negotiate a replacement thereof
15. Notices. All notices and other official communications under this Letter
Agreement shall be in writing and addressed as follows for each of the
parties:
To WINK To NBC:
Wink Communications NBC Multimedia, Inc.
1001 Marina Village Parkway 30 Rockefeller Plaza
Alameda, California 94501 New York, New York 10112
Attn: Allan Thygesen
Attn: Peg Murphy Fax, (510) 337-2960
Fax: (212) 664-5561 With a copy to:
With a copy to:
WILSON, SONSINI, GOODRICH National Broadcasting
& ROSATI Company, Inc.
Attention: Herbert Fockler 30 Rockefeller Plaza, 10th Floor
650 Page Mill Road New York, New York 10112
Palo Alto, CA 94304 Attn: Legal Department
Fax: (212) 664-2147
Notices shall be effective upon receipt of the relevant party.
16. Survival. Sections 1(a) (the last sentence only), 9, 10, 12, 13, 14, 15,
16, and 20 will survive the expiration or termination of this Letter
Agreement.
17. Assignment. Except in the case of a merger, sale or transfer of all or a
substantial portion of the material assets of the business to which this
Letter Agreement relates, or sale or transfer of a majority of the
outstanding voting shares of stock in the corporation to a single
entity, and subject to the next sentence hereof, Wink shall not assign
or subcontract this Letter Agreement or any right or obligation
hereunder without the prior written consent of NBC. In the case of such
a merger, sale or transfer, Wink will NBC at least 30 days before the
closing
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<PAGE> 8
of the transaction (the "Notice of Transaction"). NBC shall have the
right, in its sole discretion and without liability to any person to
terminate this Letter Agreement effective as of the closing date of such
transaction and thereby prevent the assignment of this Letter Agreement
by giving Wink written notice of termination, within 5 business days
from receipt by NBC of the Notice of Transaction. If the transaction
does not close, this Letter Agreement will remain in effect. Exercise of
this right of termination shall not be a breach of this Letter
Agreement.
18. Waiver/Modification: No modification or amendment to, or waiver of, this
Letter Agreement will be binding and valid unless it is in writing and
executed by the party against whom enforcement is sought. No waiver of a
breach of any provision of this Letter Agreement or of any default
hereunder shall be deemed a waiver of any other breach or default of
this Letter Agreement.
19. Force Majeure: Neither party will be liable to the other party for
failure to perform its obligations hereunder because such performance is
prevented by a "Force Majeure Event." A "Force Majeure Event" shall mean
an act of God, war (whether declared or not), riot, embargo, act of
governmental or military authority, strike, labor dispute, fire or other
similar cause beyond the party's control. Notwithstanding the foregoing,
a party failing to perform because of a Force Majeure Event shall
immediately use reasonable efforts to mitigate the impact of any Force
Majeure Event and commence performance. In addition, if NBC fails to
present any Wink Program over the NBC facilities because of the
unavailability of technical facilities, defect or breakdown of equipment
or transmission facilities, labor dispute, government action, the
unforeseen absence of a principal performer, or any cause beyond the
control of NBC and its affiliates, whether of a similar or dissimilar
nature, such failure to broadcast or distribute shall not constitute a
breach of this Agreement.
20. Reservation of Rights. This Agreement does not grant any right or
license, under any intellectual property rights of NBC, Wink or their
affiliates and licensors, except as expressly provided herein, and no
other right or license is to be implied by or inferred from any
provision of this Letter Agreement or the conduct of the parties
hereunder. In particular, Wink acknowledges that this Letter Agreement
gives it no rights to Wink Programs or Wink Enhancements or any portions
thereof. Notwithstanding the foregoing, Wink shall have the right to
request authorization to display and publicly perform segments from
previously broadcasted Wink Programs in connection with Wink's marketing
and promotional activities, subject to NBC's prior approval of the
particular segments and the manner of use of such segments, which
approval shall be in NBC's sole discretion, provided that NBC will give
reasonable consideration to each such reasonable Wink request.
21. Entire Agreement. The provisions of this Letter Agreement set forth the
entire agreement and understanding between the parties as to the subject
matter hereof and supersedes all prior agreements, oral or written, and
all other communications between the parties relating to the subject
matter hereof other than the Warrant Purchase Agreements, the Warrants
and/or the
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<PAGE> 9
Wink Investors Rights Agreement or Co-Sale Agreement, each among Wink
and each other party thereto as well as the letter agreement between the
parties related to Visitation Rights and the Confidentiality and
Nondisclosure Agreement related thereto.
22. Counterparts. This Letter Agreement may be executed in counterparts,
each of which shall constitute an original but all of which, when taken
together, shall constitute one agreement, and shall become effective
when one or more such counterparts have been signed by each of the
parties and delivered to the other parties.
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below.
Very truly yours,
WINK COMMUNICATIONS, INC.
By: /s/ Maggie Wilderotter
Title: President & CEO
ACCEPTED AND AGREED:
NBC MULTIMEDIA, INC.
By: /s/ Martin J. Yudkovitz
Name: Martin J. Yudkovitz
Title: President & CEO
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<PAGE> 1
EXHIBIT 10.15
CABLE AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 31st day of October, 1997 by and
between WINK COMMUNICATIONS, INC., a California corporation ("Wink"), whose
address is 1001 Marina Village Parkway, Alameda, CA 94501 and 21st Century,
Cable TV, Inc. a Illinois corporation ("Affiliate"), whose address is 350 North
Orleans Suite 600 Chicago, IL. 60654.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Affiliate the non-exclusive license to use the
Wink ITV Studio, Wink ITV Broadcast Server, and Wink ITV Response Server
versions 1.0 and 1.x updates (hereinafter collectively referred to as "Wink
Software") to deliver "enhanced broadcasting" to all Affiliate cable systems in
the continental United States.
1.2 This License is not transferable outside of the Affiliate systems
Operating Area, nor any rights hereunder, may be transferred, assigned or
sublicensed in whole or in part without Wink's prior written consent.
1.3 For purposes of this Agreement, the "Operating Area" of any system
shall mean, with respect to a cable television system, the geographical area
where Affiliate is authorized to construct, operate, manage or maintain a cable
television system by appropriate governmental authority.
1.4 Affiliate agrees to use reasonable efforts to utilize the Wink
Software on all advanced analog and digital cable set top boxes.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution
of this Agreement and terminate three (3) years thereafter.
2.2 This Agreement will automatically renew for one year periods unless
either party notifies the other at least 90 days prior to the end of the
then-correct term of that party's intent not to renew.
3. INTEGRATION
3.1 Affiliate will distribute "enhanced broadcasting" through its
Operating Area head-ends. For the purposes of this Agreement, "enhanced
broadcasting" consists of video originated by a national broadcaster or a cable
programming network that has been enhanced through the use of Wink Software.
3.2 Wink also agrees to perform all Wink related work necessary to
integrate with advanced analog and digital cable set top boxes at no charge to
Affiliate.
<PAGE> 2
3.3 Affiliate agrees to prioritize the Wink software
installation/integration and provide the necessary resources to meet a June,
1998, Affiliate system launch date or thereafter when technically feasible for
the Chicago Operating Area(s) within the year, 1998.
3.4 Both parties will use best efforts to complete all integration work
per the date mentioned above.
3.5 Affiliate agrees to allow Wink to install and use Wink Response
Servers located in individual Affiliate Operating Area headends to collect,
aggregate, and route responses for national "enhanced broadcasting" applications
through Wink's Alameda Data Center. Wink agrees to provide daily reporting to
Affiliate of all response traffic generated by its Affiliate subscribers.
4. RATES AND DEPLOYMENT
4.1 Affiliate agrees to provide Wink "enhanced broadcasting" as part of
its advanced analog and digital offering to its subscribers in Chicago Operating
Areas [the Launch Market(s)] by June, 1998.
4.2 Effective at launch, Affiliate agrees to remit a license fee payment
per Operating Area of [*] for the Launch Market(s). Affiliate is granted the
option to utilize the Local Ad Software and additional Virtual Channels as
specified (Step-Up-Schedule C). Affiliate agrees that beginning in Year 3,
Affiliate will remit to the Wink Standard Package pricing of [*] for the
remainder of the term of the Agreement to Wink. The Standard Package includes
Local Ad Software and additional Virtual Channels.
4.3 Affiliate has up to six (6) months after deployment in the Launch
Market(s) to deploy Wink Software in other Affiliate Operating Areas that have
Wink capable set top boxes per Charter pricing in 4.2.
4.4 Affiliate commits to distribute to its digital and advanced analog
subscribers "enhanced broadcasting" delivered from National Broadcasters and
National Cable Programming Services (hereinafter collectively referred to as
"Programmers") in the VBI of the Programmers Video Signal. Affiliate agrees to
keep the appropriate headend and server equipment in good working order for an
uninterrupted carriage of "enhanced broadcasting". If Affiliate experiences
problems with the "enhanced broadcasting" delivery system, Affiliate will use
its reasonable efforts to restore "enhanced broadcasting" service as soon as
possible. Affiliate agrees not to charge Programmer for carriage or use of VBI
associated with delivery of "enhanced broadcasting" for the term of the
Agreement.
4.5 Wink agrees to Revenue Share with Affiliate, its fees, on all Wink
generated advertising purchase and request transactions by Affiliates' Wink
Subscribers for the term of this Agreement. Wink will pay Affiliate per the
attached Schedule A.
- - ----------------------
*Confidential treatment has been requested with respect to certain portions of
this exhibit pursuant to a request for treatment filed with the Securities and
Exchange Commission. Omitted portions have been filed with the Commission.
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<PAGE> 3
4.6 For purposes of this Agreement, the term "Wink Subscriber" shall
mean each Affiliate residential customer and commercial or business
establishment receiving and separately paying for cable television service with
a digital or advanced analog box in all Affiliate Operating Areas.
4.7 [*] Affiliate is responsible to provide all Server hardware platform
components required for the launch of the Wink Software (Bill of
Materials-Schedule 8). Affiliate may elect the Wink Hardware lease option of an
additional [ * ] per month per Operating Area. Affiliate has the option to
purchase the hardware either from Wink or from selected vendors. Conversion fees
for all other Affiliate Operating Areas, outside of the Launch Market will be
[*] per Operating area, plus any shipping or travel costs incurred by Wink in
support of on-site installation, maintenance, support, or consulting under this
Agreement shall be payable by Affiliate.
4.8 Affiliate may choose to utilize other products and services of Wink
from time to time under this Agreement. These services will be extended by Wink
to Affiliate at the then prevailing retail rate.
4.9 Wink Agrees to a minimum of ten(10) National Programmers
broadcasting Wink Enhanced programming by the actual deployment date of
beginning of June 1998, with Enhanced Broadcasting Agreements in place with a
minimum of twenty(20) National Programmers by June 1999.
5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following each month
throughout the term of this Agreement, Affiliate shall remit to Wink all fees
owed for services rendered in the previous month.
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Affiliate of its obligation to make any
payment in a timely manner consistent with the terms of this Agreement. Past due
payments shall bear interest at a rate equal to the lesser of (i) one and
one-half percent (1 - 1/2%) per month or (ii) the maximum legal rate permitted
under law, and Affiliate shall be liable for all reasonable costs and expenses
(including, without limitation, reasonable court costs and attorneys' fees)
incurred by Wink in collecting any past due payments.
6. PROMOTION AND RESEARCH
6.1 Affiliate agrees to promote and market the Wink service to
Subscribers within the Operating Area of each launched system. Advertising,
promotional, marketing and/or sales materials concerning the Wink service which
are provided to Affiliate by Wink may be used at the discretion of Affiliate.
6.2 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in connection with Affiliate. Affiliate shall
provide Wink with reasonable assistance in conducting such research with respect
to Affiliate's subscribers. Limited to whatever laws are in place
-3-
<PAGE> 4
Affiliate agrees that Wink will have access to any and all research regarding
the deployment, launch, and usage of Wink service by Affiliate subscribers.
7. NOTICES
7.1 All notices, statements, and other communications given hereunder
shall be in writing and shall be delivered by facsimile transmission, personal
deliver, certified mail, return receipt requested, or by next day express
deliver, addressed, if to WINK COMMUNICATIONS, Attn: VP Affiliate Sales at 1001
Marina Village Parkway, Alameda, CA 94501. The date of such facsimile
transmission, telegraphing or personal delivery or the next day if by express
deliver, or the date three (3) days after mailing, shall be deemed the date on
which such notice is given and effective.
8. TRADEMARKS
8.1 All right, title and interest in and to the service or other rights,
of whatever nature, related thereto shall remain the property of Wink. Further,
Affiliate acknowledges and agrees that all names, logos, marks, copyright
notices or designations utilized by Wink in connection with the service are the
sole and exclusive property of Wink, and no rights or ownership are intended to
be or shall be transferred to Affiliate.
9. REPRESENTATION AND INDEMNIFICATION
9.1 Wink represents and warrants to Affiliate that (i) it is a
corporation duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority to enter into this
Agreement and to fully perform its obligations hereunder (iii) Wink is under no
contractual or other legal obligation which in any way interferes with its
ability to fully, promptly and completely perform hereunder.
9.2 Affiliate represents and warrants to Wink that (i) Affiliate is a
corporation duly organized and validly existing under the laws of the State of
Illinois; (ii) Affiliate has the requisite power and authority to enter in this
Agreement and to fully perform its obligations hereunder; (iii) Affiliate's
operating areas are operating or will be operating, with respect to any cable
television system, pursuant to valid franchise agreements, or licenses or other
permits duly authorized by proper local authorities; (iv) Affiliate is under no
contractual or other legal obligation which in any way interferes with its
ability to fully, promptly and completely perform hereunder.
9.3 Affiliate and Wink shall each indemnify, defend and forever hold
harmless the other, and their affiliated companies and people, from any and all
losses, liabilities, claims, costs, damages and expenses (including, without
limitation, fines, forfeitures, attorney's fees, disbursements and court or
administrative costs) arising out of any breach of any term of this Agreement or
any warranty, covenant or representation contained herein. Without limiting the
provisions of the above, Wink will indemnify, defend and forever hold affiliate
and affiliate's companies and people harmless from and against any and all
losses, liabilities, claims, cost, damages and expenses (including, without
limitation, fines, forfeitures,
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<PAGE> 5
attorney's fees, disbursements and court or administrative costs) caused by or
arising directly or indirectly out of (i) any content delivered by or through
Wink or Wink's processes, (ii) any claim that the Licensed Product infringes the
copyright, trade secret or trademark rights of a third party, provided that
Affiliate notifies Wink of such claim promptly in writing of and gives Wink the
exclusive authority to defend or settle such claim. Affiliate shall provide
reasonable cooperation and assistance to settle or defend any such claim. If the
Licensed Product becomes, or if Wink reasonably believes it may become, the
subject of any claim for infringement or is adjudicatively determined to
infringe, then Wink may, at its option and expense, either (i) procure for
affiliate the right to sell or use, as appropriate, the Licensed Product or (ii)
replace or modify the Licensed Product with other suitable and reasonably
equivalent software so that the Licensed Product becomes noninfringing or (iii)
if (i) and (ii) are not commercially practicable, Wink may terminate this
Agreement.
10. CONFIDENTIALITY
10.1 Neither Affiliate nor Wink shall disclose to any third party (other
than its respective employees, in their capacity as such), any information
marked "confidential" without prior written consent. The parties agree to keep
the terms of this Agreement confidential, but acknowledge that VBI pass through
disclosures will be made to Programmers and that certain other disclosures may
be required by law.
11. TERMINATION
11.1 Notwithstanding any other provision herein, either party will have
the right to terminate this Agreement or all or any licenses granted herein if
the other party fails to comply with any of its material obligations under this
Agreement. Should either party elect to exercise this right to terminate for
nonperformance, it must be done in writing specifically setting forth those
items of nonperformance. The non-performing party will then have thirty (30)
days from receipt of notification to remedy the items of nonperformance. Should
either party fail to correct these items of nonperformance, then the aggrieved
party shall have the right to physically disconnect and remove any Wink-owned or
licensed Products. In addition, Wink's termination of this Agreement or such
taking of possession shall be without prejudice to any other remedies Wink may
have, including, without limitation, all remedies with respect to the
unperformed balance of this Agreement; provided, however, that if Affiliate has
not made payment of the fees or charges due hereunder and such nonpayment
continues after thirty (30) days prior written notice by Wink, then Wink may
terminate this Agreement or any license granted herein. Unless otherwise agreed
to herein, Affiliate and Wink shall retain all rights in law and equity.
11.2 Upon expiration of the term (including any extensions thereof) of
this Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Affiliate to use the Products
will cease and Affiliate will immediately (i) grant to Wink access to its
business premises and the Products and allow Wink to remove the Products, (ii)
purge all comes of all Products from all computer processors or storage media on
which Affiliate has installed or permitted others to install such Products, and
(iii) when requested by Wink, certify to Wink in writing, signed by
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<PAGE> 6
an officer of Affiliate, that all copies of the Products have been returned to
Wink or destroyed and that no copy of any Product remains in Affiliate's
possession or under its control.
11.3 Except as otherwise provided herein, neither Affiliate nor Wink may
terminate this Agreement except upon sixty (60) days prior written notice and
then only if the other has made a misrepresentation herein or breaches any of
its material obligations hereunder and such misrepresentation or breach (which
shall be specified in such notice) is not or cannot be cured within sixty (60)
days of such notice.
12. GENERAL
The parties agree that in the event it is necessary to employ attorneys
to enforce the terms of this Agreement the prevailing party in any lawsuit shall
be entitled to an award of reasonable attorneys' fees and court costs.
a) This Agreement may not be assigned without prior written mutual
consent of Affiliate and Wink.
b) This Agreement may be amended only by an instrument in writing,
executed by Affiliate and Wink.
c) This Agreement will be governed in all respects by the laws of
the State of California.
d) This Agreement represents the entire agreement between the
parties and supersede and replace all prior oral and written
proposals, communications and agreements with regard to the
subject matter hereof between Affiliate and Wink.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. 21st Century Cable TV, Inc.
By: /s/ Maggie Wilderotter By: /s/ Richard Wiegand-Mors
----------------------------- -----------------------------
Name: Maggie Wilderotter Name: Richard Wiegand-Mors
Title: President & CEO Title: Chief Operating Officer
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<PAGE> 7
WINK/AFFILIATE REVENUE SHARE
SCHEDULE A
WINK RESPONSE SERVICE TRANSACTION FEE
<TABLE>
<CAPTION>
Purchase Transaction Fees Affiliate Revenue Share
- - -------------------------------------------------------- --------------------------------------
(Viewer name, address, credit card) National Ads Local Ads
------------ ---------
<S> <C> <C>
1-5,000 transactions/mo [*] [*]
5,001 - 25,000 transactions/mo [*] [*]
25,001 - 100,000 transactions/mo [*] [*]
100,001 - 250,000 transactions/mo [*] [*]
250,001 - 500,000 transactions/mo [*] [*]
500,001 - up transactions/mo [*] [*]
Request Transaction Fees
- - --------------------------------------------------------
(Viewer name, address only)
1,500 transactions/mo [*] [*]
5,001 - 25,000 transactions/mo [*] [*]
25,001 - 100,000 transactions/mo [*] [*]
100,001 - 250,000 transactions/mo [*] [*]
250,001 - 500,000 transactions/mo [*] [*]
500,001 - up transactions/mo [*] [*]
</TABLE>
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<PAGE> 8
Sheet 1
BOM FOR WINK INTRODUCTORY PACKAGE FOR 21ST CENTURY
SCHEDULE B
<TABLE>
<CAPTION>
QUANTITY ITEM UNIT COST TOTAL COST
<S> <C> <C> <C>
Wink Broadcast Server (WBS) Total $9,580.00
1 Sun Ultra 1: 7600.00 7600.00
64MB RAM
2 GB Internal Hard Drive
3.5" Internal Floppy Drive
Keyboard
1 Sun 16" Color Monitor 400.00 400.00
1 SBUS Ethernet Card (2nd port) 850.00 850.00
12 20 ft.CAT 5 Ethernet Cables 15.00 180.00
10 10 ft.CAT 5 Ethernet Cables 12.00 120.00
1 U.S. Robotics Courier 33.3 External Modem 430.00 430.00
1 Wink Broadcast Server Software license license
Wink Response Server (WRS) Total $17,000.00
1 Sun Ultra 1: 9200.00 9200.00
128 MB RAM
1 GB Internal hard Drive
3.5" Internal Floppy Drive
Keyboard
1 16" Color Monitor 400.00 400.00
1 2 GB External hard Drive 800.00 800.00
1 UNIX 8mm Tape Drive" Exabyte 8707XL-14 1500.00 1500.00
20 8mm Tape: 16m Length 15.00 300.00
1 External SCSI CD-ROM Drive & Cable: Toshi 600.00 600.00
1 Oracle Enterprise Server 7.3.2.1 for Solaris 4200.00 4200.00
1 Wink Response Server Software license
Total $ --
Total $ 26,580.00
</TABLE>
* Scientific Atlantic Headend equipment not included
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<PAGE> 9
WINK/21ST CENTURY "STEP-UP" OPTION PRICING
-SCHEDULE C-
1. LOCAL AD INSERTION MODULE
Equipment: [*]
Monthly Fee: [*]
2. UNLIMITED VIRTUAL CHANNELS
Equipment: [*]
Monthly Fee: [*]
3. TECHNICAL SUPPORT
One "free" incident per month is included in Introductory package. The
[*] fee includes 3 incidents per month. An incident is defined as actual
trouble resolution.
Wink consulting services are available for [*].
-9-
<PAGE> 1
EXHIBIT 10.16
CABLE AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 8th day of May, 1998, by and between
WINK COMMUNICATIONS, INC., a California corporation ("Wink"), whose address is
1001 Marina Village Parkway, Alameda, CA 94501 and Jones Programming Services
Inc., a Colorado corporation ("Affiliate"), whose address is 9697 East Mineral
Ave., Englewood, CO 80112.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Affiliate the non-exclusive license to use the
Wink ITV Broadcast Server and Wink ITV Response Server versions 1.0 and all
subsequent updates as related to the 1.0 Wink Engine (hereinafter collectively
referred to as "Wink Software") to deliver "Enhanced Broadcasting" to all cable
systems owned by Affiliate or an affiliated entity of Affiliate in the United
States and its territories and possessions, (individually a "System", and all
Systems shall be referred to collectively as "Affiliate's System"). This License
is not transferable outside of the Affiliate systems Operating Area, and rights
hereunder, may not be transferred, assigned or sub-licensed in whole or in part
without Wink's prior written consent.
1.2 For purposes of this Agreement, the "Operating Area" shall be
defined as any System or group of Systems that is authorized to deliver Enhanced
Broadcasting from a single location, as listed on Schedule A.
1.3 This Agreement allows Affiliate to utilize the Wink Software on all
advanced analog and digital cable set top boxes.
1.4 For the purposes of this Agreement, "Enhanced Broadcasting" consists
of information or data that is directly related to the video service, originated
by a national broadcaster, advertiser, or cable programming network and has been
enhanced and delivered through the use of Wink Software.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution
of this Agreement and terminate six (6) years thereafter (hereinafter referred
to as "Initial Term").
2.2 This Agreement will automatically renew, following the "initial
Term", for one month periods, unless either party terminates this Agreement upon
(90) days prior written notice. Pricing terms of the contract renewal would be
adjusted based on Consumer Price Index.
2.3 Wink agrees not to enter into an agreement with any other local
provider of multichannel video programming in Affiliate's Operating Area(s) from
the date of execution of this Agreement for a period of twelve (12) months. At
that time, should Affiliate achieve the milestone of Wink deployment to a
cumulative minimum of 100,000 households in two-way network environment(s) by
March 31, 1999, Wink shall extend the exclusivity period an additional six (6)
months.
Proprietary and Confidential
<PAGE> 2
3. INTEGRATION
3.1 Affiliate will distribute Enhanced Broadcasting through its Systems
specified in Schedule A, which Affiliate may add to or delete from in its sole
discretion.
3.2 For purposes of this Agreement, the term "Wink Subscriber" shall
mean each Affiliate residential customer and commercial or business
establishment receiving Wink Enhanced Broadcasting, while receiving and
separately paying for cable television service with a Wink capable digital or
advanced analog box in all Affiliate Operating Areas.
3.3 Wink will perform all Wink related work necessary to integrate with
advanced analog and digital cable set top boxes at no charge to Affiliate
through the term of the Agreement. ( see schedule B for integration work)
3.4 Affiliate agrees to prioritize the Wink software
installation/integration and provide the necessary resources to enable the
national pass through of Enhanced Broadcasting for delivery to Affiliates
Systems in accordance with Schedule A. Each Affiliate Launch market shall have a
"Launch Period", which is defined as a 120 day period of time where the Wink
product launched must meet predefined criteria developed by Affiliate and Wink.
(see Schedule C). During the Launch Period, technical criteria established by
Affiliate and Wink will be monitored and measured to ensure the successful
market launch. System Deployment is defined as that date following the Launch
Period when Wink's Enhanced Broadcasting is being deployed to all other Wink
capable advanced analog and digital customer homes system by system in
Affiliate's Systems per Schedule A. The System Deployment will occur upon
notification by Affiliate to Wink that the Technical criteria has been
successfully met.
3.5 Both parties will use their commercially reasonable efforts to
complete all integration work per the dates mentioned above and specified in
Schedule C.
3.6 Affiliate agrees to allow Wink to install and use Wink Response
Servers located in individual Affiliate Operating Areas specified in Schedule A
to collect, aggregate, and route responses for national Enhanced Broadcasting
applications through Wink's Alameda Data Center. Wink agrees to provide weekly
reporting (e.g. usage data as a result of purchase and non-purchase transaction
activity - See Exhibit A) to Affiliate of all response traffic generated by its
Affiliate subscribers.
4. RATES AND DEPLOYMENT
4.1 Effective at Launch (hereinafter Launch being defined as the time
when there exists any Wink Subscriber receiving Wink's Enhanced Broadcasting
applications in an Operating Area), Affiliate agrees to remit payments per
Operating Area as defined in 4.2. Technical Support (see Schedule F) shall be
provided at no charge for a period of sixty (60) days following Launch for those
Systems deploying Wink in 1998.
Proprietary and Confidential
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<PAGE> 3
4.2 Affiliate Launch Market is defined as those advanced analog and
digital markets, not to exceed three (3) Systems, to deploy Wink capable set top
boxes in 1998. Launch Markets shall receive the Launch Pricing (see below).
<TABLE>
<CAPTION>
PACKAGE USE OF LICENSE MO. FEE
------- -------------- -------
<S> <C> <C> <C>
Launch Pricing Operator may use Wink Software for the First 18 mo.
following purposes: option to move
to charter or
standard pricing
* To provision Wink services to subscribers. [*]
* To provide (i.e., pass through) any number of [*]
nationally delivered Enhanced Broadcasting
services to subscribers.
* To provide two locally inserted virtual [*]
channels.
Charter Pricing * To provision Wink services to subscribers. [*]
* To provide (i.e. pass through) any number of [*]
nationally delivered Enhanced Broadcasting
services to subscribers.
* To provide two locally inserted virtual channels. [*]
Standard Pricing * To provision Wink services to subscribers. [*]
* To provide (i.e. pass through) any number of [*]
nationally delivered Enhanced Broadcasting
services to subscribers.
* To provide two locally inserted virtual Support
channels.
</TABLE>
4.3 Affiliate hereby is granted the option to elect, by written notice
to Wink, to extend the delivery of Enhanced Broadcasting to any of Affiliate's
Wink capable cable systems in the continental United States through 1999 and
receive the Charter or Standard pricing outlined in 4.2. Affiliate shall receive
the Standard Pricing specified in 4.2 for Affiliate Operating Areas that launch
after 1999. Wink agrees to provide Affiliate Most Favored Nations Pricing as
compared to other system operators of equal or smaller size, market by market.
Most Favored Nations Pricing shall mean the lowest net cost per subscriber which
shall include Wink headend equipment costs, software license
- - ----------------------
*Confidential treatment has been requested with respect to certain portions of
this exhibit pursuant to a request for treatment filed with the Securities and
Exchange Commission. Omitted portions have been filed with the Commission.
Proprietary and Confidential
-3-
<PAGE> 4
fees, marketing co-op, and any other financial consideration exchanged between
the parties for Wink products and services. Wink agrees to provide upon request
a statement of compliance with this Most Favored Nations section on an annual
schedule to Affiliate.
4.4 Affiliate commits to distribute Enhanced Broadcasting to its digital
and advanced analog subscribers in Systems indicated on Schedule A which
originates from National Broadcasters and National Cable Programming Services
(hereinafter collectively referred to as "Programmers") in the VBI of the
Programmers Video Signal. Affiliate agrees to keep the appropriate headend and
server equipment in good working order for an uninterrupted carriage of Enhanced
Broadcasting. If either party experiences problems with the Enhanced
Broadcasting delivery system, both parties will use their commercially
reasonable efforts to restore Enhanced Broadcasting service as soon as possible.
Affiliate agrees not to charge Programmer for carriage or use of VBI associated
with delivery of Enhanced Broadcasting for the first twenty-four (24) months of
this Agreement. Commencing at Launch and for the first eighteen (18) months,
Affiliate agrees to pass through all Enhanced Broadcast applications, including
non-commercial show enhancements, request for information applications, and
Purchase Transaction applications. However, Affiliate has the right to delete
any Wink based consumer subscription services offered by Programmer. [*]
4.5 Wink agrees to launch a minimum of twelve (12) National Programmers
broadcasting Wink Enhanced Broadcasting including but not limited to, NBC, The
Weather Channel, Court TV, TNN, TNT, TBS, CNN, HNN, ESPN, ESPN2, VH-1,
Nickelodeon/Nick at Nite by the agreed upon system deployment date.
4.6 Wink agrees to Revenue Share with Affiliate, its fees, on all Wink
generated Purchase Transactions and Request Transactions by Affiliates' Wink
Subscribers for the term of this Agreement. Wink will pay Affiliate per the
attached Schedule D.
4.7 [*] Affiliate is responsible to provide all hardware required for
the launch of the Wink Software (Bill of Materials - Schedule E), except in the
Albuquerque, NM System where Wink will pay all upfront headend hardware costs
associated with a launch date prior to August 1, 1998, or within thirty (30)
days of their Wink capable set-top deployment. Affiliate may elect the Wink
hardware lease option of an additional [ * ] per month per Operating Area.
Affiliate has the option to purchase the hardware either from Wink or other
vendors that meet Wink specifications. Installation and Conversion fees for all
other Affiliate Operating areas, outside of all markets that launch within a
period of eight (8) months from date of Agreement execution Launch Market(s),
will be [ * ] per Operating Area, plus any shipping or travel costs incurred
by Wink in support of on-site installation, maintenance, support, or consulting
under this Agreement.
4.8 Affiliate may choose to utilize other products and services of Wink
from time to time under this Agreement. These services will be extended by Wink
to Affiliate as outlined in Schedule F of this Agreement.
Proprietary and Confidential
-4-
<PAGE> 5
5. PAYMENT TERMS
5.1 On or before the forty-fifth (45th) day following each month
throughout the term of this Agreement, each party shall remit to the other party
all fees owed for services rendered in the previous month.
5.2 Either party's failure, for any reason, to send an invoice for a
particular monthly payment shall not relieve the other party of its obligation
to make any payment in a timely manner consistent with the terms of this
Agreement. Past due payments shall bear interest at a rate equal to the lesser
of (1) one percent (1%) per month or (ii) the maximum legal rate permitted under
law, and the delinquent party shall be liable for all reasonable direct costs
and expenses (including, without limitation, reasonable court costs and
attorneys' fees) incurred by the other party in collecting any past due
payments.
6. PROMOTION AND RESEARCH
6.1 Affiliate and Wink agree to promote and market the Wink service to
subscribers within the Operating Area of each launched system. Advertising,
promotional, marketing and/or sales materials concerning the Wink service (e.g.
TV spots, Virtual Channel, Ad Slick, Bill Insert Direct Mail, On Hold Message,
Press releases etc..) will be provided to Affiliate by Wink immediately
following each update or revision of such materials, and may be used at the
discretion of Affiliate.
6.2 For the purpose of promoting Enhanced Broadcasting, Affiliate and
Wink shall issue one mutually agreed upon press release for each Operating Area
launched within thirty (30) days of such launch. Affiliate and Wink shall also
issue one mutually agreed upon press release within 30 days of execution of this
Agreement.
6.3 Wink shall not engage in any communications with subscribers, press
or media, governmental entities or franchise or licensing authorities which
could reasonably be expected to adversely interfere with Affiliate's relations
with the subscribers, governmental entities or franchise or licensing
authorities in such Operating Area or the community comprising such Operating
Area. This provision shall not apply a) to any national advertising by Wink in
connection with Enhanced Broadcasting, b) to any proceeding before any judicial
body, or c) to communications with Congress or with any other branch or agency
of the Federal government. This Section shall survive the expiration or
termination of this Agreement (regardless of the reason for such expiration or
termination) for a period of two (2) years.
6.4 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in connection with Affiliate. Affiliate, in its
sole discretion, may provide Wink with reasonable assistance in conducting such
research with respect to Affiliate's subscribers. All information regarding
Affiliates subscribers will be kept confidential.
Proprietary and Confidential
-5-
<PAGE> 6
7. NOTICES
7.1 All notices, statements, and other communications given hereunder
shall be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day express
delivery, addressed, if to WINK COMMUNICATIONS, Attn: VP - Affiliate Sales at
1001 Marina Village Parkway, Alameda, CA 94501. The date of such facsimile
transmission, telegraphing or personal delivery or the next day if by express
delivery, or the date three (3) days after mailing, shall be deemed the date on
which such notice is given and effective.
8. TRADEMARKS
8.1 All right, title and interest in and to the service or other rights,
of whatever nature, related thereto shall remain the property of Wink. Further,
Affiliate acknowledges and agrees that all names, logos, marks, copyright
notices or designations utilized by Wink in connection with the service are the
sole and exclusive property of Wink, and no rights or ownership are intended to
be or shall be transferred to Affiliate.
9. REPRESENTATION AND INDEMNIFICATION
9.1 Wink represents and warrants to Affiliate that (i) it is a
corporation duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority to enter into this
Agreement and to fully perform its obligations hereunder (iii) Wink is under no
contractual or other legal obligation which in any way interferes with its
ability to fully, promptly and completely perform hereunder.
9.2 Affiliate represents and warrants to Wink that (i) Affiliate is a
corporation duly organized and validly existing under the laws of the State of
Colorado (ii) Affiliate has the requisite power and authority to enter in this
Agreement and to fully perform its obligations hereunder; (iii) Affiliate's
Operating Areas are operating, with respect to any cable television system,
pursuant to valid franchise agreements, or licenses or other permits duly
authorized by proper local authorities; (iv) Affiliate is under no contractual
or other legal obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
9.3 Affiliate and Wink shall each indemnify, defend and forever hold
harmless the other, and their affiliated companies and people, from any and all
losses, liabilities, claims, costs, damages and expenses (including, without
limitation, fines, forfeitures, attorneys' fees, disbursements and court or
administrative costs) arising out of any breach of any term of this Agreement or
any warranty, covenant or representation contained herein. Without limiting the
provisions of the above, Wink will indemnify, defend and forever hold Affiliate
and Affiliate's affiliated companies and people harmless from and against any
and all losses, liabilities, claims, costs, damages and expenses (including,
without limitation, fines, forfeitures, attorneys' fees, disbursements and court
or administrative costs) caused by or arising directly or indirectly out of (i)
any content delivered by or through Wink or Wink's processes, (ii) any
Proprietary and Confidential
-6-
<PAGE> 7
claim that the Wink Software infringes the copyright, trade secret or trademark
rights of a third party, provided that Affiliate notifies Wink of such claim
promptly in writing of and gives Wink the exclusive authority to defend or
settle such claim. Affiliate shall provide reasonable cooperation and assistance
to settle or defend any such claim. If the Wink Software becomes, or if Wink
reasonably believes it may become, the subject of any claim for infringement or
is adjudicatively determined to infringe, then Wink may, at its option and
expense, either (i) procure for Affiliate the right to sell or use, as
appropriate, the Wink Software or (ii) replace or modify the Wink Software with
other suitable and reasonably equivalent software so that the Wink Software
becomes noninfringing or (iii) if (i) and (ii) are not commercially practicable,
either party may terminate this Agreement.
10.. CONFIDENTIALITY
10.1 Neither Affiliate nor Wink shall disclose to any third party (other
than its respective employees, in their capacity as such), any information
without prior written consent. The parties agree to keep the terms of this
Agreement confidential, but acknowledge that VBI pass through disclosures will
be made to Programmers and that certain other disclosures may be required by
law.
10.2 Wink commits to Affiliate that Wink will implement high levels of
security on the network for the collection, storage, and routing of Subscriber
Information. Wink further agrees to only release individual Subscriber
Information to entities that a subscriber decides should have that information.
Choice is granted by the subscriber through their deliberate interaction with a
Wink Enhanced Broadcasting application. Wink agrees that Affiliate Subscriber
Data and Subscriber Information remain the property of Affiliate. For purposes
of this Agreement, Subscriber Data is defined as that information which
currently resides in Affiliate's billing system, e.g. subscriber name, address,
phone number, service level, monthly billing amount, ordering activity tied to
pay-per-view and other ancillary services and products. Subscriber Information
is defined as those responses initiated by subscriber over the Wink Software.
Affiliate agrees that Wink may use Subscriber Information in aggregate form only
as a part of national results specific to Wink.
11. TERMINATION
11.1 Notwithstanding any other provision herein, either party will have
the right to terminate this Agreement or all or any licenses granted herein if
the other party fails to comply with any of its material obligations under this
Agreement. Should either party elect to exercise this right to terminate for
nonperformance, it must be done in writing specifically setting forth those
items of nonperformance. The non-performing party will then have sixty (60)days
from receipt of notification to remedy the items of nonperformance. Should such
non performing party fail to correct these items of nonperformance, then the
aggrieved party shall have the right to physically disconnect and remove any
Wink-owned components or Wink Software, returning such licensed products to
Wink. In addition, either party's termination of this Agreement or such taking
of possession shall be without prejudice to any other remedies such party may
have, provided however, that if a party has not made payment of the fees or
Proprietary and Confidential
-7-
<PAGE> 8
charges due hereunder and such nonpayment continues after forty-five (45) days
prior written notice by the other party, then the other party may terminate this
Agreement or any license granted herein.
11.2 Upon expiration of the Initial Term (including any extensions
thereof) of this Agreement or upon the termination of this Agreement or of any
license granted hereunder for any reason, all rights of Affiliate to use the
Wink Software will cease and Affiliate will immediately (i) grant to Wink access
to its business premises and the Wink Software and allow Wink to remove the Wink
Software in an orderly manner, (ii) purge all copies of all Wink Software from
all computer processors or storage media on which Affiliate has installed or
permitted others to install such Software, and (iii) when requested by Wink,
certify to Wink in writing, signed by an officer of Affiliate, that all copies
of the Wink Software have been returned to Wink or destroyed and that no copy of
any Wink Software remains in Affiliate's possession or under its control.
11.3 Except as otherwise provided herein, neither Affiliate nor Wink may
terminate this Agreement except upon sixty (60) days prior written notice and
then only if the other has made a misrepresentation herein or breaches any of
its material obligations hereunder and such misrepresentation or breach (which
shall be specified in such notice) is not or cannot be cured within sixty (60)
days of such notice.
12. GENERAL
a) This Agreement may not be assigned by either party without the prior
written consent of the other, except that no such consent shall be required for
an assignment to any entity controlling, controlled by or under common control
with the assigning party.
b) This Agreement may be amended only by an instrument in writing,
executed by Affiliate and Wink.
c) This Agreement will be governed in all respects by the laws of the
State of California.
d) This Agreement represents the entire agreement between the parties
and supersedes and replaces all prior oral and written proposals, communications
and agreements with regard to the subject matter hereof between Affiliate and
Wink.
Proprietary and Confidential
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<PAGE> 9
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. JONES PROGRAMMING
SERVICES, Inc.
By: /s/ Maggie Wilderotter By: /s/ Philip Laxar
Name: Maggie Wilderotter Name: Philip Laxar
Title: President/CEO Title: SR. VP PROGRAMMING
Proprietary and Confidential
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<PAGE> 10
SCHEDULE A
AFFILIATE'S SYSTEMS
OPERATING AREA SYSTEMS PLATFORM EST. WINK HH
Pima, AZ DCT
Savannah, GA S-A8600X
Albuquerque, NM CFT2200
Proprietary and Confidential
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<PAGE> 11
SCHEDULE B
WINK INTEGRATION WITH ADVANCED ANALOG AND DIGITAL
Wink has performed all core development work necessary to integrate with
advanced analog and digital set top boxes at no charge to Affiliate. This
includes all design and redesign work, development, integration and testing with
the set top box to optimize the system. Listed below are details of the work
necessary for porting to the boxes:
Integration tactics and specifications:
Develop marketing requirement document
Develop functional specs
Develop system design
Develop component and interface specs
Develop unit test plan
Develop test cases (typically about 1,500)
Wink Engine (client)
Set up and test development systems
Develop graphics primitives
Develop I/0 Drivers
Develop memory management
Develop resident fonts and icons
Develop interface layer to APIs and O/S
Integrate Wink engine with interface layer
Optimize code for small footprint, including writing in assembly Optimize code
for performance
Perform unit test
Debugging
Proprietary and Confidential
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<PAGE> 12
SCHEDULE C
PRE-LAUNCH CRITERIA
1. TECHNICAL ACCEPTANCE OF WINK EQUIPMENT & SOFTWARE
1.1 This criteria may include the Wink Launch suite which run on the ITV
Broadcast Server and Wink ITV Response Server, version 1.0 or a subsequent
update as related to 1.0 Wink Engine. The Wink Launch suite includes NBC,
CNN/HNN, TWC, Court TV, ESPN, ESPN2, TBS, TNT, TNN, VH-1, Nickelodeon/Nick at
Nite.
1.2 Affiliate will execute customer acceptance criteria on specific
set-top boxes. Wink will prepare the test cases, including the expected results.
1.3 Regression tests will be run until 100% of the cases are passed if
some of the above tests fail and changes are needed.
2. TECHNICAL ACCEPTANCE BY GI AND SA
2.1 GI has certified as ready for production the Wink set-top box engine
and GI equipment and software configurations (e.g., ACC-4000 and DPT) when
using Wink.
2.2 SA has certified for production the Wink set-top box engine and SA
equipment and software configurations when using Wink.
2.3 Affiliate may elect to have the configurations reviewed by a SA or
GI field engineer.
3. OPERATIONAL READINESS TRAINING
3.1 Affiliate head-end operations and MIS have been trained on the
operation of the Wink Broadcast and Response server, daily monitoring by Wink,
and how to use Wink technical support.
3.2 Affiliate customer and field representatives have been trained.
3.3 All operational and customer support procedures have been updated to
include Wink. This includes procedures to manage VBI bandwidth and response
demand to match capacity.
Proprietary and Confidential
-12-
<PAGE> 13
4. OTHER CRITERIA
4.1 User Acceptance criteria. User acceptance criteria will be part of
initial deployments of the Wink system as well as any upgrades to the system.
The user acceptance is based on Wink prepared cases that ensure the system works
as functionally specified. Wink will prepare the test cases, including the
expected results. Affiliate may elect to add their own cases.
4.2 The quality and quantity of content is dependent on the programmers.
While Wink will initiate the Enhanced Broadcasting Agreements, it is known that
the influence Affiliate has in the programming environment may significantly
Improve the quality and quantity of content moving forward. During the Launch
period, customer feedback will be gathered in order to substantiate Wink
feedback to program Developers.
4.3 Time Duration for Response Polling and Processing. A service level
for time for polling and impact on Affiliate technical and business resources
will be defined as part of the deployment planning. Central Wink Response Server
will collect responses from all controllers (both GI and SA) over a WAN, using
TCP/IP. The bandwidth required is estimated at less than 30 seconds/ day at
56Kbps. The response collections is estimated at 1hr / day with operator time
estimated at 5 minutes controller.
4.4 Impact on and Interoperability with Other Box Functions. Other set
top box functions will function as designed, when used with Wink. This
specification will be agreed upon in advanced of deployment field testing. For
example, in the SA 8600x and SA Explorer this means the Wink enabled box has
passed SA's ISV tests and works the same as non-Wink enabled boxes, except for
predefined changes to the amount of guide data shown. Wink agrees to participate
in tests that includes DPT settings, different box configurations, and guide
data provisioning in order to maximize the guide information for the viewers.
(See Schedule G for Wink capable set-top platforms.)
4.5 Response Processing out to Advertising or Information Providers. A
service level for response processing will be defined as part of the deployment
planning.
4.6 Disaster Recovery Plan: The redundant server options are 1) Purchase
redundant equipment and software. 2) Purchase higher capacity Wink Broadcast
Server and Wink Response Server that can back each other up. Wink will work with
Affiliate to correctly size and configure the Sun Sparc servers to support both
WBS and WRS processes on the some server. Wink would also develop procedures to
ensure either server has the software and data needed to back-up the other.
Proprietary and Confidential
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<PAGE> 14
SCHEDULE D
WINK/AFFILIATE REVENUE SHARE
PER TRANSACTION
WINK RESPONSE SERVICE TRANSACTION FEE
Purchase Transaction is defined as transaction(s) initiated by Wink enabled
subscribers which result in the purchase of services or products advertised
through a Wink Enhanced Broadcast application.
<TABLE>
<CAPTION>
Purchase Transaction Fees Affiliate Revenue Share per Transaction
------------------------- ---------------------------------------
(Viewer name, address, credit card) National Ads Local Ads
------------ ---------------
<S> <C> <C>
1-5,000 transactions/mo [*] [*]
5,001 - 25,000 transactions/mo [*] [*]
25,001 - 100,000 transactions/mo [*] [*]
100,001 - 250,000 transactions/mo [*] [*]
250,001 - 500,000 transactions/mo [*] [*]
500,001 - up transactions/mo [*] [*]
</TABLE>
Request Transaction is defined as transaction(s) initiated by Wink enabled
subscribers which result in the subscriber requesting information that must be
sent to subscriber, about services or products advertised through a Wink
Enhanced Broadcast application.
<TABLE>
<CAPTION>
Request Transaction Fees Affiliate Revenue Share per Transaction
------------------------- ---------------------------------------
(Viewer name, address only) National Ads Local Ads
------------ ---------------
<S> <C> <C>
1-5,000 transactions/mo [*] [*]
5,001 - 25,000 transactions/mo [*] [*]
25,001 - 100,000 transactions/mo [*] [*]
100,001 - 250,000 transactions/mo [*] [*]
250,001 - 500,000 transactions/mo [*] [*]
500,001 - up transactions/mo [*] [*]
</TABLE>
Proprietary and Confidential
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<PAGE> 15
SCHEDULE E
BILL OF MATERIALS
<TABLE>
<CAPTION>
BAV - Headend COMPUTERS PART NUMBER UNIT COST ITEM COST
<S> <C> <C> <C>
Wink Broadcast Server (WBS) 9,136.26 9,136.2
Sun Ultra Enterprise 1 Model 170 All-UBA1-9S-064CE 5,775.00
w/167MHz
TGX Graphics Sbus Adapter X7110 A 809.00
17" Color Monitor X7103A 698.00
Sun 1.44 Internal Floppy Drive X6001 A 115.00
Sun CD 12 Internal CD ROM X61661 A 231.00
Fast Ethernet 10/100 Sbus Adapter X1059A 612.00
Sun Country Kit - UNIX (Keyboard, X3540A 000
Mouse, Power Cords)
Sun Silver Server Support Ultra 1 model 170 619.20
Silver
Solaris Media 2.5.1 SOLD-2.5.1APR97 77.00
System Configuration - OS IS-101D 85.00
System Configuration IS-203 120.00
Wink Broadcast Server Software License 13,336.20
Wink Response Server (WRS) 9,136.20
Sun Ultra Enterprise 1 Model A11-UBA1-9S- 5,775.00
170 w/167MHz 064CE
TGX Graphics Sbus Adapter X7110 A 809.00
17" Color Monitor X7103A 693.00
Sun 1.44 Internal Floppy Drive X6001 A 115.00
Sun CD 12 Internal CD ROM X61661 A 231.00
Fast Ethernet 10/100 Sbus Adapter X1059A 612.00
Sun Country Kit - UNIX (Keyboard, X3540A 0.00
Mouse,Power Cords)
Sun Silver Server Support Ultra 1 model 170 619.20
Silver
Solaris Media 2.5.1 SOLD-2.5.1APR97 77.00
System Configuration - OS IS-101D 85.00
System Configuration IS-203 120.00
Oracle Enterprise Server 7.3.2.1 for
Solaris
Wink Response Server Software License
Wink SeaChange CCD PC 2,415.00 2,415.00
</TABLE>
Proprietary and Confidential
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<PAGE> 16
<TABLE>
<CAPTION>
BAV - Headend COMPUTERS PART NUMBER UNIT COST ITEM COST
<S> <C> <C> <C>
PC - Rack Mountable:
Rackmount Case w/ 250 Power SRPC-210
Supply
Slide Rail Set
Pentium 166MHz Motherboard
w/512K Cache
32 MB RAM
1.2 GB WD EIDE Internal Hard Drive
3.5" - 1.44MB Teac Internal Floppy
Drive
24X Toshiba IDE CD-ROM
Diamond Stealth PCI w/2MB
3COM 3C900 PCI Ethernet (Port #1)
3COM 3C900 PCI Ethernet (Port #2)
Additional Corn Card for Com3
Com4 LPT2
Windows NT Workstation 4.0 CD-
ROM
Mouse
14" SVGA Color Monitor
Rackmount Keyboard w/ Mouse Tray RMKO-110 [*] [*]
US Robitics Courier V. Everything A22536-001224-1
TERMINAL SERVERS
Xylogics Annex Three - 32-port, net- AX3-32/0-N-300 [*] [*]
boot, twisted pair
Annex Modem (DCE) Cable - 50pin AX3-CBL-DCE-100 [*] [*]
Telco Fan to 6 Male DB25
Annex Three Software - CDROM CM0014007 [*] [*]
LOCAL INSERTION CABLE HEADEND EQUIPMENT
Norpak TES-3 Data Insertion Unit [*] [*]
Total Cost: [*]
</TABLE>
Proprietary and Confidential
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<PAGE> 17
<TABLE>
<CAPTION>
Quantity CFT - Headend COMPUTERS PART NUMBER UNIT ITEM
COST COST
<S> <C> <C> <C> <C>
1 WINK BROADCAST [*] [*]
SERVER (WBS)
Sun Ultra Enterprise 1 Model A11-UBA1-9S-O64CE [*]
170 w/167MHz TGX Graphics X711 OA [*]
Sbus Adapter
17" Color Monitor X7103A [*]
Sun 1.44 Internal Floppy Drive X6001 A [*]
Sun CD 12 Internal CD ROM X61661 A [*]
Fast Ethernet 10/100 Sbus X1059A [*]
Adapter
Sun Country Kit - UNIX X3540A [*]
(Keyboard, Mouse, Power
Cords)
Sun Silver Server Support Ultra 1 model 170 [*]
Silver
Solaris Media 2.5.1 SOLD-2.5.1APR97 [*]
System Configuration - OS IS-101D [*]
System Configuration IS-203 [*]
Wink Broadcast Server [*]
Software
1 WINK RESPONSE SERVER [*] [*]
(WRS)
Sun Ultra Enterprise 1 Model A11-UBA1-9S-O64CE [*]
170 w/167MHz
TGX Graphics Sbus Adapter X711OA [*]
17" Color Monitor X7103A [*]
Sun 1.44 Internal Floppy Drive X6001A [*]
Sun CD 12 Internal CD ROM X61661A [*]
Fast Ethernet 10/100 Sbus X1059A [*]
Adapter
Sun Country Kit - UNIX X3540A [*]
(Keyboard, Mouse, Power
Cords)
Sun Si1ver Server Support Ultra 1 model 170 [*]
Silver
Solaris Media 2.5.1 SOLD-2.5.1APR97 [*]
System Configuration - OS IS-101 D [*]
System Configuration IS-203 [*]
Oracle Enterprise Server 7.3.2.1 [*]
for Solaris
</TABLE>
Proprietary and Confidential
-17-
<PAGE> 18
<TABLE>
<CAPTION>
Quantity CFT - Headend COMPUTERS PART NUMBER UNIT ITEM
COST COST
<S> <C> <C> <C> <C>
Wink Response Server [*]
Software
1 WINK GATEWAY PC [*] [*]
PC - Rack Mountable:
Rackmount Case w/ 250 Power SRPC-210
Supply
Slide Rail Set
Pentium 166MHz Motherboard
w/512K Cache
32 MB RAM
1.2 GB WD EIDE Internal
Hard Drive
3.5" - 1.44MB Teac Internal
Floppy Drive
24X Toshiba IDE CD-ROM
Diamond Stealth PCI w/2MB
3COM 3C900 PCI Ethernet
(Port #1)
3COM 3C900 PCI Ethernet
(Port #2)
Additional Com Card for Com3
Com4 LPT2
Windows NT Workstation 4.0
CD-ROM
Mouse
14" SVGA Color Monitor
Rackmount Keyboard w/Mouse RMK-110
Tray
Wink's Gateway Software
Computer Peripherals
2 US Robitics Courier V. A22536-001224-0 [*] [*]
Everything
Terminal Servers
1 Xylogics Annex Three - 64- AX3-32/32-1N-100 [*] [*]
port, net-boot, twisted pair
12 Annex Modem (DCE) Cable - AX3-CBL-DCE-100 [*] [*]
50pin Telco Fan to 6 Male
DB25
</TABLE>
Proprietary and Confidential
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<PAGE> 19
<TABLE>
<CAPTION>
Quantity CFT - Headend COMPUTERS PART NUMBER UNIT ITEM
COST COST
<S> <C> <C> <C> <C>
1 Annex Three Software - CM0014007 [*] [*]
CDROM Cable Headend
Equipment
20 Norpak TTX-745 NABTS [*] [*]
Decoder (2/channel)
10 MVPII-DIU v0.7 or greater [*]
Total Cost 39968.40
</TABLE>
<TABLE>
<CAPTION>
Quantity DCT - Headend COMPUTERS PART NUMBER UNIT ITEM
COST COST
<S> <C> <C> <C> <C>
1 Wink Broadcast Server (WBS) [*] [*]
Sun Ultra Enterprise 1 Model A11-UBA1-9S-064CE [*]
170 w/167MHz
TGX Graphics Sbus Adapter X7110A [*]
17" Color Monitor X1703A [*]
Sun 1.44 Internal Floppy Drive X6001A [*]
Sun CD 12 Internal CD ROM X61661A [*]
Fast Ethernet 10/100 Sbus X1059A [*]
Adapter
Sun Country Kit - UNIZ X3540A [*]
(Keyboard, Mouse, Power
Cords)
Sun Silver Server Support Ultra 1 model 170 [*]
Silver
Solaris Media 2.5.1 SOLD-2.5.1 APR97 [*]
System Configuration - OS IS-101D [*]
System Configuration IS-203 [*]
Wink Broadcast Server [*]
Software
1 Wink Response Server (WRS) [*] [*]
Sun Ultra Enterprise 1 Model All -UBA1-9S-064CE [*]
170 w/167 Mhz
TGX Graphics Sbus Adapter X7112A [*]
17" Color Monitor X7103A [*]
Sun 1.44 Internal Floppy Drive X6001A [*]
Sun CD 12 Internal CD ROM X6166A [*]
Fast Ethernet 10/100 Sbus X1059A [*]
Adapter
</TABLE>
Proprietary and Confidential
-19-
<PAGE> 20
<TABLE>
<CAPTION>
Quantity DCT - Headend COMPUTERS PART NUMBER UNIT ITEM
COST COST
<S> <C> <C> <C> <C>
Sun Country Kit - UNIX X3540A [*]
(Keyboard, Mouse, Power
Cords)
Sun Silver Server Support Ultra 1 model 170 [*]
Silver
Solaris Media 2.5.1 SOLD-2.5.1 APR 97 [*]
System Configuration - OS IS-101D [*]
System Configuration IS-203 [*]
Oracle Enterprise Server 7.3.2.1 [*]
for Solaris
Wink Response Server [*]
Software
1 Wink DCT Gateway PC [*] [*]
PC - Rack Mountable:
Rackmount Case w/ 250 Power SRPC-210
Supply
Slide Rail Set
Pentium 166MHz Motherboard
w/512K Cache
32 MB RAM
1.2 GB WD EIDE Internal
Hard Drive
3.5" - 1.44MB Teac Internal
Floppy Drive
24X Toshiba IDE CD-ROM
Diamond Stealth PCI w/2MB
3COM 3C900 PCI Ethernet
(Port #1)
3COM 3C900 PCI Ethernet
(Port #2)
Additional Com Card for Com3
Com4 LPT2
Windows NT Workstation 4.0
CD-ROM
Mouse
14" SVGA Color Monitor
Rackmount Keyboard w/ RMK-110
Mouse Tray
Wink's Gateway Software
1 Wink SeaChange CCD PC
</TABLE>
Proprietary and Confidential
-20-
<PAGE> 21
<TABLE>
<CAPTION>
Quantity DCT - Headend COMPUTERS PART NUMBER UNIT ITEM
COST COST
<S> <C> <C> <C> <C>
PC - Rack Mountable:
Rackmount Case w/250 Power SRPC-210
Supply
Slide Rail Set
Pentium 166MHz Motherboard
w/512K Cache
32 MB RAM
1.2 GB WD EIDE Internal
Hard Drive
3.5" - 1.44MB Teac Internal
Floppy Drive
24X Toshiba IDE CD-ROM
Diamond Stealth PCI w/2MB
3COM 3C900 PCI Ethernet
(Port #1)
3COM 3C9OO PCI Ethernet
(Port #2)
Add. Com Card for Com3
Com4 LPT2
Windows NT Workstation 4.0
CD-ROM
Mouse
14" SVGA Solor Monitor
Rackmount Keyboard w/Mouse RMK-110
Tray
Wink's Gateway Software
Computer Peripherals
2 US Robotics Courier V. A22536-001224-0 [*] [*]
Everything
Terminal Servers
2 Xylogics Annex Three - 32- AX3-32/0-1N-300 [*] [*]
port, twisted pair
12 Annex Modem (DCE) Cable - AX3-CBL-DCE-100 [*] [*]
50pin Telco Fan to 6 Male
DB25
2 Annex Three Software - CM0014007 [*] [*]
CDROM
Local insertion Cable Headend
Equipment
</TABLE>
Proprietary and Confidential
-21-
<PAGE> 22
<TABLE>
<CAPTION>
Quantity DCT - Headend COMPUTERS PART NUMBER UNIT ITEM
COST COST
<S> <C> <C> <C> <C>
1/Chanl. Norpak TES-3 Data Insertion [*] [*]
Unit
Total Cost: [*]
</TABLE>
S-A Bill of Materials not fully developed.
Proprietary and Confidential
-22-
<PAGE> 23
SCHEDULE F
OTHER SOFTWARE OPTIONS, SUPPORT AND CONSULTING FEES
SOFTWARE OPTIONS
Affiliate at no additional charge may experiment with, for any consecutive six
(6) month period during the term of the Agreement, other use of Wink Software,
including, but not limited to, the use of Wink templates for PPV, premium
sign-up, and local ads. The price for using these services, if implemented after
the six(6) month experimentation period, will be:
1. [*] for the local ad insertion module.
2. One time [*] for Wink Studio (template tools) to develop Wink templates.
3. [*] and [*] for up to 10 Virtual Channels
4. AISM Installation fee [*], Virtual Channel installation fee [*]
TECHNICAL SUPPORT
All technical support is available 24x7; travel expenses are additional and
billed at cost. Technical support would involve an error created by the
Operator or Operator's system equipment, that would require a Wink repair to
Wink Software.
Technical Support service contract [*]
- includes 3 incidents/mo and [*] charge per incident after 3
- priority service over non-contract customers
- service contract must match term of license/maintenance agreement
Per incident fee (no contract) [*] incident
CONSULTATIVE SERVICES
- Custom application development [*]
- Application consulting; training [*]
1. Phone training/consulting billed at [*] with charges rounded to
the nearest 15 minutes.
2. Travel expenses are billed separately at cost.
Wink has the right to increase prices on all products and services covered in
this Agreement on an annual basis based upon the Consumer Price Index.
Proprietary and Confidential
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<PAGE> 24
SCHEDULE G
WINK CAPABLE ADVANCED ANALOG AND DIGITAL PLATFORMS:
General Instrument
DCT1000, DCT1200, DCT 5000
CFT2200
Scientific-Atlanta
Explorer HCT2000
8600X
Pioneer
Voyager
BA-V2000 and versions thereof
Proprietary and Confidential
-24-
<PAGE> 1
EXHIBIT 10.17
CABLE AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 23rd day of February, 1998, by and between WINK
COMMUNICATIONS, INC., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and INTERMEDIA PARTNERS SOUTHEAST, a
California general partnership ("Affiliate"), whose address is 424 Church
Street, Suite 1600, Nashville, Tennessee 37219.
1. GRANT OF LICENSE
1.1 Wink hereby grants to Affiliate the non-exclusive license to use the
Wink ITV Studio, Wink ITV Broadcast Server, and Wink ITV Response Server
versions 1.0 and 1.x updates (hereinafter collectively referred to as "Wink
Software") to deliver "enhanced broadcasting" to all of Affiliate's cable
systems in the continental United States.
1.2 This License is not transferable outside of the Affiliate's System
Operating Area, nor any rights hereunder, may be transferred, assigned or
sublicensed in whole or in part without Wink's prior written consent, which
shall not be unreasonably withheld.
1.3 For purposes of this Agreement, the "Operating Area" of any system
in which the Wink "enhanced broadcasting" is launched in accordance with
Section 4.1, shall mean, with respect to a cable television system, the
geographical areas where Affiliate is authorized to construct, operate, manage
or maintain a cable television system by appropriate governmental authority.
1.4 Affiliate agrees to evaluate the Wink Software on all advanced
analog and digital cable set-top boxes in use by a subscriber in the Operating
Areas.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution
of this Agreement and terminate three (3) years thereafter.
2.2 Except as otherwise provided herein, neither Affiliate nor Wink may
give notice of its intent to terminate this Agreement prior to a date occurring
six (6) months from the launch date. After such initial six-month period,
Affiliate or Wink may terminate upon sixty (60) days written notice. Upon
Affiliate's or Wink's notice and during such sixty (60) day period, Wink may
take steps to cure any outstanding issues of nonperformance to Affiliate's
satisfaction, provided that Affiliate shall have ultimate discretion in
deciding whether to accept any cure tendered by Wink. If Affiliate or Wink
terminates this Agreement, Wink must buy back the server hardware utilized for
Wink services from Affiliate within thirty (30) days of such termination date
and at the same cost Affiliate paid for such hardware.
Proprietary and Confidential
<PAGE> 2
3. INTEGRATION
3.1 Affiliate will distribute "enhanced broadcasting" through its
Operating Area head-ends. For the purposes of this Agreement, "enhanced
broadcasting" consists of video generated by and originating from a national
broadcaster or a cable programming network that has been enhanced through the
use of Wink Software. The "enhanced" nature of the video shall be evident in
the manner in which the Wink Software shall enable the viewer to access
information on shows, sporting events, other broadcast or syndicated programs,
and/or virtual channels through the capabilities embedded in the Vertical
Blanking Interval (the "VBI"). Wink Software also shall enable the reception
and processing of requests for information and/or purchases of product through
the viewer's use of a cable remote in conjunction with a Wink-enabled set-top
box. Affiliate does not and shall not relinquish any of its proprietary rights
in the use of, control over, or ownership of the VBI.
3.2 Wink also agrees to perform all Wink related work necessary to
integrate the Wink Software with advanced analog and digital cable set-top
boxes at no charge to Affiliate. Wink also agrees to perform all Wink related
work necessary to maintain such integrated solution involving the Wink Software
and Affiliate's advanced analog and digital cable set-top boxes.
3.3 Affiliate agrees to provide the necessary resources to meet an
Affiliate system launch date of May 1, 1998 for Affiliate's Kingsport Operating
Area.
3.4 Both parties will use their best efforts to complete all integration
work per the dates mentioned above.
3.5 Affiliate agrees to allow Wink to install and use Wink Response
Servers located in individual Affiliate cable headends to collect, aggregate,
and route responses for national "enhanced broadcasting" applications through
Wink's Alameda Data Center. Wink agrees to provide Affiliate with online
Internet access to daily reports detailing all response traffic generated by
Affiliate's subscribers.
4. RATES AND DEPLOYMENT
4.1 Affiliate agrees to provide Wink "enhanced broadcasting" as part of
its advanced analog offering to its subscribers in Kingsport, Tennessee
Operating Areas (the Launch Market) by May 1, 1998.
4.2 (a) Effective at launch, Affiliate agrees to remit a license fee
payment of [ * ]* for the Launch Market during the first eighteen months of the
Term of this Agreement.
- - -------------------------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
Proprietary and Confidential
-2-
<PAGE> 3
(b) Thereafter, Affiliate agrees to remit a license fee payment
of [ * ] for the Launch Market. Wink will negotiate the procurement of engine
software from NextLevel Systems for all CFT-2200 set-top boxes acquired prior
to January 1, 1998, at no charge to Affiliate. Affiliate will provide all
server hardware needed for deployment, subject to the terms set forth in
Section 2.2 of this Agreement.
4.3 Affiliate may evaluate the possibility of the delivery of "enhanced
broadcasting" to all of Affiliate's cable systems in the continental United
States that have advanced analog or digital cable set-top boxes. Affiliate has
up to seven (7) months after deployment in the Launch Market to deploy Wink
Software in other Affiliate markets that have Wink capable set-top boxes and
retain pricing per Section 4.2(b), and may deploy Wink Software in such other
Affiliate markets according to the rates and under the terms and conditions set
forth in this Agreement upon written notice to Wink at any time during such
seven (7) month period.
4.4 Affiliate commits to distribute to its digital and advanced analog
subscribers within the Operating Areas, "enhanced broadcasting" delivered from
National Broadcasters and National Cable Programming Services (hereinafter
collectively referred to as "Programmers") in the VBI of the Programmers Video
Signal. Affiliate agrees to keep the appropriate headend and server equipment
in good working order to facilitate uninterrupted carriage of "enhanced
broadcasting". If Affiliate experiences problems with the "enhanced
broadcasting" delivery system, Affiliate shall restore "enhanced broadcasting"
service as soon as possible. Affiliate agrees not to charge Programmer for
carriage of Wink's "enhanced broadcasting" on the VBI or for use of the VBI in
connection with the delivery of Wink's "enhanced broadcasting" for the term of
the Agreement. Affiliate does not and shall not relinquish any of its
proprietary rights in the use of, control over, or ownership of the VBI.
4.5 Wink agrees to Share Revenue with Affiliate, based upon the amount
of revenue received by Wink as a result of all Wink generated purchase and
request transactions by Affiliate's Subscribers in Operating Areas offering
Wink's "enhanced broadcasting" for the term of this Agreement. Wink will pay
Affiliate at rates specified in Schedule A of this Agreement.
4.6 For purposes of this Agreement, the term "Wink Subscriber" shall
mean each Affiliate residential customer and commercial or business
establishment receiving and separately paying for gable television service with
a digital or advanced analog box in all of Affiliate's Operating Areas.
4.7 Any reasonable and necessary shipping or travel costs incurred by
Wink in support of on-site installation, maintenance, support, or consulting
under this Agreement shall be payable by Affiliate, provided that Wink shall be
responsible for those costs associated with on-site installation, maintenance,
support, or consulting that are necessary as the result of the failure of
Wink's "enhanced broadcasting" to enable the viewer to access and/or request
information or make purchases of products through the cable remote when used
with a Wink-enabled set-top box as intended by the parties to this Agreement
and as is described in Section 3.1.
Proprietary and Confidential
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<PAGE> 4
4.8 Affiliate may choose to utilize other products and services of Wink
from time to time under this Agreement.
5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following each month during
which period of time that Wink's product is functional and being used in
Affiliate's cable systems throughout the term of this Agreement, Affiliate
shall remit to Wink all fees owed for services rendered in the previous month.
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Affiliate of its obligation to make any
payment in a timely manner consistent with the terms of this Agreement.
Past-due payments shall bear interest at a rate equal to one and one-half
percent (1 -1/2%) per month, and if either party is obligated to incur costs in
order to enforce any provision of this Agreement (including collection of
amounts due), the prevailing party shall be entitled to reimbursement for all
reasonable costs so incurred, including reasonable attorney's fees and costs.
6. PROMOTION AND RESEARCH
6.1 Affiliate agrees to promote and market the Wink service to
Subscribers within the Operating Area of each launched system. Advertising,
promotional, marketing and/or sales materials concerning the Wink service which
are provided to Affiliate by Wink may be used at the discretion of Affiliate.
6.2 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in connection with Affiliate's use of Wink's
product provided that such activities do not interfere or compete with
Affiliate's operations. Affiliate shall provide Wink with reasonable assistance
in conducting such research with respect to Affiliate's subscribers. Affiliate
agrees that Wink will have access to any and all research performed to gauge
the deployment and launch of Wink's services and the usage of Wink's services
by Affiliate's subscribers. Wink shall not disclose to any third party any
information deemed by Affiliate to be proprietary and confidential. Such
obligation not to disclose to any third party any and all proprietary and
confidential information shall survive the expiration of this Agreement and
shall continue until Affiliate notifies Wink otherwise. Information regarding
the aggregate usage of Wink's services and information required for
Wink-related transaction processing shall not be deemed proprietary and
confidential.
7. NOTICES
7.1 All notices, statements, and other communications given hereunder
shall be in writing and shall be delivered by personal delivery, certified
mail, return receipt requested, or by next day express delivery, addressed, if
to Wink, as follows: WINK COMMUNICATIONS at 1001 Marina Village Parkway,
Alameda, CA 94501; and if to Affiliate, as follows: InterMedia, PO Box
Proprietary and Confidential
-4-
<PAGE> 5
3608, 105 Jack White Drive, Kingsport, TN 37664, with a copy to InterMedia Legal
Department, 424 Church street, Suite 1600, Nashville, TN 37219. The date of such
personal delivery or the next day if by express delivery, or the date three (3)
days after mailing, shall be deemed the date on which such notice is given and
effective.
8. TRADEMARKS
8.1 All right, title and interest in and to the service provided or
developed by Wink or other rights, of whatever nature, related to and developed
from such Wink service, shall remain the property of Wink. Further, Affiliate
acknowledges and agrees that all names, logos, marks, copyright notices or
designations utilized by Wink in connection with the service are the sole and
exclusive property of Wink, and no rights or ownership are intended to nor
shall be transferred to Affiliate.
9. REPRESENTATION AND INDEMNIFICATION
9.1 Wink represents and warrants to Affiliate that (i) it is a
corporation duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority to enter into this
Agreement and to fully perform its obligations hereunder (iii) Wink is under no
contractual or other legal obligation which in any way interferes with its
ability to fully, promptly and completely perform hereunder.
9.2 Affiliate represents and warrants to Wink that (i) Affiliate is a
corporation/limited partnership duly organized and validly existing under the
laws of the State of California; (ii) Affiliate has the requisite power and
authority to enter into this Agreement and to fully perform its obligations
hereunder; (iii) Affiliate's Operating Areas are operating, with respect to any
cable television system, pursuant to valid franchise agreements, or licenses or
other permits duly authorized by proper local authorities; (iv) Affiliate is
under no contractual or other legal obligation which in any way interferes with
its ability to fully, promptly and completely perform hereunder.
9.3 Affiliate and Wink shall each indemnify, defend, and forever hold
harmless the other, and their affiliated companies and people, from any and all
losses, liabilities, claims, costs, damages and expenses (including, without
limitation, fines, forfeitures, attorney's fees disbursements and court or
administrative costs) arising out of any breach of any term of this Agreement or
any warranty, covenant or representation contained herein (excluding any and all
losses, liabilities, claims, costs, damages and expenses [including, without
limitation, fines, forfeitures, attorney's fees, disbursements and court or
administrative costs] arising out of the negligence or willful misconduct of the
other). Without limiting the provisions set out in this Section, Wink will
indemnify, defend and forever hold Affiliate and Affiliate's affiliated
companies, agents, representatives and employees harmless from and against any
and all losses, liabilities, claims, costs, damages and expenses (including,
without limitation, fines, forfeitures, attorney's fees, disbursements and court
or administrative costs) caused by or arising directly or indirectly out of (i)
any content delivered by or through Wink or Wink's processes, (ii) any claim
that the
Proprietary and Confidential
-5-
<PAGE> 6
Licensed Product infringes the copyright, trade secret or trademark rights of a
third party, provided that Affiliate notifies Wink of such claim promptly in
writing and gives Wink the exclusive authority to defend or settle such claim.
Affiliate shall provide reasonable cooperation and assistance to Wink in its
efforts to settle or defend against any such claim. If the Licensed Product
becomes, or if Wink reasonably believes it may become, the subject of any claim
for infringement or the Licensed Product is determined by a court of competent
jurisdiction to infringe, then Wink may, at its option and expense, either (i)
procure for Affiliate the right to sell or use, as appropriate, the Licensed
Product with other suitable and reasonably equivalent software so that the
Licensed Product becomes non-infringing or (ii) if (I) and (ii) are not
commercially practicable, Wink may terminate this Agreement.
10. CONFIDENTIALITY
10.1 Neither Affiliate nor Wink shall disclose to any third party (other
than its respective employees, in their capacity as such), any information
marked "confidential" without prior written consent. The parties agree to keep
the terms of this Agreement confidential, but acknowledge that certain
disclosures may be required by law.
10.2 Wink commits to Affiliate that Wink will implement high levels of
security on the network for the collection, storage, and routing of subscriber
information to the degree necessary for both Wink and the Affiliate to comply
with Section 631 of the Cable Communications Act of 1984, as amended (47 U.S.C.
Section 551). Wink further agrees to release individual subscriber information
only to entities that the particular subscriber involved decides should have
that information. Choice as to which entities will be permitted access to
subscriber information shall be determined by the subscriber through their
deliberate interaction with a Wink enhanced broadcast application with regard
to such entities.
11. TERMINATION
11.1 Notwithstanding any other provision herein, either party shall have
the right to terminate this Agreement or all or any licenses granted herein in
accordance with the terms and conditions of this Section if the other party
fails to comply with any of its material obligations under this Agreement.
Should either party elect to exercise this right to terminate for
nonperformance, it must be done in writing specifically setting forth those
items of nonperformance. The defaulting party will then have thirty (30) days
from receipt of such notification. In the event Affiliate is the defaulting
party and Affiliate fails to correct items of nonperformance, then Wink shall
have the right to enter upon Affiliate's premises to repossess and remove any
Wink-owned Products provided that such repossession does not unreasonably
interfere with Affiliate's operations. In addition, the termination of this
Agreement in accordance with this Section shall be without prejudice to any
other remedies the terminating party may have, including, without limitation,
all remedies with respect to the unperformed balance of this Agreement;
provided, however, that if the defaulting party has not made payment of the fees
or charges due hereunder and such nonpayment continues
Proprietary and Confidential
-6-
<PAGE> 7
thirty (30) days after receipt of prior written notice, then the non-defaulting
party may terminate this Agreement or any license granted herein.
11.2 Upon expiration of the term (including any extensions thereof) of
this Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Affiliate to use the Products
will cease and Affiliate will immediately (i) grant to Wink access to the
Products and allow Wink to remove the Products, (ii) purge all copies of all
Products from all computer processors or storage media on which Affiliate has
installed or permitted others to install such Products, and (iii) when
requested by Wink, certify to Wink in writing, signed by an officer of
Affiliate, that all copies of the Products have been returned to Wink or
destroyed and that no copy of any Product remains in Affiliate's possession or
under its control.
11.3 Nothing in this Section shall affect the rights of the parties as
enumerated in Section 2.2. In the event of a conflict between the provisions in
this Section and those set forth in Section 2.2, those in Section 2.2 shall
control.
11.4 FORCE MAJEURE. The performance of each party hereto shall be
excused by any prevention, delay or stoppage due to strikes, lockouts,
picketing, boycotts, governmental restrictions, regulations or controls, enemy
or hostile government action, civil commotion, fire, acts of God, flood,
earthquake, tornado, hurricane, unseasonable weather, energy shortages or other
causes beyond the reasonable control of the parties.
12. GENERAL
The parties agree that in the event it is necessary to employ attorneys
to enforce the terms of this Agreement, the prevailing party in any lawsuit
shall be entitled to an award of reasonable attorneys' fees and court costs.
a) This Agreement may not be assigned without the prior written mutual
consent of Affiliate and Wink.
b) This Agreement may be amended only by an instrument in writing,
executed by Affiliate and Wink.
c) This Agreement will be governed in all respects by the laws of the
State of California.
d) This Agreement represents the entire agreement between the parties
and supersedes and replaces all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof between
Affiliate and Wink.
Proprietary and Confidential
-7
<PAGE> 8
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. INTERMEDIA
PARTNERS
SOUTHEAST
By: /s/ Maggie Wilderotter By: /s/ Steve Crawford
Name: Maggie Wilderotter Name: Steve Crawford
Title: President and CEO Title: Chief Operating Officer
Proprietary and Confidential
-8-
<PAGE> 1
EXHIBIT 10.18
CABLE AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 8th day of October, 1997, by and between WINK
COMMUNICATIONS, INC., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and Charter Communications Inc., a
Delaware corporation ("Charter"), whose address is 12444 Powerscourt Drive, St.
Louis, MO 63131
WHEREAS, Wink is the proprietary owner of a software and hardware configuration
or product (the "Product") which allows multi-channel video programming
suppliers and off-air broadcast networks to utilize that band known as the
vertical blanking interval and commonly referred to as the VBI.
WHEREAS, the Wink Product will allow programmers to program the VBI with data.
WHEREAS, Charter is an owner, manager and operator of CATV systems.
WHEREAS, Charter controls the VBI broadcast over its cable system.
WHEREAS, Charter desires to provide this data stream to its customers.
NOW, THEREFORE, the parties agree as follows:
1. GRANT OF LICENSE
1.1 Wink hereby grants to Charter Communications, Inc. and its subsidiaries
and affiliated entities (collectively referred to herein as "Affiliate")
the non-exclusive license to use the Wink ITV Studio, Wink ITV Broadcast
Server, and Wink ITV Response Server versions 1.0 and 1.x updates
(hereinafter collectively referred to as "Wink Software") to deliver
"enhanced broadcasting" capability, virtual channels, response
transaction routing and templates for pay-per-view and pay unit
enhancement trials.
1.2 Except as provided herein, this License is not transferable outside of
the Affiliate systems Operating Area, nor any rights hereunder, may be
transferred, assigned or sub-licensed in whole or in part without Wink's
prior written consent which consent will not be unreasonably withheld.
1.3 For purposes of this Agreement, the "Operating Area" of any system shall
mean, with respect to a cable television system, the geographical area
where Affiliate is authorized to construct, operate, manage or maintain
a cable television system by appropriate governmental authority.
1.4 Affiliate agrees to utilize the Wink Software on advanced analog and
digital cable set top boxes owned by Affiliate and designated by
Affiliate in its discretion, for use with Wink services. Affiliate
agrees to launch Wink services in St. Paul, MN within 90 days of
completing the Acquisition of the St. Paul, MN System. Affiliate also
agrees to launch Wink Services in its Los Angeles system within 90 days
of offering Digital or Advanced Analog converters to its customers.
<PAGE> 2
1.5 Wink agrees that a minimum of ten programmers will be offering Wink
"enhanced broadcasting" content starting at launch and through the term
of this Agreement.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution of
this Agreement and terminate three (3) years thereafter.
2.2 Except as otherwise provided herein, neither Affiliate nor Wink may
terminate this Agreement except upon sixty (60) days prior written
notice and then only if the other has made a misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within sixty (60) days of such notice.
2.3 Wink agrees to not provide Wink Services to other CATV/Satellite/MMDS
operators competing in the two (2) Affiliate launch markets excluding
CATV Operators TCI, Media One and Century that have franchises that are
adjacent to the launch markets throughout the term of this Agreement,
dependent on Affiliate launching Wink in those markets.
3. INTEGRATION
3.1 Affiliate may distribute "enhanced broadcasting" through its Operating
Area head-ends. For the purposes of this Agreement, "enhanced
broadcasting" consists of video originated by a national broadcaster or
a cable programming network that has been enhanced through the use of
Wink Software.
3.2 Wink also agrees to perform all work, provide all equipment and
equipment interface necessary to integrate with advanced analog and
digital cable set top boxes at no charge to Affiliate. The Wink software
will not exceed 128k ROM and 34k RAM I the CFT-2200 converter. Attached
hereto and incorporated herein by reference is the equipment and
equipment interface to be purchased by Affiliate in order to engage the
Wink service. Any equipment or equipment interface not specifically
included on Attachment C, plus or minus ten (10) percent of the value of
the equipment listed, will be the responsibility of Wink and Charter
will have no requirement to purchase or provide, this excludes special
headend requirements unique to Charter.
3.3 Affiliate agrees to prioritize the Wink software
installation/integration and provide the necessary resources to meet
Affiliate system launch dates outlined in paragraph 1.4 of this
Agreement.
3.4 Both parties will use their best efforts to complete all installation of
equipment and equipment interface/integration work per the dates
mentioned above subject to Wink's performance of its obligations in
paragraph 3.2 to this Agreement and to successful testing of the Wink
software installation/integration, which testing shall occur at least
one month prior to launch. Both parties agree that the scheduled launch
date is dependent upon timely completion of all
Page 2 of 13
<PAGE> 3
installation/integration work necessary for launch. Failure to complete
installation/integration work as scheduled is cause for termination of
this Agreement.
3.5 Affiliate agrees to allow Wink to install and use Wink Response Servers
located in individual Affiliate cable headends to collect, aggregate,
and route responses for national "enhanced broadcasting" applications
through Wink's Alameda Data Center. Wink agrees to provide daily
reporting to Affiliate of all response traffic generated by its
Affiliate subscribers at no additional charge. Charter will retain
ownership of all information or data related to its customers buying
patterns, trends, and characteristics. Wink may utilize only what data
is necessary to fulfill response orders and may not use the data in any
way without Charter's express written consent and to keep confidential
all information pertaining to Affiliate's subscribers and proprietary
business operations that are obtained from Affiliate as a result of this
Agreement.
4. RATES AND DEPLOYMENT
4.1 Affiliate agrees to provide Wink "enhanced broadcasting" as part of its
advanced analog offering to its subscribers in the St. Paul, Minnesota
Operating Area (the Launch Market) within 90 days of completing the
acquisition of the St. Paul, MN system. Affiliate also agrees to deploy
Wink within 90 days of launching either advanced analog or digital
converters in Los Angeles, CA operating area.
4.2 Effective at launch in St. Paul, Affiliate agrees to remit a license fee
payment of [ * ] for the Launch Market until the Launch Market has [ * ]
or for a period of one year; whichever comes first. [ * ] of this
Agreement, whichever comes first, Wink's pricing of [ * ] will then be
the introductory pricing for all Affiliate Operating Areas that chose to
launch Wink Services during the term of this Agreement, including the
Launch Market. Affiliate agrees to supply all server hardware required
for deployment as listed in Attachment C of the Agreement.
4.3 Effective with deployment in Los Angeles, Affiliate agrees to pay Wink
at a rate of [ * ] per Wink subscriber per month until 30,000 Wink
subscribers are reached. During this time, Affiliate will not share in
transaction revenue. When [ * ] are reached, Affiliate will pay Wink
[ * ] and will share in transaction revenue.
4.4 Billing System Conversion fees charged to the affiliate by CableData for
supporting Winks Services will be the sole responsibility of Wink and
will be paid by Wink throughout the term of this Agreement.
4.5 During the term of this Agreement, Charter commits to make available, in
cable systems deploying Wink's Enhance Broadcasting, three (3) lines of
VBI in the Programmers Video Signal (Channel) for Wink's Enhanced
Broadcast data transportation. Charter retains ownership of all
- - ----------------------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission.
Omitted portions have been filed with the Commission.
Page 3 of 13
<PAGE> 4
VBI in its Cable Systems and at its discretion may make available
additional VBI for Wink. VBI is a term and technology inherent in analog
environment. Assuming the functional equivalent of the "VBI" is
available in the digital environment, Charter cable systems will deploy
Wink using the functional equivalent of the current contract usage of
two lines of the VBI. Affiliate agrees to keep the appropriate headend
and server equipment in good working order for an uninterrupted carriage
of "enhanced broadcasting". If Affiliate experiences problems with the
"enhanced broadcasting" delivery system, Affiliate will use its best
efforts to restore "enhanced broadcasting" service as soon as possible.
Affiliate agrees not to charge Programmer for carriage or use of the
three lines of VBI associated with delivery of " enhanced broadcasting"
for the term of the Agreement; provided that Affiliate retains all
ownership in the VBI and may refuse to transmit or may charge Programmer
for all uses of the VBI that are not essential to the delivery of
"enhanced broadcasting". Any interference by Wink or its services with
Affiliate's legal obligation to transmit signals in the VBI or any
interference with the operation of the cable system, including but not
limited to its transmission of television signals or other services
provided over the cable system is cause for immediate termination of
this Agreement.
4.6 Wink agrees to revenue share with Affiliate, its fees, on all Wink
generated purchase and request transactions by Affiliates' Wink
Subscribers for the term of this Agreement. Wink will pay Affiliate per
Schedule A of this Agreement for all fees collected by Wink for
transactions by Charter Subscribers.
4.7 For purposes of this Agreement, the term "Wink Subscriber" shall mean
each Affiliate residential customer and commercial or business
establishment receiving the Wink Service and receiving and separately
paying for Charter's cable television service.
4.8 Affiliate agrees to pay Wink [ * ] in installation and conversion fees
within thirty (30) days of execution of the Agreement and [ * ] upon
successful launch of the Wink service in the Launch Market. This fee
will cover conversion costs for the two initial systems deploying Wink.
Conversion fees for all other Affiliate Operating Areas will be [ * ] of
Wink's then standard retail rate. Any reasonable shipping or reasonable
travel costs, lodging and meals incurred by Wink in support of on-site
installation, maintenance, support, training, or consulting under this
Agreement shall be included in the conversion fees listed above.
4.9 Affiliate may choose to utilize other products and services of Wink from
time to time under this Agreement. Services that are not essential to
the operation of the Wink Service will be extended by Wink to Affiliate
at rates listed in the Attachment B of this Agreement, if not listed on
Attachment B, the then retail rate, or at a rate to be mutually agreed
upon by both the parties will prevail.
- - ----------------------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
Page 4 of 13
<PAGE> 5
5. PAYMENT TERMS
5.1 On or before the forty-fifth (45th) day following Affiliate's receipt of
Wink's invoice. Affiliate shall remit to Wink all fees owed for services
rendered in the previous month. Charter shall have the option to prepay
on a yearly basis. In the event Charter chooses to exercise the prepay
option, the rate will be subject to a [ * ].
5.2 Wink's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Affiliate of its obligation to make
any payment. Past due payments from either party shall bear interest at
a rate equal to the lesser of (i) one percent (1%) per month or (ii) the
maximum legal rate permitted under law, and Affiliate shall be liable
for all reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable court costs and attorneys' fees) incurred by Wink
in collecting any past due payments.
5.3 Wink will pay Charter Revenue Share Fees, as listed in Attachment A,
within forty five (45) days of each month's accumulative total. Payments
made to Charter after the thirty day billing period will be subject to
late payment terms outlined in paragraph 5.2.
6. PROMOTION AND RESEARCH
6.1 Affiliate agrees to promote and market the Wink service to Subscribers
within the Operating Area of each Affiliate system in which service is
being provided. Advertising, promotional, marketing and/or sales
materials concerning the Wink service which are provided to Affiliate by
Wink may be used at the discretion of Affiliate.
6.2 Wink may, from time to time, but not more than four (4) times per year,
undertake marketing tests and surveys, rating polls and other research
in connection with Affiliate, provided, that Wink provides Affiliate
with prior written notice. Affiliate shall use best efforts to provide
Wink with reasonable assistance in conducting such research with respect
to Affiliate's subscribers. Affiliate agrees that Wink and Wink agrees
that Affiliate will have access to any and all research regarding the
deployment, launch, and usage of Wink service by Affiliate subscribers.
Wink agrees to treat as confidential all information about Affiliate and
Affiliate's Subscribers obtained by Wink in connection with this
Agreement.
7. NOTICES
7.1 All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express delivery, addressed, if to WINK COMMUNICATIONS at 1001 Marina
Village Parkway, Alameda, CA 94501 and if to Affiliate at 12444
Powerscourt Drive, Ste 400, St. Louis, MO 63131. The date of such
facsimile transmission, telegraphing or personal delivery or the next
day if by express delivery, or the date three (3) days after mailing,
shall be deemed the date on which such notice is given and effective.
Page 5 of 13
<PAGE> 6
8. TRADEMARKS
8.1 All right, title and interest in and to the service or other rights, of
whatever nature, related thereto shall remain the property of Wink.
Further, Affiliate acknowledges and agrees that all names, logos, marks,
copyright notices or designations utilized by Wink in connection with
the service are the sole and exclusive property of Wink, and no rights
or ownership are intended to be or shall be transferred to Affiliate.
8.2 All right, title and interest in and to Affiliate's services, equipment
or facilities or other rights, of whatever nature, related thereto shall
remain the property of Affiliate. Further, Wink acknowledges and agrees
that all names, logos, marks, copyright notices utilized by Affiliate in
connection with Affiliate's services are the sole and exclusive property
of Affiliate, and no rights or ownership are intended to be or shall be
transferred to Wink.
9. REPRESENTATION
9.1 Wink represents and warrants to Affiliate that (i) it is a corporation
duly organized and validly existing under the laws of the State of
California; (ii) Wink has the corporate power and authority and all
necessary legal rights to enter into this Agreement and to fully perform
its obligations hereunder; (iii) Wink is under no contractual or other
legal obligation which in' any way interferes with its ability to fully,
promptly and completely perform hereunder.
9.2 Affiliate represents and warrants to Wink that (i) Affiliate is a
corporation duly organized and validly existing under the laws of the
State of Delaware; (ii) Affiliate has the requisite power and authority
to enter in this Agreement and to fully perform its obligations
hereunder; (iii) Affiliate's operating areas are operating, with respect
to any cable television system, pursuant to valid franchise agreements,
or licenses or other permits duly authorized by proper local
authorities; (iv) Affiliate is under no contractual or other legal
obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
10. CONFIDENTIALITY
10.1 Neither Affiliate nor Wink shall disclose to any third party (other than
its respective employees, in their capacity as such), any Proprietary
Information without prior written consent. The parties agree to keep the
terms of this Agreement and Proprietary Information confidential, but
acknowledge that certain disclosures may be required by law.
"Proprietary Information" means any ideas, plans or information,
including, without limitation, information of a technological or
business nature (including, without limitation, all trade secrets,
technology, intellectual property, data, summaries, reports, subscriber
information, or mailing lists, whether written or oral and, if written,
however produced) which is received by the receiving Party or otherwise
disclosed to the receiving Party from or by the disclosing Party, that
is marked as confidential or proprietary or bears a marking of like
import, or that the disclosing Party states, is to be considered
proprietary or confidential, or that would logically be considered to be
proprietary under the circumstances of disclosure.
Page 6 of 13
<PAGE> 7
12. TERMINATION
12.1 Notwithstanding any other provision herein, Wink will have the right to
terminate this Agreement or any licenses granted herein if Affiliate
fails to comply with any of its material obligations under this
Agreement. Should Wink elect to exercise this right to terminate for
nonperformance, it must be done in writing specifically setting forth
those items of nonperformance. Affiliate will then have sixty (60) days
from receipt of notification to remedy the items of nonperformance. In
the event that Affiliate does not remedy the items of nonperformance,
then Wink shall have the right, at reasonable times and under reasonable
conditions, with prior written notice to Affiliate, to enter upon
Affiliate's premises to repossess and remove any Wink-owned or licensed
Products. In addition, Wink's termination of this Agreement or such
taking of possession shall be without prejudice to any other remedies
Wink may have, including, without limitation, all remedies with respect
to the unperformed balance of this Agreement; provided, however, that if
Affiliate has not made payment of the fees or charges due hereunder and
such nonpayment continues after thirty (30) days prior written notice by
Wink, then Wink may terminate this Agreement or any license granted
herein.
12.2 Notwithstanding any other provision herein, Affiliate will have the
right to terminate this Agreement or all or any licenses granted herein
if Wink fails to comply with any of its material obligations under this
Agreement. Should Affiliate elect to exercise this right to terminate
for nonperformance, it must be done in writing specifically setting
forth those items of nonperformance. Unless termination is immediate,
Wink will then have sixty (60) days from receipt of notification to
remedy the items of nonperformance. In the event that Wink does not
remedy the items of nonperformance, then Affiliate shall have the right
to without limitation, all remedies with respect to the unperformed
balance of this Agreement.
12.3 Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of Affiliate to use the
Products will cease and Affiliate will promptly (i) grant to Wink, at
reasonable times and under reasonable conditions, with prior written
notice, access to its business premises and the Products and allow Wink
to remove the Products, (ii) purge all copies of all Products from all
computer processors or storage media on which Affiliate has installed or
permitted others to install such Products, and (iii) when requested by
Wink, certify to Wink in writing, signed by an officer of Affiliate,
that all copies of the Products have been returned to Wink or destroyed
and that no copy of any Product remains in Affiliate's possession or
under its control. Upon expiration or termination of this Agreement, all
rights to use Affiliate's VBI shall revert back to Affiliate.
13. FORCE MAJEURE
13.1 If either party to this Agreement shall be delayed or interrupted in the
performance or completion of their performance obligations hereunder by
an embargo, war, fire, flood, earthquake, epidemic or other calamity,
act of God or of the public enemy, or by any strike or labor dispute, or
by the
Page 7 of 13
<PAGE> 8
inability to secure governmental licenses, permits or priorities, or by
the unavailability of sources of supply, or by any other outside cause
which is beyond the control of the party and without its fault or
negligence, then it shall be excused from any delay or failure to
perform under the Agreement.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys to
enforce the terms of this Agreement, the prevailing party in any lawsuit shall
be entitled to an award of reasonable attorneys' fees and court costs.
(a) Neither party may assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, Affiliate may assign this Agreement to affiliated or
subsidiary companies without the consent of Affiliate and Wink.
(b) This Agreement will be governed in all respects by the laws of the State
of California.
(c) this Agreement represents the entire agreement between the parties and
supersedes and replaces all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof
between Affiliate and Wink. This Agreement may be amended only by an
instrument in writing, executed by Affiliate and Wink.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. CHARTER COMMUNICATIONS, INC.
By: /s/ Maggie Wilderotter By: /s/ Jerald L. Kent
Name: Maggie Wilderotter Name: Jerald L. Kent
Title: President & CEO Title: Pres. & CEO
Page 8 of 13
<PAGE> 9
<TABLE>
<CAPTION>
ATTACHMENT A
WINK/AFFILIATE REVENUE SHARE
WINK RESPONSE SERVICE TRANSACTION FEE
PURCHASE TRANSACTION FEES AFFILIATE REVENUE SHARE
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
(Viewer name, address, credit card) National Ads Local Ads
1-5,000 transactions/mo [ * ] [ * ]
5,001-25,000 transactions/mo [ * ] [ * ]
25,001-100,00 transactions /mo [ * ] [ * ]
100,001-250,000 transactions/mo [ * ] [ * ]
250,001-500,000 transactions/mo [ * ] [ * ]
500,001-up transactions/mo [ * ] [ * ]
REQUEST TRANSACTION FEES
- - ----------------------------------------------------------------------------------------------------
(Viewer name, address only)
1-5,000 transactions/mo [ * ] [ * ]
5,001-25,000 transactions/mo [ * ] [ * ]
25,001-100,00 transactions /mo [ * ] [ * ]
100,001-250,000 transactions/mo [ * ] [ * ]
250,001-500,000 transactions/mo [ * ] [ * ]
500,001-up transactions/mo [ * ] [ * ]
</TABLE>
- - ----------------------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portion shave been filed
with the Commission.
Page 9 of 13
<PAGE> 10
ATTACHMENT B
ANCILLARY CHARGES
1. Local Ad Insertion Module
Equipment: [ * ] for Annex and SeaChange PC
[ * ]
Monthly Fee: [ * ]
2. UNLIMITED VIRTUAL CHANNELS
Equipment: [ * ]
[ * ]
Monthly Fee: [ * ]
3. CUSTOMER SUPPORT
[ * ] technical support incident per month is included with
the contract. Additional incidents are charged at a rate of [ * ].
A service contract is also available for [ * ] which includes 3
incidents per month.
4. CONSULTATIVE SERVICES
Telephone consulting is billed at [ * ]. On-site consulting is
billed at [ * ].
- - ----------------------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
Page 10 of 13
<PAGE> 11
<TABLE>
<CAPTION>
ATTACHMENT C
CHARTER CFT-BOM
---------------
QTY COMPUTERS PART NUMBER UNIT COST ITEM COST
--- --------- ----------- --------- ---------
<S> <C> <C> <C> <C>
1 WINK BROADCAST SERVER (WBS) $9,136.20 $9,136.20
Sun Ultra Enterprise 1 Model A11-UBA1-9S-064CE $5,775.00
170 w/167MHz
TGX Graphics Sbus Adapter X711OA $809.00
17" Color Monitor X7103A $693.00
Sun 1.44 Internal Floppy Drive X6001A $115.00
Sun CD 12 Internal CD ROM X61661A $231.00
Fast Ethernet 10/100 Sbus Adapter X1059A $612.00
Sun Country Kit-UNIX (Keyboard, Mouse, Power Cords) X3540A $0.00
Sun Silver Server Support Ultra 1 model 170 Silver $619.20
Solaris Media 2.5.1 SOLD 2.5.1 APR97 $77.00
System Configuration-OS IS-101D $85.00
System Configuration IS-203 $120.00
Wink Broadcast Server Software License
1 WINK RESPONSE SERVER (WRS) $9,136.20 $13,336.20
Sun Ultra Enterprise 1 Model 170 w/167MHz A11-UBA1-9S-064CE $5,775.00
TGX Graphics Sbus Adapter X711OA $809.00
17" Color Monitor X7103A $693.00
Sun 1.44 Internal Floppy Drive X6001 A $115.00
Sun CD 12 Internal CD ROM X61661A $231.00
Fast Ethernet 10/100 Sbus Adapter X1059A $612.00
Sun Country Kit/UNIX (Keyboard, Mouse, Power Cords) X3540A $0.00
Sun Silver Server Support Ultra I model 170 Silver $619.20
Solaris Media 2.5.1 SOLD 2.5.1 APR97 $77.00
System Configuration-OS IS-101D $85.00
System Configuration IS-203 $120.00
Oracle Enterprise Server 7.3.2.1 for Solaris $4,200.00
Wink Response Server Software License
1 WINK GATEWAY PC $2,415.00 $2,415.00
PC-Rack Mountable
Rackmount Case w/250 Power Supply SRPC-210
Slide Rail Set
Pentium 166MHz Motherboard w/512K Cache
32 MB RAM
1.2 GB WD EIDE Internal Hard Drive
3.5" - 1.44MB Teac Internal Floppy Drive
24X Toshiba IDE CD-ROM
Diamond Stealth PCI w/2MB
3COM 3C900 PCI Ethernet (Port #1)
3COM 3C900 PCI Ethernet (Port #2)
Additional Com Card for Com3 Com4 LPT2
Windows NT Workstation 4.0 CD-ROM
Mouse
14" SVGA Color Monitor
Rackmount Keyboard w/Mouse Tray RMK-110
Wink's Gateway Software
COMPUTER PERIPHERALS
2 US Robitics Courier V. Everything A22536-001224-0 $263.00 $526.00
</TABLE>
Page 11 of 13
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C>
TERMINAL SERVERS
1 Xylogics Annex Three - 64-port, net-boot, twisted pair AX3-32/32-IN-100 $4,895.00 $4,895.00
12 Annex Modem (DCE) Cable-50pin Telco Fan to 6 Male DB25 AX3-CBL-DCE-100 $110.00 $1,320.00
1 Annex Three Software-DCROM CM0014007 $340.00 $340.00
CABLE HEADEND EQUIPMENT
20 Norpak TTX-745 NABTS Decoder (2/channel) $400,001 $8,000.00
10 MVPII-DIU v0.7 or greater Charter
====== ==================================================================== =========== ============
Total Cost: $39,968.40
- - ------ -------------------------------------------------------------------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
CHARTER DCT-BOM
QTY COMPUTORS PART NUMBER UNIT COST ITEM COST
--- --------- ----------- --------- ---------
<S> <C> <C> <C> <C>
1 WINK BROADCAST SERVER (WBS) $9,136.20 $9,136.20
- - ------ -------------------------------------------------------------------- ----------- ------------
Sun Ultra Enterprise 1 Model 170 w/167MHz A11-UBA1-9S-O64CE $5,775.00
TGX Graphics Sbus Adapter X7110A $809.00
17" Color Monitor X7103A $693.00
Sun 1.44 Internal Floppy Drive X6001A $115.00
Sun CD 12 Internal CD ROM X61661A $231.00
Fast Ethernet 10/100 Sbus Adapter X1059A $612.00
Sun Country Kit-UNIX (Keyboard, Mouse, Power Cords) X3540A $0.00
Sun Silver Server Support Ultra 1 model 170 Silver $619.20
Solaris Media 2.5.1 SOLD 2.5.1 APR97 $77.00
System Configuration - OS IS-101D $85.00
System Configuration IS-203 $120.00
Wink Broadcast Server Software License
1 WINK RESPONSE SERVER (WRS) $9,136.20 $13,336.20
- - ------ -------------------------------------------------------------------- ----------- ------------
Sun Ultra Enterprise 1 Model 170 w/167MHz All-UBA1-9S-064CE $5,775.00
TGX Graphics Sbus Adapter X7110A $809.00
17" Color Monitor X7103A $693.00
Sun 1.44 Internal Floppy Drive X6001A $115.00
Sun CD 12 Internal CD ROM X61661A $231.00
Fast Ethernet 10/100 Sbus Adapter X1059A $612.00
Sun Country Kit-UNIX (Keyboard, Mouse, Power Cords) X3540A $0.00
Sun Silver Server Support Ultra 1 model 170 Silver $619.20
Solaris Media 2.5.1 SOLD 2.5.1 APR97 $77.00
System Configuration-OS IS-101D $85.00
System Configuration IS-203 $120.00
Oracle Enterprise Server 7.3.2.1 for Solaris $4,200.00
Wink Response Server Software License
1 WINK GATEWAY PC $2,415.00 $2,415.00
- - ------ -------------------------------------------------------------------- ----------- ------------
PC-Rack Mountable
Rackmount Case w/250 Power Supply SRPC-210
Slide Rail Set
Pentium 166MHz Motherboard w/512K Cache
32 MB RAM
1.2 GB WD EIDE Internal Hard Drive
3.5" - 1.44MB Teac Internal Floppy Drive
24X Toshiba IDE CD-ROM
Diamond Stealth PCI w/2MB
3COM 3C900 PCI Ethernet (Port #1)
3COM 3C900 PCI Ethernet (Port #2)
Additional Com Card for Com3 Com4 LPT2
Windows NT Workstation 4.0 CD-ROM
Mouse
14" SVGA Color Monitor
Rackmount Keyboard w/Mouse Tray RMK-110
Wink's Gateway Software
</TABLE>
Page 12 of 13
<PAGE> 13
<TABLE>
COMPUTOR PERIPHERALS
<S> <C> <C> <C> <C>
2 US Robitics Courier V. Everything A22536-001224-0 $263.00 $526.00
TERMINAL SERVERS
1 Xylogics Annex Three - 32-port, net-boot, twisted pair AX3-32/32-1N-300 $3,550.00 $3,550.00
6 Annex Modem (DCE) Cable-50pin Telco Fan to 6 Male DB25 AX3-CBL-DCE-100 $110.00 $660.00
1 Annex Three Software-DCROM CM0014007 $340.00 $340.00
CABLE HEADEND EQUIPMENT
20 Norpak TTX-745 NABTS Decoder (2/channel) $400.00 $8,000.00
====== ==================================================================== =========== ============
TOTAL COST: $37,963.40
</TABLE>
Page 13 of 13
<PAGE> 1
EXHIBIT 10.19
PROGRAMMING AGREEMENT
THIS PROGRAMMING AGREEMENT ("Agreement") is made this 21st day of NOVEMBER, 1997
between CENTURY COMMUNICATIONS CORP. having an address of 50 Locust Ave., New
Canaan, CT 06840 ("Century"), and WINK COMMUNICATIONS having address of 1001
Marina Village Parkway, Alameda, CA 94501 ("Wink").
Whereas, Wink is the licensor of certain computer software referred to
as Wink ITV Broadcast Server, versions 1.0 and 1.x updates ("Wink Software");
and
Whereas, the application of Wink Software results in an enhanced image
("Enhanced Broadcasting") that consists of video originated from national
broadcasters and cable programming networks that has been enhanced through the
use of Wink Software (the "Service"); and
Whereas, Wink desires to have Century test, and Century may desire to
test in up to two (2) markets to be determined in Century's discretion, Wink
Software and the Service in contemplation for potential distribution by Century
to certain of its cable subscribers receiving advanced analog and/or digital
service in test market(s) to be determined in Century's sole discretion
(referred to individually and collectively as "Test Market"); and
Whereas, Wink will provide Wink Software and the Service in a Test
Market for six month periods (referred to individually and collectively as "Test
Period"); and
Whereas, Wink will provide Wink Software and the Service at no cost to
Century in any Test Market during any Test Period; and
Whereas, in the event Century launches advanced analog and/or digital
service in Los Angeles, Wink may designate Los Angeles as a Test Market subject
to the equipment restrictions as provided hereunder; and
Whereas, at any time during a Test Period, Century may choose to
terminate the test, subject to the restrictions as provided hereunder, or deploy
Wink Software and the Service under the charter pricing and terms as established
in Attachment A which is made a part hereof, and
Whereas, the offers made herein shall terminate as of January 1, 1999,
unless a Test Period is in effect in which event the offers made herein shall
terminate as of the end of said particular Test Period;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. In any designated Test Market, Wink will install Wink Software and activate
the Service. When the Service is activated the Test Period shall begin. This
date will be mutually agreed to by the parties.
<PAGE> 2
2. Century agrees to provide a reasonable level of support to ensure the
successful integration of Wink Software and the Service in a Test Market. Should
Century need to incur expenses to implement Wink Software and the Service, Wink
shall pre-approve and be responsible for these expenses including, without
limitation, additional staffing costs. Century shall be responsible for all
reasonable and standard maintenance of Century's head-end equipment during any
Test Period in order to provide for uninterrupted carriage of the Service,
except as may be required by local, state, or federal law, force majeure or
other events or circumstances beyond Century's control. Reasonable and standard
maintenance shall be determined by Century in Century's sole discretion.
3. Wink agrees to waive any and all monthly software license fees during any and
all Test Period. Wink will waive any and all installation fees during any and
all Test Period. Wink represents and warrants to Century that Century will incur
no incremental fees or expenses from national broadcasters or cable programming
networks ("Programmers") due to Century's implementing Enhanced Broadcasting in
any Test Market. Wink shall indemnify Century for any breach of this
representation and warranty. Century agrees not to charge Programmers any
additional incremental fees to carry their enhanced video as part of the Service
during any Test Period.
4. Wink agrees to purchase the necessary server platforms ("Server Platforms")
for any Test Market with the understanding that following a Test Period, should
Century deploy Wink Software and the Service in any Century market, Century may
purchase the Server Platforms from Wink at a price to be negotiated by the
parties at that time. If Century chooses to purchase advanced analog and/or
digital set top boxes enabled with Wink engines Century shall have the right, in
Century's sole discretion, to purchase these boxes from set top manufacturers at
the Century negotiated rate. Notwithstanding the foregoing, if Century chooses,
in Century's sole discretion, to deploy set top boxes in its existing inventory
or purchase set top boxes off the shelf from any manufacturer that are not
enabled with Wink engines, Century shall have no obligation to retrofit these
boxes with Wink engines.
5. Wink Software and the Service shall at all times remain the property of Wink
and Century shall have no right, title, or interest in Wink Software or the
Service except for such use as is authorized by this Agreement. Wink shall
perform all maintenance of Wink Software and the Service. Upon the expiration or
termination of any Test Period or this Agreement, at a time agreeable to Century
but in no event more than ninety (90) days after expiration or termination, Wink
shall be solely responsible for the removal of any and all components of Wink
Software and the Service.
6. Wink represents and warrants that neither Wink Software nor the Service
infringes on any copyright, trademark, patent or any other right of any person
or entity, and Wink shall protect, indemnify and hold Century harmless from any
and all claims regarding this representation and warranty including, without
limitation, attorney's fees.
7. The parties acknowledge that nothing contained herein shall obligate the
parties to enter into any further business relationship or agreement or prohibit
either party from entering into any business relationship or agreement with any
other party and that neither party is relying on the other
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party in developing and operating its respective business. Except as set forth
in this Agreement, there shall be no further obligation whatsoever on the part
of either party, unless agreed to in writing by the parties.
8. Neither Century nor Wink shall be, or hold itself out as, the agent of the
other. Nothing contained herein shall be deemed to create and the parties do not
intend to create any relationship or partnership, joint venture or agency as
between Century and Wink. Neither party is authorized or shall act toward third
parties or the public in any manner that would indicate any such relationship
with the other without the prior written consent of the other. For the purpose
of promoting Enhanced Broadcasting, Century and Wink shall issue one mutually
agreed upon press release after the execution of this Agreement, and Century and
Wink may issue one mutually agreed upon press release for each Test Market
within thirty (30) days of each Test Period.
9. In the event the Wink Software and/or the Service fails to perform as
contemplated herein, Wink shall have thirty (30) days from notice to cure such
failure of performance. In the event Wink fails to cure, Century may terminate
the particular Test Period and/or this Agreement in Century's sole discretion.
Notwithstanding anything to the contrary herein, in the event Wink Software
and/or the Service causes, in Century's sole opinion, any disruption of
Century's service and/or operations including, without limitation, blackouts,
distortion or signal interference, Century may terminate this Agreement
immediately without notice and Wink shall indemnify Century for any costs
incurred by Century that arise from such disruption of service and/ or
operations. Notwithstanding anything to the contrary herein, Wink shall
indemnify and hold Century harmless from and against any and all claims arising
out of the content of the Service whether or not such content originates from
Programmers, Wink or any other party.
10. Nothing in this Agreement shall in any way affect or alter Century's rights
with respect to its agreements with any and all Programmers. Further, nothing in
this Agreement shall obligate Century to carry, or continue to carry, any
Programmers in any market.
11. This Agreement will not be amended, changed or modified other than by
written instrument, signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement.
WINK COMMUNICATIONS CENTURY COMMUNICATION
CORP.
By: /s/ Maggie Wilderotter By: /s/ Daniel Gold
Its: President & CEO Its: VICE PRESIDENT
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WINK RESPONSE SERVICE TRANSACTION FEE
Purchase Transaction Fees Affiliate Revenue Share
(Viewer name, address, credit card)
National Ads
Local Ads
1-5,000 transactions/mo [ * ]* [ * ]
5,001 - 25,000 transactions/mo [ * ] [ * ]
5,001 - 100,000 transactions/mo [ * ] [ * ]
0,001 - 250,000 transactions/mo. [ * ] [ * ]
0,001 - 500,000 transactions/mo [ * ] [ * ]
500,001 - up transactions/mo [ * ] [ * ]
Request Transaction Fees
(Viewer name, address only)
1-5,000 transactions/mo [ * ] [ * ]
5,001 - 25,000 transactions/mo [ * ] [ * ]
5,001 - 100,000 transactions/mo [ * ] [ * ]
0,001 - 250,000 transactions/mo [ * ] [ * ]
0,001 - 500,000 transactions/mo [ * ] [ * ]
500,001 - up transactions/mo [ * ] [ * ]
- - --------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for Confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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<PAGE> 5
CHARTER PRICING
CENTURY COMMUNICATIONS
10/28/97
OFFER CATEGORY CENTURY OFFER DETAILS STANDARD WINK OFFER
AGREEMENT TERM 3 YEARS 3 YEARS
"CHARTER" PRICING PACKAGE [ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
PRE-LAUNCH PERIOD [ * ] [ * ]
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EXHIBIT 10.20
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is executed as
of 1 September 1997 (the "Execution Date") to memorialize the parties'
relationship and its terms are effective 26 April 1996, between Wink
Communications, Inc., a California corporation with offices at 1001 Marina
Village Parkway, Alameda, CA 94501 ("Wink") and Matsushita Electric Industrial
Co., Ltd., a Japanese corporation having a principal place of business at 1006
Oaza Kadoma, Kadoma, Osaka 571, Japan ("MEI").
1. BACKGROUND
A. Wink is a software developer and has developed an interactive
television system of technology and related products, services, processes and
materials (the "Wink ITV System"), which includes a software protocol for
delivering interactive applications synchronized with or independent of
television programs and advertisements. Also included without limitation in the
Wink ITV System are an authoring tool, server software and the Wink EngineTM
that decodes the protocol and displays the interactive applications overlaid on
a television screen.
B. MEI is a manufacturer of televisions that include an SH-series
processor, a MC architecture chip for providing at least graphic overlay and VBI
data decoding, and ROM and RAM (the "MC2/SH2 Platform").
C. Wink and MEI desire that Wink develop and grant to MEI the right to
embed a customized version of the Wink Engine on MEI MC2/SH2 Platform for use in
MEI televisions and related consumer products (such as VCRs, settop boxes, etc.)
and for MEI to sell to other manufacturers as a component to be used in those
manufacturers' televisions and related consumer products.
The terms of the Agreement are as follows:
2. DEFINITIONS
2.1 "Wink Engine" shall mean Wink's software engine described in
Exhibit C hereto, in machine executable, object code format.
2.2 "Licensed Technology" shall mean version 1.0 of the Wink Engine
as adapted by Wink for an MEI Device and any Updates (version
1.x) in object code format, and any related documentation which
Wink may create, in Wink's sole discretion, for public
distribution with Versions 1.0 and 1.x of the Wink Engine. To
the extent that this Agreement is amended to include New
Products, references to "Licensed Technology" shall be deemed to
also include such New Products.
<PAGE> 2
2.3 "Protocol" shall mean Wink's Interactive Communicating
Applications Protocol.
2.4 "Update" shall mean a new version of the Licensed Technology
which contains Error Corrections or minor new features or
functionality, but which is not a New Product, in each case as
determined in Wink's sole discretion but after consultation with
MEI. An Update shall be designated by a change in the digit or
digits to the right of the decimal point in the version number.
In the case of the version numbers described in Exhibit A
hereto, Updates shall be designated by a change to any one of
the digits denoted as follows (using the letter "x" as a
placeholder): 1.xxx.
2.5 "New Product" shall mean a software product which contains major
new features or functionality and which Wink offers to its
customers at a separate price, in each case as determined in
Wink's sole discretion but after consultation with MEI. A New
Product shall be designated by a change in the digit or digits
to the left of the decimal point in the version number.
2.6 "Initial Product" shall mean the final release of version 1.0 of
a Wink Engine and the first version of a New Product (e.g. any
product labeled version x.0).
2.7 "MEI Device" shall mean any MEI television or other related
consumer product (such as VCRs and broadcast settop boxes) that
are built to include the MC2/SH2 Platform, or any third party
sublicensee's product that is built to include the MC2/SH2
Platform.
2.8 "MEI Component" shall mean either (a) a circuit module
containing the MC2/SH2 Platform, ROM or flash ROM, RAM, and a
communications device such as a modem for insertion into a
television, VCR, broadcast set-top device or similar
audio-visual device, or (b) the memory LSI for insertion into
such circuit module.
2.9 "Combined Component" shall mean the MEI Component with the
Licensed Technology incorporated.
2.10 "Combined Product" shall mean an MEI Device containing the
Licensed Technology embedded in an MEI Component, an MEI Device
containing a Combined Component or a third party device
containing a Combined Component.
2.11 "Development Schedule" shall mean the schedule for completion of
the development activities set forth in Exhibit A hereto
("Development Activities").
2.12 "Exhibit A" shall mean the exhibits attached hereto as Exhibit
A. There shall be one Exhibit A for each MEI Device to which the
Wink Engine is ported.
2.13 "Specifications" shall mean the technical and other
specifications for the Deliverables to be developed by the
parties as described below and in Exhibit A hereto and as set
forth thereafter in Exhibit B hereto.
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2.14 "Milestone" shall mean each milestone identified in Exhibit A
hereto.
2.15 "Deliverables" shall mean each Deliverable identified in Exhibit
A hereto, to be delivered at the time of each completion of a
Milestone by Wink.
2.16 "Intellectual Property Rights" shall mean all current and future
worldwide patents and other patent rights, copyrights; mask work
rights, trade secrets, and all other intellectual property
rights, including without limitation all applications and
registrations with respect thereto.
2.17 "Affiliates" shall mean MEI's affiliates and subsidiaries.
2.18 "Subdistributors" shall mean entities authorized by MEI to
distribute the Licensed Technology including, without
limitation, Affiliates, distributors, resellers, system
operators, value-added resellers, dealers or sales
representatives.
2.19 "Submanufacturers" shall mean entities authorized by MEI to copy
the Licensed Technology onto Combined Components or Combined
Products including, without limitation, Affiliates and
third-party manufacturers.
2.20 "Error Correction" shall mean an error correction by Wink to fix
a reproducible programming error resident in the Licensed
Technology which prevents the Licensed Technology from
conforming to the Specifications, and which is discovered by
Wink or MEI and, if discovered by MEI, reported to Wink with
sufficient information to allow Wink to reproduce and locate
such error.
3. DEVELOPMENT, DELIVERY AND ACCEPTANCE
3.1 Development. Wink agrees to port and customize the Wink Engine
to MEI's current MC2/SH2 Platform, as designated in Exhibit A.1.
Wink also agrees to port the Wink Engine to other devices,
platforms or future versions of the MC2/SH2 Platform, for
additional NRE Fees as agreed to by the parties, as set forth in
a new Exhibit A (e.g.) A.2, A.3, etc.). Wink agrees to perform
such Development Activities in accordance with the
Specifications. In connection therewith, MEI shall (i) assist
Wink in producing the Specifications and (ii) provide other
necessary materials and information, as mutually agreed by the
parties in the Specifications or otherwise. The parties may
agree on additional Development Activities by amending Exhibit A
hereto.
3.1.1 Trivial Development Effort related to Non-MC2/SH2
Platforms. The parties recognize that MEI also wishes to
use the Licensed Technology in other MEI Devices that
may contain platforms other than the MC2/SH2 Platform,
and such other platforms may be MC/SH platforms or
non-MC/SH platforms. Upon MEI's request to use the
Licensed Technology for a
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platform other than the MC2/SH2 Platform, Wink agrees to
do simple re- compiles of the Licensed Technology source
code for such other platform, provided that MEI provides
all the necessary equipment, software, or other
materials or information necessary to enable Wink to do
such simple re- compiles. The only charge by Wink for
such work will be Wink's then current hourly charges for
the time spent in set-up of the equipment, re-
compiling, and simple testing of success of recompiling
("Re-compiling Setup"); Wink estimates that such
Re-compiling Set-up will require one man- week, or less
if MEI provides an engineer to assist in Re-compiling
Set-up. However, if the Re-compiling Set-up is not
trivial (defined as less than one man-week where set-up
is required, or one man-hour where functioning
development equipment is already set up) or if
additional development or customization or testing of
the Licensed Technology is required, the parties agree
that such non-trivial recompiling work or additional
development or customization or testing will require a
mutually signed agreement regarding NRE fees. Whether
the work involved in re-compiling is trivial or not,
only MEI shall have responsibility for testing the
quality of the software's compatibility with the
non-MC2/SH2 platform device, since Wink will be
unfamiliar with the non-MC2/SH2 platform. Wink shall
only take responsibility for testing the quality of such
software compatibility when it performs significant
review and testing, pursuant to Section 6.6 below.
3.1.2 Revised Definitions regarding Re-Compiling. Unless
stated otherwise herein references to source code shall
be deemed to also include such re-compiled source code
of the Licensed Technology (to be called "Recompiled
Source Code" when it needs to be differentiated from the
source code that is not re- compiled). Similarly, unless
stated otherwise herein, references to "Licensed
Technology" shall be deemed to also include the Licensed
Technology that results from re-compiled source code (to
be called "Re-Compiled Licensed Technology" when it
needs to be differentiated from Licensed Technology for
the MC2/SH2 Platform), and references to "Combined
Components" and "Combined Products" shall be deemed to
also include "MEI" Components" or "MEI Devices" that
include Re-Compiled Licensed Technology (to be called
"Re-Compiled Combined Components" and "Re-Compiled
Combined Products", respectively, when they need to be
differentiated from Combined Components and Combined
Products for the MC2/SH2 Platform). In addition, unless
stated otherwise herein, references to "Initial
Product", "Update", and "New Product" shall be deemed to
include re-compiled versions of Initial Products,
Updates, and New Products (to be called "Re- Compiled
Initial Products", "Re-Compiled Updates", and
"Re-Compiled New Products" when they need to be
differentiated from Initial Products, Updates, and New
Products designed for the MC2/SH2 Platform).
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3.1.3 No Obligation to create Re-compiled Updates or New
Products. Whether or not MEI has requested that a
certain Update, or New Product be re- compiled, Wink is
under no obligation to create on its own initiative
subsequent Re-Compiled Updates or Re-Compiled New
Products, even if subsequent Updates or New Products are
prepared for the MC2/SH2 Platform. However, Wink will do
such re-compiling following MEI request, pursuant to
Section 3.1.1. If the re-compiling is so done MEI shall
have significantly more than its standard responsibility
for testing the quality of the Re-Compiled Update's or
Re-Compiled New Product's compatibility with the
non-MC2/SH2 platform device, since Wink will be
unfamiliar with the non- MC2/SH2 platform.
3.1.4 Localization. Wink and MEI will mutually agree upon
reasonable NRE Fees for localization of the customized
Licensed Technology for non-Japanese markets, if the
parties mutually agree in writing to expand this
Agreement to encompass products for such markets.
3.2 Provision of Software, Hardware and Equipment. MEI shall provide
all hardware, software, and equipment ("Equipment") reasonably
necessary for Wink to duplicate the MEI environment, and all
Equipment that is used to perform the activities in Exhibit A or
in support thereof pursuant to Section 9.2, to Wink at MEI's
cost. Notwithstanding the foregoing, Wink and MEI agree that
Wink shall pay certain agreed rental fees resulting from the use
of certain MEI equipment during the summer of 1997, as written
in Exhibit A. A preliminary list of Equipment is included in
Exhibit A. The list in Exhibit A may be updated from time to
time by mutual agreement. MEI shall retain ownership of all such
software, hardware and equipment provided to Wink, and Wink
shall return all such software, hardware and equipment to MEI
promptly upon request by MEI; provided that Wink's development
and support obligations under this Section 3.2 and Section 9.2
below shall terminate to the extent software, hardware or
equipment returned to MEI is required by Wink to fulfill its
obligations.
3.3 Modifications. Wink may, upon written approval by MEI in each
instance, which approval shall not be unreasonably withheld,
alter the Specifications commensurate with good faith efforts to
finalize and refine the Deliverables in accordance with MEI's
needs and objective for the Licensed Technology.
3.4 Delivery and Acceptance. This Section 3.4 shall not apply to
Re-Compiled Licensed Technology unless the parties specifically
agree, in a mutually signed writing, to do so on a case by case
basis.
3.4.1 Wink shall use reasonable commercial efforts to complete
each Milestone in accordance with the Development
Schedule. Upon completion of each Milestone, Wink shall
deliver to MEI all applicable Deliverables for
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evaluation by MEI pursuant to Section 3.4.2 below. In
the event MEI is late in the performance of its
obligations with respect to Section 3.1 and such
delay affects Wink's obligations hereunder, Wink's
Performance of such affected obligations shall be
delayed by the same time period.
3.4.2 Within thirty (30) days after receipt, MEI shall review
and evaluate such Deliverables and shall provide Wink
with a written acceptance of the Deliverables or a
written statement of errors to be corrected. MEI shall
not withhold acceptance of any Deliverable (except the
Specifications and Development Schedule) unless such
Deliverable materially deviates from the Specifications,
and such deviation is documented and promptly reported
to Wink. MEI's failure to provide an acceptance or
statement of errors within such thirty day period (as
applicable) shall be deemed an acceptance of such
Deliverables. When deviations from the Specifications
are identified and confirmed, Wink shall use all
reasonable commercial efforts to correct such
deviations, if any, as soon as commercially reasonable
practicable, and to return a copy of the updated
Deliverables to MEI for review and reevaluation in
accordance with the foregoing procedure. The foregoing
procedure shall be repeated until acceptance by MEI of
the Deliverables or the parties mutually agree to cease
development and terminate this Agreement.
3.5 Transfer of Software. Upon MEI's acceptance of all Deliverables
(other than Specifications and Development Schedule) pertaining
to a particular development project, Wink shall deliver to MEI a
master diskette or other digital storage media (the "Master
Media") containing the Wink Engine for use by MEI in accordance
with the terms of this Agreement, including without limitation
Section 4.
3.6 Delivery Outside of California. Tangible property will not be
delivered within the State of California unless such delivery is
by means of remote telecommunications or unless the parties
hereto are satisfied that such transfer will not incur a sales
or use tax liability. Any attempted transfer contrary to the
terms hereof will be void and of no effect. If the delivery is
made by remote telecommunications, the parties will keep a
detailed contemporaneous log documenting each transmission by
date, time, place, and the individuals responsible for such
transmission.
3.7 Right to Pursue Other Projects. The parties acknowledge and
understand that, independent of the development efforts
hereunder, Wink and MEI each have been and continue to be
actively engaged in research and development in the field, and
in the course of such research and development may have
developed or may hereafter develop software similar to the
Licensed Technology; provided that such similar software shall
be developed without use of or reference to, materials or
information provided by the other party under this Agreement.
However, the parties recognize that the MEI information which is
included in the Licensed Technology is not crucial;
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therefore, Wink may develop or modify the Licensed
Technology for itself or for others notwithstanding the
foregoing restriction. The parties agree that this
Agreement shall not be construed as (i) prohibiting such
independent research and development, either on their
own behalf or under contract with others, (ii)
precluding either party from developing, acquiring,
utilizing or distributing such similar software without
obligation the other party so long as such research and
development or such party do not otherwise breach the
terms of this Agreement or (iii) prohibiting such
development or modification of the Licensed Technology
by Wink.
4. GRANT OF RIGHTS
4.1 Wink Engine. Subject to the terms and conditions of this
Agreement, Wink grants to MEI a non-exclusive, non-transferable
(except as provided in Section 14.3), right and license, under
all of Wink's Intellectual Property Rights in and to the
Licensed Technology, to (a) use, reproduce and have reproduced
the Licensed Technology, and to use the Protocol as necessary or
useful therefor in conjunction with the use of the Licensed
Technology, solely (i) for the purpose of incorporating the
Licensed Technology into an MEI Component to create a Combined
Component, or (ii) as necessary in the course of distribution
and support of the Combined Component as permitted hereunder;
and (b) distribute the Combined Component within Japan, directly
or indirectly through Subdistributors in accordance with Section
4.3 below, to OEMs for incorporation into an OEM Device to
create a Combined Product for distribution within Japan; and (c)
incorporate the Combined Component into an MEI Device to form a
Combined Product and distribute such Combined Product within
Japan or, in the case of a shipment to Wink of an MEI Devices
for development, debugging, testing, or marketing use, to the
USA, and (d) distribute the Licensed Technology on a standalone
basis through a one-time (not including transmission of Updates)
transmission through coaxial cable, satellite transmission or
other electronic transmission to a unit of an MEI Device, MEI
Component, or Combined Product within Japan which was previously
acquired from MEI, for use only with such previously acquired
unit, provided that such distribution shall be subject to
procedures reasonably acceptable to Wink to monitor and account
for such distribution, including encryption procedures where
distributed electronically or by broadcast or other
transmission. The parties shall mutually agree in writing on
such procedures prior to any such distribution and MEI shall
ensure that its Subdistributors comply with all such procedures.
MEI shall have no right to sublicense the foregoing rights
except to the extent a sublicense may be deemed to have been
granted in connection with the exercise by MEI of its rights to
engage Submanufacturers and Subdistributors as described herein.
Except as expressly provided in this Agreement, Wink reserves
all rights and ownership to the Licensed Technology.
4.2 Combined Product. MEI agrees to provide Wink with a written
notice describing the Combined Product prior to the first
shipment of such a Combined Product, with such notice to be
provided as early as possible but with a target of at least
thirty (30) days
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prior. The description of the Combined Product shall include the
product type (e.g., color television), distinguishing
characteristics (e.g., 32" double-wide screen), model number and
expected Suggested Retail (List) Price, and in the case of
Combined Products that contain Re-Compiled Licensed Technology,
the fact that such products contain such Re-Compiled Licensed
Technology. MEI shall also provide one free sample unit of such
Combined Product (production unit), as soon as is practicable.
Wink shall have no obligation to return such sample units.
4.3 Have Reproduced. Upon Wink's prior written approval which shall
not be unreasonably withheld, MEI shall have the right to
provide the Licensed Technology to its Submanufacturers for the
sole purpose of copying the Licensed Technology to MEI
Components, provided that each such Submanufacturer shall agree
in a signed writing (i) to use and copy the Licensed Technology
solely to manufacture Combined Components and Combined Products
only for MEI's account, (ii) not to sell or distribute Licensed
Technology, Combined Components and Combined Products except to
MEI, and (iii) to keep the Licensed Technology confidential
pursuant to terms and conditions no less restrictive than the
terms and conditions of this Agreement. MEI need not provide to
Wink a copy of such signed written agreement between it and each
Submanufacturer; however, MEI shall ensure that each
Submanufacturer abides by the terms of its written agreements
described herein. MEI agrees to indemnify Wink for royalties not
paid to Wink arising out of or related to a breach of the
foregoing provisions by Submanufacturers. MEI agrees to promptly
notify Wink if MEI has reason to believe that a Submanufacturer
has breached the provisions of subsection (i)-(iii) above, and
MEI shall promptly investigate the situation and promptly report
to Wink all relevant information about Submanufacturer and the
situation.
4.4 Subdistributors. MEI may exercise its distribution rights
hereunder through Subdistributors; provided, that each
Subdistributor must agree in a signed writing, prior to
obtaining the Licensed Technology from MEI, to be bound by all
applicable restrictions on MEI set forth in this Agreement. MEI
need not provide to Wink a copy of such signed written agreement
between it and each Subdistributor; however, MEI shall ensure
that its Subdistributors abide by the terms of such agreements.
MEI agrees to indemnify Wink for royalties not paid to Wink
arising out of or related to a breach of such agreements by
Subdistributors. MEI shall promptly notify Wink if MEI has
reason to believe that any of MEI's Subdistributors may not be
not abiding by such restrictions, and MEI shall promptly
investigate the situation and promptly report to Wink all
relevant information about Subdistributor and the situation.
4.5 Proprietary Notices. MEI shall not modify, alter or obscure any
proprietary notices contained on or within the Licensed
Technology, and all copies of the Licensed Technology reproduced
or distributed by or for MEI shall contain copyright and other
proprietary notices in the same manner in which Wink
incorporates such notices in
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the Licensed Technology and the documentation. A sample of such
proprietary notices shall be found in Exhibit D.
4.6 Limitations. MEI shall not modify, prepare derivative works of,
reverse engineer, disassemble, decompile, or otherwise have or
attempt to obtain access to the source code of the Licensed
Technology. Notwithstanding the foregoing, disassembling that
occurs as a necessary part of using standard de-bug tools such
as an In-Circuit Emulator (ICE) shall be permitted, provided
that the disassembled code is not reviewed, saved, copied nor
printed, but instead is immediately and securely erased.
5. COMPENSATION
5.1 Non-Recurring, Engineering. In consideration of the duties and
obligations of Wink under Section 3, MEI has paid Wink the
amounts set forth in Exhibit A hereto, at the times set forth in
Exhibit A hereto.
5.2 Per-Copy Royalty. In consideration for the rights and licenses
granted to it under Section 4 above, for each unit of the
Combined Component or Combined Product distributed by MEI or a
Subdistributor, MEI shall pay Wink the per-unit royalty set
forth in Exhibit A hereto. MEI and Subdistributors shall have no
obligation to pay more than one royalty for any particular unit
of a Combined Component or Combined Product unless this
Agreement is amended to include New Products, in which case an
additional royalty will be due on distribution of such New
Product for use with such units. In the event that MEI or a
Subdistributor distributes a Combined Product to an end-user for
which a royalty is or has been paid and thereafter accepts a
return of the same unit of Combined Product, MEI or such
Subdistributor may redistribute such unit or a substitute unit
of Combined Product to the same end-user without owing an
additional royalty hereunder to Wink. In addition, MEI shall
have no obligation to pay any royalty for any products which do
not incorporate the Licensed Technology or any portion thereof.
5.3 Payments. MEI shall make royalty payments to Wink within thirty
(30) days after the end of each calendar quarter during the term
hereof, with respect to distributions by MEI, Affiliates or
Subdistributors in such calendar quarter. Such payments shall be
accompanied by a written report which details all of the
following by product and OEM customer, with respect to the
applicable calendar quarter (i) the number of Combined
Components and Combined Products distributed by MEI or its
Subdistributors, (ii) the number of copies of the Licensed
Technology for which a royalty is due hereunder distributed by
MEI and its Subdistributors other than as part of a Combined
Component or Combined Product, (iii) the royalty due Wink With
respect to Combined Products, Combined Components and copies of
the Licensed Technology distributed during such calendar
quarter, (iv) the number of copies of the Licensed Technology
(including without limitation Updates) or Combined Products
distributed by MEI or its Subdistributors for which no royalty
is due under the
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<PAGE> 10
exceptions to Section 5.2 set forth in Sections 5.6 or 5.7; and
(v) the geographic market in which each sale was made.
5.4 Advance Royalties. MEI has paid or shall pay Wink the royalty
advances set forth in Exhibit A hereto, at the times set forth
in Exhibit A hereto. Such royalty advances shall be
non-refundable, except as provided in Section 12.2. All advances
paid by MEI hereunder shall be credited against MEI's royalty
payments under Section 5.2. Unless otherwise agreed by the
parties, to the extent that credits against royalty payments for
the distribution of the Licensed Technology pursuant to Section
5.2 are not consumed by shipments pursuant to Section 5.2, the
remaining advance royalties may be applied against royalties due
upon distribution of units containing New Products or against
distribution of future products (that is, products not based on
the MC2/SH2 Platform) for which future development and licensing
agreements may be reached between Wink and MEI or for which this
Agreement may be amended to permit. The amount of royalties due
on distribution of such New Products or such future products,
and the terms of such distribution rights, are to be determined
by such future development and licensing agreements or by
amendments to this Agreement, if any.
5.5 Late payments. Any amount not paid when due under Section 5.1,
5.3, or 5.4 will be subject to a late charge of 1.5% per month,
or the maximum permitted by law, whichever is lower.
5.6 Distribution of Updates. In the case of Update to be provided by
MEI or its Subdistributor (as permitted by Section 9.1.1 hereof)
to an already shipped MEI Device for which a royalty has already
been paid, the distribution of that Update shall not incur any
new royalty in addition to that royalty which has already been
paid. Notwithstanding the foregoing, if this Agreement is
amended to permit distribution of New Product versions of the
Licensed Technology, a royalty is due if the version number of
the Licensed Technology then inside the previously distributed
MEI Device has a lower digit to the left of the decimal point
than does the Update to be delivered to it, such delivery shall
be royalty-bearing --- that is, if the Update being provided
hereunder is an Update to a New Product in comparison to the
Licensed Technology inside the receiving MEI Device, the Update
shall be royalty-bearing.
5.7 Promotional Units. MEI may distribute a reasonable number of
Combined Products as promotional units, without incurring a
royalty payable to Wink under the provisions of Section 5.2,
provided that such units are to be distributed by MEI at no
charge. MEI shall pay Wink the royalty pursuant to Section 5.2
above whenever MEI or its Subdistributor imposes any charge for
the Combined Product.
5.8 Currency; Taxes. All payments hereunder shall be in United
States dollars. All payments by MEI shall be made free And clear
of, and without reduction for, any and all taxes, including,
without limitation, sales, use, value added, withholding, or
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<PAGE> 11
similar taxes, other than taxes which are imposed by the United
States or any political subdivision thereof based on the net
income of Wink. Any such taxes which are otherwise imposed on
payments to Wink shall be the sole responsibility of MEI;
provided, however, to the extent Wink recoups any such
withholding tax, as a result of actually applying such credit
and reducing its United States income tax liability in that
period as a result of a credit for such withholding tax, MEI
shall be allowed to reduce royalties due Wink for the quarter in
which such amounts were so recouped. MEI shall provide Wink with
official receipts issued by the appropriate taxing authority or
such other evidence as is reasonably requested by Wink to
establish that such taxes have been paid.
5.9 Books and Records; Audit. MEI agrees to maintain, and to require
that each Subdistributor who distributes the Licensed Technology
maintain and provide to MEI, until three (3) years after the
earlier of (i) the termination of this Agreement or (ii) the
last shipment of the Licensed Technology hereunder, complete and
current books, records and accounts regarding all copying and
distribution activities pursuant to this Agreement, the payments
due to Wink thereon. MEI agrees to allow Wink or its designee to
audit and examine such books, records and accounts and the
Master Media delivered to MEI no more than once each calendar
quarter, during MEI's normal business hours, to verify the
accuracy of the reports and payments made to Wink under this
Section 5. In the event such audit determines that MEI has not
paid for all of the royalties due to Wink, MEI agrees to pay, in
addition to any damages to which Wink might be entitled due to
MEI's systematic undercounting or underpayment or MEI's willful
breach of this Agreement, the amount of such shortfall plus
interest at a rate of one and one-half percent (1.5%) per month
or the highest rate allowed by law, whichever is lower. The cost
of such audit shall be borne by Wink, provided that if any such
audit reveals an underpayment to Wink of at least five percent
(5%), MEI shall reimburse to Wink its costs of such audit.
6. PRODUCT QUALITY WARRANTY
6.1 Product Warranty. Wink warrants to MEI that each Initial Product
and any Updates thereto shall function under ordinary use
without defects that cause it not to be in substantial
conformance with the Specifications for a period of one year
after MEI's acceptance of such Initial Product or delivery of
such Update (the "Warranty Period"). Wink does not warrant that
the Licensed Technology will meet all of MEI's requirements,
except as set forth in the Specifications.
6.2 Defects not Covered by Warranty. Wink's warranty shall not
extend to problems that result from: (i) MEI's failure to
implement any Error Corrections or Updates which are provided by
Wink, to the extent the same are made available to MEI free of
charge and without material degradation in function and/or
performance; (ii) changes to the operating system or environment
or MEI Devices or MEI Components which adversely affect the
Licensed Technology; (iii) any alterations of or additions to
the
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<PAGE> 12
learned Technology performed by parties other than Wink or on
Wink's behalf, (iv) use of the Licensed Technology in a manner
inconsistent with the Specifications; (v) accident, negligence,
or misuse of the Licensed Technology by any party other than
Wink personnel; (vi) combination of the Licensed Technology with
other products not supplied by Wink (excluding the MEI hardware
device and those third party software or hardware products which
are identified in the Specifications as compatible with the
Licensed Technology), which problems do not affect the Licensed
Technology standing alone; or (vii) operation of the Licensed
Technology outside of environmental specifications. As used in
Subsection 6.2(iii), "on Wink's behalf" shall mean that Wink has
given its written authorization for MEI or a third party to
perform such alterations or additions.
6.3 Exclusive Remedy. Wink's sole obligation and MEI's exclusive
remedy under the above warranty shall be for Wink to use
commercially reasonable efforts to make Error Corrections to the
Initial Product or Update as applicable to bring it into
conformity with Wink's warranty set forth above, at no cost to
MEI (other than as provided for in Section 9.1); provided, that
Wink shall have no obligation to fix bugs that are not
commercially reasonable to fix, based on impact on the end-user
versus the cost and risk of fixing such bugs. The process of
error correction shall proceed in accordance with Exhibit F.
6.4 Certain Costs to be borne by MEI. If a substantial
non-conformance with the Specifications is discovered in an
Update before the expiration of that Update's Warranty Period,
and if Wink determines that the error was also resident in a
prior Update or the Initial Product in such a manner that it
could potentially cause the same or similar problem, and if the
Warranty Period on such prior Update or the Initial Product has
expired, then the cost of correcting such error and related
testing efforts on the Update shall be borne by MEI as an out of
warranty Error Correction under Section 9.1.2.
6.5 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY AND
THE EXPRESS WARRANTY OF SECTION 12 INCLUDING THE LIMITATIONS
THEREIN, WINK MAKES AND MEI RECEIVES NO WARRANTIES WITH RESPECT
TO THE LICENSED TECHNOLOGY, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, AND WINK SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY
OF MERCHANTABILLITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR
PURPOSE.
6.6 Limited Application of Sections 6.1-6.5 on Re-compiled Licensed
Technology. The warrants and obligations of Wink in Sections
6.1-6.5 shall not apply to Re-Compiled Licensed Technology
unless Wink has, at Wink's sole discretion and MEI's cost,
thoroughly reviewed and tested the Re-Compiled Licensed
Technology and provided to MEI, in a signed writing, a
confirmation of compatibility with MEI Devices designed for
including Re-Compiled Licensed Technology. Such thorough review
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<PAGE> 13
and testing, if conducted, shall be done at MEI's cost, to be
charged at Wink's then current rates. In such circumstances,
Wink shall conduct its standard level of testing as part of the
quality assurance for delivering a warranted product, and MEI
will be responsible for its standard level of testing as part of
the quality assurance for delivering a product to market.
7. PROPERTY RIGHTS
7.1 MEI agrees that prior to, on and after the Effective Date, as
between MEI and Wink, Wink owns and shall own all right, title
and interest in (a) the Licensed Technology and all
modifications and derivatives thereof and (b) all Intellectual
Property Rights relating to the design, manufacture, marketing,
operation or service of the Licensed Technology and the Wink ITV
System. Except as expressly provided in Section 4, Wink does not
grant to MEI any right, title or interest in the Licensed
Technology whether by implication, estoppel or otherwise. All
property rights with respect to the Licensed Technology and the
Protocol not specifically granted herein are reserved to Wink.
7.2 Wink agrees that prior to, on and after the Effective Date, as
between MEI and Wink, MEI owns and shall own all right, title
and interest in all MEI-provided software or other technology
that resides outside the Licensed Technology (e.g. teletext
decoding software, fonts, hardware drivers, etc.). MEI shall
inform Wink in the event any such software is owned by a third
party. Except as reasonably required by Wink to fulfill its
obligations under this Agreement, MEI does not grant to Wink any
right, title or interest in software, whether by implication,
estoppel or otherwise.
7.3 Rights. The parties acknowledge that each party may be or have
been provided with access to source code developed by the other
party for the purpose of speeding the development or support
activities related to this Agreement. In addition, each party
acknowledges that the other party may have assisted in the
development or de-bugging of the first party's code.
Irrespective of such access, development, and de-bugging, all
Intellectual Property Rights shall be as set forth in this
Agreement. When the party receiving such source code has
completed the task for which it obtained such source code, such
receiving party shall then within 24 hours return to the
providing party or securely destroy such source code and all
copies or printouts thereof; the parties hereby certify that as
of the Execution Date, all such source code as well as copies
and printouts of such source code have been securely destroyed,
excluding certain source code of the platform-specific portion
of the Licensed Technology, as mutually confirmed between Wink
and MEI.
8. MARKETING; TRADEMARKS AND TRADE NAMES
8.1 No Registration of Wink Marks. Except as expressly set forth in
this Agreement, nothing shall grant to MEI or its
Subdistributors, any right, title or interest in the
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<PAGE> 14
Wink Marks. At no time during the term of this Agreement shall
MEI register, attempt to register or cause the registration of
any of the Wink Marks other than in Wink's name and at Wink's
specific written request, except in the event MEI adopts, uses
or acquires a trade, mark or trade name substantially similar to
a Wink Mark prior to Wink's adoption, use or acquisition of such
Wink Mark. Except to the extent such acts may not be prohibited
by applicable law, at no time during or after the term of this
Agreement shall MEI or its Subdistributors challenge or assist
others to challenge the Wink Marks or the registration thereof
8.2 Press Releases. The parties agree that where it imposes little
burden to either party, the parties shall cooperate and
participate in public relations programs to promote the Licensed
Technologies and the relationship between the parties. Such
cooperation and participation will include each party
instructing its marketing communications personnel to provide
contact names (along with title, fax, phone, and email address)
to the other party to facilitate communication. In addition, the
parties agree that each party will send the other all press
releases regarding television related news promptly after such
releases are made to the press. If either party wishes to make a
press release that includes a quote from the other party, such
other party shall cooperate where reasonable.
8.3 Disclosures of Terms and Relationship. Each party agrees to
disclose the terms of this Agreement to any third party without
the other's written consent in its sole discretion, except to
such party's accountants, attorneys and other professional
advisors, or as required by securities or other applicable laws.
8.4 Units for Marketing and Employee Use. Upon written request from
Wink, MEI agrees to sell to Wink, at MEI's wholesale price, a
reasonable number of each Combined Product and a maximum of ten
(10) Combined Components for use by Wink in its marketing
programs or for re-sale or gift to Wink employees or consultants
("Marketing/Employee Units"). Marketing/Employee Units shall be
shipped at Wink's cost.
9. TRAINING, SUPPORT AND MAINTENANCE
9.1 Out of Warranty Maintenance. In addition to the support
obligations set forth in Section 6.1, Wink will provide Out of
Warranty Maintenance ("Support", as follows:
9.1.1 Updates. Wink, in its sole discretion, shall release
Updates from time to time. Wink agrees to make available
to MEI, at no charge to MEI, all such Updates and permit
MEI to distribute Updates to its Subdistributors and
Submanufacturers for their use consistent with this
Agreement. MEI shall promptly notify its
Submanufacturers and Subdistributors of the availability
of each Update and, MEI shall require (in the case of
any Submanufacturer) or request (in the case of any
Subdistributor) them to promptly begin using
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<PAGE> 15
each such Update in place of the previous version of the
Licensed Technology. Wink shall not be responsible for
distributing such Updates to MEI's Subdistributors,
Submanufacturers, or customers. MEI shall
implement, at its sole discretion, each Update to new
production of MEI Devices promptly after receipt of such
Update from Wink.
9.1.2 Other Support by Wink. Wink shall make available at
prices to be determined by Wink support service packages
that shall provide for out of warranty error corrections
in addition to the Updates provided by Wink from time to
time ("Support Packages") at Wink's then current rates.
Wink agrees to make available Support Packages for the
then current and immediately prior Update (or in the
case of the first Update to an Initial Product, the
Initial Product) of the Licensed Technology, and any
other Update that Wink, in its sole discretion, decides
to support. The process of error correction shall
proceed in accordance with Exhibit F. Notwithstanding
the foregoing, the parties recognize that MEI has a
policy of providing repair of design errors on
consumer-owned MEI Devices for a period of nine (9)
years after MEI terminates production of a such model of
MEI Devices ("MEI Design Repair Period"), and that MEI
has the right to change such MEI Design Repair Period.
The parties therefore agree that Wink may cease offering
or providing service for out of warranty error
corrections on the Licensed Technology found within an
MEI Device upon the lesser of (a) the expiration of the
MEI Design Period, or (b) the expiration of nine (9)
years after MEI terminates production of such model of
MEI Device.
9.1.3 Wink to Pay for Error Correction under "Recall"
exception to 9.1.2. Notwithstanding the provisions of
Section 9.1.2, if the Licensed Technology does not
function under ordinary use without defects, such that
the Licensed Technology is not in substantial
conformance with the Specifications, and if the problem
created by non-conformance with the Specifications
causes MEI to recall and receive back to MEI or to fix
on-site 10% or more of is shipped units of Combined
Products from consumers or retailers during the five
years following the acceptance by MEI of the Initial
Product or the delivery of an Update (such an error
causing a recall to be referred to as a "Recall-Causing
Error", and the period of five years following the
acceptance by MEI of the Initial Product or the delivery
of an Update to be referred to as the "Recall related
Free Fix Period"), then Wink shall use commercially
reasonable efforts to make Error Corrections to the
Licensed Technology to bring it into conformity with the
Specification at no charge to MEI, subject to the same
exclusions as set forth in Section 6.2. This Section
9.1.3 shall not apply to Re-Compiled Licensed
Technology, unless Wink has, at its sole discretion,
thoroughly reviewed and tested the Re-Compiled Licensed
Technology and provided to MEI, in a signed writing, a
confirmation of
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compatibility with MEI Devices designed for including
Re-Compiled Licensed Technology, in accordance with the
terms of Section 6.6.
9.1.4 Limitation on Wink's Payment for Error Correction under
"Recall" exception to 9.1.2. Notwithstanding the
provisions of Section 9.1.3, if a Recall-Causing Error
occurs in an Update during the Recall-related Free Fix
Period of that Update, and if Wink determines that such
Recall Causing Error was also resident in a prior Update
or the Initial Product in such a manner that it could
potentially cause the same or similar problem, and if
the Recall-related Free Fix Period of such prior Update
or the Initial Product has expired, then the cost of
correcting such error and related testing efforts on the
Update shall be borne by MEI pursuant to Section 9.1.2.
9.2 Provision of Hardware, Software and Equipment. The parties
intend that Wink have an environment in which to recreate field
situations, to allow Wink to replicate problems which may occur
in the field and to test solutions for such problems. In order
to facilitate Wink's performance of the support activities
contemplated herein, MEI shall, at its own expense, provide Wink
with all of be hardware, software and equipment (the
"Equipment") which is reasonably necessary to functionally
replicate a system of the type in which the Licensed Technology
will actually be used. The Equipment may comprise some or all of
the same Equipment contemplated in Section 3.2. Upon expiration
or termination of this Agreement, Wink shall return all of the
Equipment to MEI. MEI shall retain ownership of all such
Equipment, a preliminary list of which is included in Exhibit A.
In the event that MEI is late in the performance of its
obligations with respect to this Section 9.2 and such delay
affects Wink's obligations under this section, Wink's
performance of such affected obligations shall be delayed by the
same time period. Wink shall return all such software, hardware
and equipment to MEI promptly upon request by MEI; provided that
Wink's development and support obligations under this Section
9.2 and Section 3.2 above shall terminate to the extent
software, hardware or equipment returned to MEI is required by
Wink to fulfill its obligations.
9.3 Travel Requirements. In the event that, in the performance of
its obligations under this Section 9, Section 6.3 or under
Section 3, it is mutually agreed by the parties that Wink
engineering employees or contractors will travel from Wink's
facility, MEI shall pay and/or promptly reimburse Wink for, all
reasonable travel, room and board, car rental and other similar
expenses associated with such travel, which expenses are
approved in writing by MEI prior to their being incurred;
provided that Wink shall not be paid and/or reimbursed for
employee or contractor time expended with respect to such
travel. Any such travel expenses approved in writing by MEI
shall be deemed reasonable by virtue of such approval.
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9.4 MEI Support to its Customers. MEI shall provide support to
end-users as well as to Subdistributors. Wink shall have no
responsibility for direct communication with end-users or
Subdistributors.
10. TERM AND TERMINATION
10.1 Term. This Agreement shall commence on the Effective Date and
shall continue in full force and effect until the later of: (i)
five (5) years from the first commercial shipment of Combined
Component or Combined Product by MEI, or (ii) the end of the
calendar year in which MEI ships the last unit of four hundred
and twenty five thousand units of Combined Component or Combined
Product by MEI The term of this Agreement may be extended by
mutual agreement of the parties.
10.2 Termination for Cause. If either party materially breaches its
obligations under Section 11 of this Agreement (regarding
Confidentiality), the non-breaching party may immediately
terminate this Agreement. If either party breaches its material
obligations under this Agreement and fails to cure such breach
within thirty (30) days from written notice to cure, the
non-breaching party may terminate this Agreement. The parties
agree that a breach of any license grant under this Agreement,
except Section 4.2, will be a material breach.
10.3 Termination for Insolvency. This Agreement shall terminate upon
written notice given by a party, at such party's option and
without further notice, upon the earlier of: (i) the institution
by or against the other party of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the
settlement of the other party's debts, (ii) the other party's
making an assignment for the benefit of its creditors, (iii) the
other party's declaration in writing of its inability to pay
debts as they become due, or (iv) the other party's dissolution
or ceasing to conduct business as a going concern.
10.4 Effect of Termination. Upon the expiration or termination of
this Agreement, the following provisions shall take effect:
10.4.1 Subject to the provisions of Section 10.5, the rights
and licenses granted to MEI under this Agreement shall
automatically terminate;
10.4.2 Any and all sublicenses for end use for the Licensed
Technology granted by MEI or its Subdistributors shall
continue in effect according to their terms and
conditions;
10.4.3 Within ten (10) days after such expiration or
termination, MEI shall return, and shall certify to Wink
the return of all Master Media and all Wink Confidential
Information in its or its Submanufacturer's possession
at the time of expiration or termination. In addition,
Wink shall return, and shall
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certify to MEI the return of, all MEI Confidential
Information in its possession at the time of expiration
or termination. MEI shall not make or retain any Master
Media, copies of the Licensed Technology, or any other
materials containing confidential information of Wink
entrusted to MEI. Notwithstanding the foregoing, MEI may
(i) maintain a single copy of the Master Media and (ii)
retain any Confidential Information necessary for
support, subject to the provisions of Section 11, both
solely to provide support to its Subdistributors and to
end-users in existence as of the effective date of
expiration or termination; and
10.4.4 MEI shall pay all outstanding amounts owed to Wink
within thirty (30) days of quarter end. In the event
Wink is performing development tasks for MEI at the time
of any termination, MEI shall also pay to Wink the next
payment due under the Development Schedule.
10.4.5 The provisions of Sections 2, 3.1.2, 3.7, 5.8, 5.9, 6,
7, 9, 10, 11, 12, 13, and 14 and Exhibit F and all
payment obligations accrued at the time of expiration or
termination shall survive the expiration or termination
of this Agreement for any reason.
10.5 Sell-off Period. In the event of the expiration of this
Agreement or a termination by MEI, MEI may, subject to the
provisions of Section 5 (including without limitation MEI's
obligation to pay royalties in connection with all
distributions) dispose of its inventory of Combined Components
and Combined Products on hand, for a period not to exceed one
hundred and twenty (120) days after the effective date of such
expiration or termination (the "Sell-Off Period").
10.6 Destruction of Inventory. Within ten (10) days after (i) the end
of the Sell-Off Period, in the event of the expiration or
termination of this Agreement by MEI or (ii) the effective date
of termination, in the event of a termination by Wink, MEI shall
destroy, and shall certify to Wink the destruction of, all
copies of the Licensed Technology in its or its Subdistributors
or Submanufacturers' possession.
11. CONFIDENTIALITY
11.1 Obligation of Confidentiality. The parties acknowledge that by
reason of their relationship to each other hereunder, each may
have access to certain information and materials concerning the
other's business, plans, customers, technology and products that
is confidential and of substantial value to that other party,
which value would be impaired if such information were disclosed
to third parties ("Confidential Information"). Without limiting
the foregoing, Confidential Information shall include the source
code of the Wink Engine and Licensed Technology. With respect to
Confidential Information of the other party, each party agrees
that it shall not, except as set forth in this Agreement: (i)
use such Confidential Information in any way, for
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its own account or the account of any third party, (ii) disclose
it to any third party or (iii) disclose such Confidential
Information to its employees other than employees who have a
need to know for the purposes set forth in this Agreement. MEI
agrees to keep access to Wink Confidential Information
restricted to the AVC Products Development Laboratory and the
Television Division of MEI, and to disclose to only employees in
those two divisions who have a need to know the Wink
Confidential Information in order to perform the obligations
imposed and exercise the rights granted under this Agreement.
Confidential Information shall at all times be disclosed in
written or tangible form conspicuously marked "Confidential", or
be summarized in written communication to the receiving party
within thirty (30) days in case of disclosures in intangible
form that occur subsequent to the Execution Date, provided that
the Licensed Technology (except for documentation identified by
Wink as public) shall at all times be deemed Confidential
Information of Wink. Disclosure of Confidential Information in
intangible form prior to the Execution Date shall be considered
confidential even in be absence of any written communication
summarizing the information or any other statement of
confidentiality, so long as the recipient should have reasonably
expected that the information should be considered confidential;
any technical information provided by one party to the other
party prior to the Execution Date in such manner shall be
considered Confidential Information of the disclosing party.
Neither party shall develop or have developed any software
programs utilizing any of the other party's Confidential
Information.
11.2 Exceptions. Information shall not be deemed Confidential
Information hereunder if such information:
11.2.1 Is or becomes part of the public domain through no fault
or breach on the part of the receiving party;
11.2.2 Is known to the receiving party prior to the disclosure
by the disclosing party and such knowledge can be shown
by written records;
11.2.3 Is subsequently rightfully obtained by the receiving
party from a third party who has the legal right to
disclose it;
11.2.4 Is independently developed by the receiving party
without the use of any Confidential Information or any
breach of this Agreement;
11.2.5 Is approved for public release by the disclosing party;
or
11.2.6 Is required to be disclosed by judicial action provided
that the receiving party has first given the disclosing
party reasonable notice of such requirement and fully
cooperates with the disclosing party in seeking
confidential treatment for any such disclosure.
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11.3 Injunctive Relief. The parties acknowledge that any breach of
the provisions of this Section 11 may cause irreparable harm and
significant injury to an extent that may be extremely difficult
to ascertain. Accordingly, each party agrees that each will
have, in addition to any other rights or remedies available to
it at law or in equity, the right to seek injunctive relief to
enjoin any breach or violation of this Section 11.
12. INTELLECTUAL PROPERTY, WARRANTY AND INDEMNITY
12.1 Warranty. Each party represents and warrants that neither the
execution or performance by such party of this Agreement, nor
the consummation of any transactions herein does or will violate
any law, order, regulation or ruling applicable to such party or
its effort hereunder. In addition, Wink represents and warrants
that (a) as of the Execution Date, no action or proceeding
alleging intellectual property infringement by the Wink Engine
is threatened or is proceeding against Wink (nor, insofar as
Wink is aware, against any entity from which Wink has obtained
any rights related to the Wink Engine), (b) it has the right to
license the Intellectual Property Rights in and to the Wink
Engine to MEI and (c) except to the extent that an infringement
or violation is caused by MEI provided information or the
Licensed Technology's interaction with MEI hardware or software,
the Licensed Technology does not infringe upon or violate the
copyright, trade secret or trademark rights of any third party
or any Japanese patent rights, where such Japanese patents were
published ("Laid Open Patent Applications") or granted prior to
1 September 1997 and provided that such Japanese patents owned
by, controlled by, or licensed to only parties other than MEI or
its Affiliates. MEI's exclusive remedy, and Wink's sole
liability, for a breach by Wink of the warranties of subsections
(a), (b) and (c) above shall be Wink's indemnity set forth in
this Section 12.
12.2 Indemnity. Wink agrees to defend, or at its option to settle,
any claim, suit, action or proceeding brought against MEI by a
third party as a result of Wink's breach of its warranties under
12.1(a),(b) and (c) above (an "Action"), and to pay any
settlement or final judgment entered thereon against MEI,
subject to the limitations set forth hereafter. Wink shall be
relieved of its obligations hereunder unless MEI gives Wink (i)
prompt written notice upon becoming aware of the existence of an
Action, (ii) sole control over the defense or settlement of the
Action and (iii) reasonable assistance in the defense or
settlement thereof. If it is, or in the opinion of Wink may be,
determined by competent authority that the Licensed Technology
or any part thereof, or the sale, distribution or use thereof as
permitted hereunder infringes any patent, copyright, trade
secret or trademark of a third party or is enjoined, then Wink
at its sole option and expense may (a) procure for MEI the right
under such patent, copyright, trade secret or trademark to use,
reproduce and distribute the Licensed Technology or such part
thereof or such trademark; (b) replace the Licensed Technology
or such part thereof or such trademark with other suitable
software or trademark without material degradation in
performance or functionality; (c) suitably modify the Licensed
Technology or such part thereof or such trademark to avoid
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<PAGE> 21
infringement without material degradation in performance or
functionality; or (d) if none of the foregoing are commercially
reasonably feasible, terminate this Agreement or grant MEI a
right to terminate this Agreement. If termination shall occur as
permitted in Section 12.2(d), then MEI shall recoup any advance
royalties that have been paid pursuant to Section 5.4 but which
have not yet been consumed by shipment pursuant to Section 5.2
or by shipments of units containing New Products or by
distribution of future products, in accordance with the third
and fourth sentences of Section 5.4. Wink's obligation to pays
such amount to be recouped shall be due within thirty (30) days
after the end of the then current calendar quarter or by March
31 following the, termination permitted in Section 12.2(d). MEI
and its Affiliates shall not hold Wink liable for infringement
by the Licensed Technology of any patents that are owned or
controlled by MEI or its Affiliates.
12.3 Limitations. The foregoing indemnity shall not apply to an
Action to the extent it arises out of (i) any modification of
the Licensed Technology by a party other than Wink or on Wink's
behalf, (ii) any combination of the Licensed Technology with
hardware and/or software not supplied by Wink (except the
hardware of the MEI Device), which infringement does not cover
the Licensed Technology standing alone, (iii) failure to
implement an Update where use of such Update would have avoided
infringement of third party intellectual property rights, or
(iv) any trademarks, trade names or other brandings not supplied
by Wink. As used in Subsection 12.3(i), "on Wink's behalf" shall
mean that Wink has given its written authorization for MEI or a
third party to perform such modifications.
12.4 Disclaimer. THE FOREGOING PROVISIONS OF THIS SECTION 12 STATE
THE ENTIRE LIABILITY AND OBLIGATION (EXPRESS, IMPLIED,
STATUTORY, IN ANY COMMUNICATION WITH WINK OR OTHERWISE) OF WINK
AND THE EXCLUSIVE REMEDY OF MEI AND ITS SUBDISTRIBUTORS WITH
RESPECT TO ANY ALLEGED INFRINGEMENT OF A= PATENT, COPYRIGHT,
TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT BY
THE LICENSED TECHNOLOGY OR ANY PART THEREOF.
13. INDEMNITY BY MEI
13.1 Except with respect to any claim, suit, action or proceeding
arising out of any intellectual property infringement for which
Wink is required to indemnify MEI under Section 12.2, MEI agrees
to defend, or at its option to settle, any claim, suit, action
or proceeding brought against Wink by a third party arising out
of (i) the manufacture, use or sale of the Combined Components
or Combined Products or (ii) MEI's or its Subdistributors
modification, use or distribution of the Licensed Technology,
and to pay any settlement or final judgment entered thereon
against Wink, subject to the limitations set forth hereafter.
MEI shall be relieved of its obligations hereunder unless Wink
gives MEI (i) prompt written notice upon becoming aware of the
existence of any such claim, suit, action or proceeding, (ii)
sole control over the
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defense or settlement of such claim, suit, action or proceeding
and (iii) reasonable assistance in the defense or settlement
thereof.
13.2 Disclaimer. THE FOREGOING PROVISIONS OF THIS SECTION 13 STATE
THE ENTIRE LIABILITY AND OBLIGATION (EXPRESS IMPLIED, STATUTORY,
IN ANY COMMUNICATION WITH MEI OR OTHERWISE) OF MEI AND THE
EXCLUSIVE REMEDY OF WINK WITH RESPECT TO ANY CLAIMS BROUGHT
AGAINST WINK ARISING FROM MEI'S USE OF THE LICENSED TECHNOLOGY
OR EXERCISE OF THE RIGHTS AND LICENSES GRANTED TO MEI HEREUNDER.
14. GENERAL
14.1 Governing Law and Disputed Resolution. This Agreement shall be
governed by and construed under the laws of the State of
California, without reference to conflict of laws principles.
Except for any dispute or claim related to the ownership of or
either parties' rights to use intellectual property hereunder,
any dispute or claim arising out of or in relation to this
Agreement, or the interpretation, making, performance, breach or
termination thereof, shall be finally settled by binding
arbitration under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce as presently in force
("Rules") and by three (3) arbitrators appointed in accordance
with said Rules. Judgment on the award rendered may be entered
in any court having jurisdiction thereof. The place of
arbitration shall be San Francisco, California, U.S.A. Any
monetary award shall be in U.S. dollars and the arbitration
shall be conducted in the English language. The parties may
apply to any court of competent jurisdiction for temporary or
permanent injunctive relief, without breach of this Section 14.4
and without any abridgment of the powers of the arbitrator. For
any dispute or claim related to the ownership of or either
parties' rights to use intellectual property hereunder, such
dispute or claim shall be resolved through litigation in any
state or federal court serving San Francisco, California. The
parties hereto hereby submit to the jurisdiction and venue of
such courts for the resolution of such dispute or claim.
14.2 Import & Export Controls. MEI understands that Wink is subject
to regulation by agencies of the U.S. government which prohibit
export or diversion of certain products and technology to
certain countries. Any and all obligations of Wink including
without limitation obligations to provide products, technology,
documentation, or technical assistance, will be subject in all
respects to such United States laws and regulations that will
from time to time govern the license and delivery of technology
and products abroad or to foreign nationals by persons subject
to the jurisdiction of the United States. MEI warrants that it
will comply in all respects with the export and reexport
restrictions set forth in any export licenses obtained by the
Wink or MEI (if necessary). MEI warrants that it will not, and
will take all actions which may be reasonably necessary to
assure that its end-user do not, contravene such
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<PAGE> 23
United States laws or regulations. Such laws include without
limitation: Export Administration Regulations, 15 C.F.R. 768 et.
seq.; International Traffic in Arms Regulations, 22 C.F.R. 120
et. seq.; Nuclear Regulatory Commission Export Regulations, 10
C.F.R. 110 et. seq; Department of Energy Export Regulations, 10
C.F.R. 810 et. seq.; Treasury Department Antiboycott
Regulations, IRS Code 999; and Office of Foreign Asset Control
Regulations, 31 C.F.R. 500 et. seq.
14.3 No Assignment. This Agreement and any rights or obligations of
MEI or Wink hereunder shall not be assigned by either party
without the prior written consent of the other party, which
consent shall not be unreasonably withheld, except that either
party may assign its rights and obligations hereunder to any
entity (i) which controls, is controlled by or is under common
control with such party or (ii) which acquires all or
substantially all of the assets or business of such party to
which this Agreement pertains, provided in both cases that such
entity shall assume in writing or by operation of law such
party's obligations under this Agreement. Subject to the
foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns.
14.4 Independent Contractors. The relationship of the parties
established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be
construed to (i) give either party the power to direct and
control the day-to-day activities of the other, (ii) constitute
the parties as partners, joint venturers, co-owners or otherwise
as participants in a joint or common undertaking, or (iii) allow
either party to create or assume any obligation on behalf of the
other party for any purpose whatsoever.
14.5 Compliance with Laws. In exercising its rights under this
license, each party shall fully comply with the requirements of
any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of
rights under this license.
14.6 Notices. All notices under this Agreement shall be in writing
and sent by (i) certified air mail, return receipt requested,
postage prepaid or (ii) commercial courier service. If properly
addressed to or delivered at the address for each party set
forth in Exhibit E, a notice shall be deemed given upon delivery
or, where delivery cannot be effected due to the actions of the
addressee, upon tender.
14.7 Entire Agreement. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements,
understandings, proposals and representations by the parties,
including without limitation the letter of intent dated April
26, 1996.
14.8 Limitation of Liability. IN NO EVENT SHALL WINK BE LIABLE TO MEI
IN THE AGGREGATE FOR ANY AMOUNT IN EXCESS OF THE ROYALTIES
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<PAGE> 24
PAID (AND THE AMOUNTS WHICH HAVE ACCRUED HEREUNDER BUT HAVE NOT
BEEN PAID) BY MEI HEREUNDER AND (ii) IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER FOR LOST PROFITS, LOSS OF DATA OR
FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES
ARISING IN ANY WAY OUT OF THIS AGREEMENT, HOWEVER CAUSED AND ON
ANY THEORY OF LIABILITY. As used in this section 14.8, "lost
profits" shall not include, in the case of an infringement of
intellectual property rights or the disclosure of source code,
actual damages (including without limitation entitlement to a
reasonable royalty, as measured by the royalty rate provided for
in this Agreement) suffered as a result of such infringement or
disclosure, but shall include any profits made by an infringer
or discloser. THIS LIMITATION SHALL APPLY EVEN IF SUCH PARTY
KNOWS OR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY PROVIDED FOR HEREIN. If MEI recoups advance royalties as
permitted by Section 12.2, such recouped amount shall be
considered a liability of Wink for the purposes of this Section
14.8.
14.9 Severability. The provisions of this Agreement shall be
severable, and if any provision of this Agreement shall be held
or declared to be illegal, invalid, or unenforceable, such
illegal, invalid or unenforceable provision shall be severed
from this Agreement and the remainder of the Agreement shall
remain in full force and effect, and the parties shall negotiate
a substitute, legal, valid and enforceable provision that most
nearly reflects the parties' intent in entering into this
Agreement.
14.10 Basis of Bargain. Wink and MEI acknowledge and agree that Wink's
entering into this Agreement and the amount of MEI's royalty
hereunder have been done or set in reliance upon the limitations
of liabilities and disclaimers of warranty set forth in this
Agreement, and that the same form an essential basis of the
parties' bargain.
14.11 Waiver of Breach. Any waiver of any kind by either party of a
breach of this Agreement must be in writing, shall be effective
only to the extent set forth in such writing, and shall not
operate or be construed as a waiver of any subsequent breach.
Either party's delay or omission, if any, in exercising any
right, power, or remedy pursuant to a breach or default by the
other, shall not impair any other right, power, or remedy which
the non-defaulting party may have.
14.12 Force Majeure. In the event that a party is prevented from
performing its obligations hereunder due to any force majeure,
including but not limited to, disasters, fire, civil commotion,
strikes, governmental regulations or other occurrences beyond
its reasonable control and without its fault or negligence, the
provisions of this Agreement relative thereto shall be
suspended, but only as long as and so far as the impediment is
existing. In the case of any such suspension, such party shall
endeavor and use all reasonable efforts to overcome the cause
and effect of such suspension.
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<PAGE> 25
14.13 Counterparts. This Agreement may be executed in any number of
counterparts and when so executed and delivered shall have the
same force and effect as though all signatures appeared on one
document.
14.14 Authorized representatives. The undersigned hereby warrant and
represent that they are authorized to sign on behalf of and
commit the parties.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
For Wink Communications, Inc.: For Matsushita Electric Industrial Co.,
Ltd.:
By: /s/ Gary L. Hammer By: /s/ Y. Nagaoka
------------------ --------------
Name: Gary L. Hammer Name: Y. Nagaoka
-------------- ----------
Title: VP, Japan Operations Title: Director
-------------------- --------
AVC Products Development Laboratory
By: /s/ M. Veda
-----------
Name: M. Veda
-------
Title: Director
--------
Television Division
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EXHIBIT A-1
DEVELOPMENT OF WINK ENGINE
for MC2/SH2 Platform
1. Device & Specifications
Wink and MEI agree that Wink shall port the Wink Engine Version 1.0 to
the MC2/SH2 Platform.
The Specifications shall be developed by the parties and accepted by
MEI. Upon MEI's acceptance thereof, the Specifications shall be set forth in
Exhibit B hereto. Any modifications to the accepted Specifications shall be made
only upon the mutual written agreement of the parties.
2. Development Milestones
All development milestones by both Wink and MEI have been completed as
of the Execution Date.
3. Per Copy Royalty
[ * ]*
4. Royalty Advances:
MEI has remitted or will remit the following non-refundable royalty
advances to Wink:
* [ * ] due within 30 days of delivery of the Alpha version of the
Licensed Technology Version 1.0 object code (in non-caching
form). (Paid.)
* [ * ] due within 30 days of delivery of a proposed final version
of the Licensed Technology Version 1.0 object code for MEI's
acceptance testing. (Paid.)
* [ * ] due within 30 days of MEI's first distribution of the
customized Licensed Technology Version 1.0 object code for
inclusion in either (a) a TV or related consumer device or (b) a
component containing the MC2/SH2 platform to be included by a
manufacturer in that manufacturer's TV or related consumer
products. (Not yet paid, as of the Execution Date.)
- - --------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for Confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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<PAGE> 27
5. NREs. In addition to the amount set forth above, MEI has paid A
non-refundable NRE fee as follows: [ * ] upon signing of the Letter of Intent.
6. Rental Fees for Certain MEI Equipment. The parties agree that Wink shall pay
for the use of the following rental fees during the summer of 1997, for tools
provided by MEI:
- - - May 1997: [ * ]
- - - June 1997: [ * ]
- - ----------------------
Total: [ * ]
For Wink Communications, Inc.: For Matsushita Electric Industrial
Co., Ltd.:
By: /s/ Gary L. Hammer By: /s/ Y. Nagaoka
------------------ --------------
Name: Gary L. Hammer Name: Y. Nagaoka
-------------- ----------
Title: VP, Japan Operations Title: Director
-------------------- --------
AVC Products Development Laboratory
By: /s/ M. Veda
-----------
Name: M. Veda
-------
Title: Director
--------
Television Division
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EXHIBIT B
SPECIFICATIONS
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<PAGE> 29
EXHIBIT C
SOFTWARE PROGRAM
A platform- and user interface-independent software engine that
implements Wink's Interactive Communicating Applications Protocol ("ICAP") for
the interpretation of interactive graphical applications.
Under the terms of this Agreement, the Wink Engine which will be adapted
for use with certain MEI Devices described in this Agreement will be Version 1.0
as adapted. All references to the Wink Engine in this Agreement shall refer to
the adapted version of the above engine.
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<PAGE> 30
EXHIBIT D
PROPRIETARY NOTICES
NOTE: The following notices shall appear in the software provided by Wink to
MEI. MEI shall abide by the terms of Section 4.5 concerning these notices.
These Notices are only for use and distribution in Japan. If this Agreement is
later changed to permit use and distribution outside Japan, then Wink shall
revise this Exhibit and it shall become part of this Agreement, and MEI shall
promptly use such new Notices in all subsequent manufacturing lots of MEI
Devices. Furthermore, if the status of Wink proprietary rights (such as granting
of patent or other intellectual property registrations) or if the Notices should
change for other reasons (such as the modification of the copyright year or the
change of Wink's address), Wink shall revise this Exhibit and it shall become
part of this Agreement, and MEI shall promptly use such new Notices in all
subsequent manufacturing lots of MEI Devices.
Failure by Wink to revise this Exhibit shall not constitute a waiver of MEI's
obligations under Section 4.5.
Because MEI is not obligated under this Agreement to put Wink proprietary
notices on the outside of MEI Devices or Combined Components.
For source code (generally not provided to MEI, except for some files provided
in preprocessed form with the following notices re-inserted):
(c) 1996 Wink Communications, Inc. All rights reserved. Unpublished --
rights reserved under United States and International copyright laws. USE OF A
COPYRIGHT NOTICE IS PRECAUTIONARY ONLY AND DOES NOT IMPLY PUBLICATION OR
DISCLOSURE.
U.S. GOVERNMENT RIGHTS
Use, duplication, reproduction, release, modification, disclosure or
transfer of this commercial product and accompanying documentation (if any),
is restricted in accordance with FAR 12.212 and DFARS 227.7202, and by a
license agreement. Contractor/manufacturer is: Wink Communications, Inc.,
1001 Marina Village Parkway, Alameda, CA 94501 USA
THIS SOFTWARE CONTAINS CONFIDENTIAL INFORMATION AND TRADE SECRETS OF WINK
COMMUNICATIONS, INC. USE, DISCLOSURE, OR REPRODUCTION IS
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<PAGE> 31
PROHIBITED WITHOUT THE PRIOR EXPRESS WRITTEN PERMISSION OF WINK COMMUNICATIONS,
INC.
For object code, the following notices shall be re-inserted by Wink after
compiling:
(c) 1996 Wink Communications, Inc. All rights reserved.
U.S. GOVERNMENT RIGHTS
Use, duplication, reproduction, release, modification, disclosure or
transfer of this commercial product and accompanying documentation (if
any), is restricted in accordance with FAR 12.212 and DFARS 227.7202,
and by a license agreement. Contractor/manufacturer is: Wink
Communications, Inc., 1001 Marina Village Parkway, Alameda, CA 94501 USA
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<PAGE> 32
EXHIBIT E
NOTICE
Parties for Notice under this Agreement shall be:
For MEI:
General Manager
Corporate and Product Planning Department
Television Division
AVC Company
Matsushita Electric Industrial Co., Ltd.
1-1, Matsushita-Cho, Ibaraki, Osaka, 567 Japan.
Current contact name: Mr. Shuji Horikawa
Tel.: (+81) 726 24 7703
Fax:(+81) 726 24 8100
Email:
---------------------------------
For Wink:
General Counsel
Legal Department
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94301
USA.
Current contact name: Chanel Aquino (Manager, Admin. Services)
Tel.: (+1) 510 337 6301
Fax: (+1) 510 337 2960
Email: [email protected]
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<PAGE> 33
EXHIBIT F
PROCESS OF ERROR CORRECTION
If a substantial non-conformance with Specifications is identified MEI or Wink
or strongly suspected by Wink, MEI shall provide to Wink the necessary
equipment, software, and materials for Wink to investigate the situation. If
Wink is unable to fix the error in this manner in a period to be agreed upon by
the parties, then Wink shall send at least one engineer to MEI's office to
investigate the situation. The costs of equipment shipment (and equipment
set-up) and travel, if any, shall be paid by whichever party is responsible for
paying the cost of error correction pursuant to Sections 6 and 9. Regardless of
which party is responsible for paying the cost of error correction, MEI shall
not charge any rental or usage fee associated with the equipment, software and
materials, excluding any reasonable rental or usage fees associated with
In-Circuit Emulators.
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<PAGE> 1
EXHIBIT 10.21
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is made
as of Jan 5, 1998 (the "Effective Date"), between Wink Communications, Inc., a
California corporation with offices at 1001 Marina Village Parkway, Alameda, CA
94501 ("Wink") and Pioneer Electronic Corporation Ltd., a Japanese corporation
having a principal place of business at 15-5, Ohmori-nishi, 4-chome, Ohta-ku,
Tokyo, 143 4-1 ,Meguro-Ku, Tokyo, T153, Japan ("Pioneer").
BACKGROUND
A. Wink is a software developer that has been developing a
software protocol for delivering interactive applications synchronized with or
independent of television programs and advertisements. Wink is in the business
of customizing and licensing its software engine (the "Wink Engine") that
decodes the protocol and displays the interactive applications overlaid on a
television screen.
B. Pioneer is a manufacturer of television set top boxes and
video products.
C. Wink and Pioneer desire that Wink grant to Pioneer the right
to embed a customized version of the Wink Engine on certain Pioneer products to
be distributed worldwide and to provide for future customization for other
products.
AGREEMENT
1. DEFINITIONS
1.1 "ICAP" means the Interactive Communicating Applications Protocol
developed by Wink. ICAP defines a method for delivering
self-contained, compact, platform independent, graphical
interactive applications which are decoded and executed by the
Wink Engine in the Combined Product.
1.2 "Wink Engine" means Winks proprietary platform- and user
interface-independent software engine that implements Wink's
Interactive Communicating Applications Protocol for the
interpretation of interactive graphical applications.
1.3 "Statement of Work" means one or more document(s) to be mutually
agreed upon and executed by the parties and attached as Exhibit
A (and numbered successively, A-1, A-2, etc.) setting forth the
Development Plan, Specifications, Deliverables, each party's
respective development obligations, payment and related terms
and conditions with respect to each Pioneer product for which
the Wink Engine is customized and
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<PAGE> 2
each development project undertaken otherwise relating to
customize the Wink Engine.
1.4 "Development Plan" means the schedule and plan for completion of
the development activities under this Agreement as set forth in
each Statement of Work.
1.5 "Specifications" means the technical and other specifications for
the Deliverables to be developed by the parties under this
Agreement as set forth in each Statement of Work.
1.6 "Deliverables" means each item identified as a deliverable in
each Statement of Work.
1.7 "Licensed Engine" means version 1.0 of the Wink Engine as
customized under each Statement of Work in object code format and
any Updates, and any related documentation which Wink may create,
in Wink's sole discretion.
1.8 "Update" means a release of the Licensed Engine which contains
error corrections or minor enhancements, but which is not a new
version containing significant new features or functionality, in
each case as determined in Winks sole discretion. An Update shall
be designated by a change in the digit or digits only to the right
of the decimal point in the version number.
1.9 "Pioneer Device" means the television, television set top box, VCR
or similar audio-visual product as identified in each Statement of
Work.
1.10 "Combined Product" means a Pioneer Device containing the Licensed
Engine or a Pioneer Device that contains a memory component into
which the Licensed Engine may be loaded or transmitted.
1.11 "Subdistributors" means entities authorized by Pioneer to
distribute the Combined Product(s) including subsidiaries,
affiliates, distributors, resellers, value-added resellers,
dealers or sales representatives.
1.12 "Intellectual Property Rights" means all current and future
worldwide patents and other patent rights, copyrights, mask work
rights, trade secrets, know-how and all other intellectual
property rights, including without limitation all applications and
registrations with respect thereto.
2. DEVELOPMENT, DELIVERY AND ACCEPTANCE
2.1 Development. Wink agrees to use reasonable commercial efforts to
customize the Wink Engine for the Pioneer Device identified in
each Statement of Work or to complete any additional development
of a Licensed Engine after Final Acceptance as set forth in each
respective Statement of Work. Wink's obligations under this
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<PAGE> 3
Agreement are contingent upon mutual agreement to each Statement
of Work. The terms of this Agreement shall apply to all such
development efforts except to the extent expressly set forth in a
particular Statement of Work.
2.2 Cooperation and Assistance. Pioneer shall (i) assist Wink in
producing the Specifications and (ii) provide other necessary
materials and information, as mutually agreed by the parties in
the Development Plan or otherwise.
2.3 Provision of Software, Hardware and Equipment. Pioneer shall
provide to Wink free of charge all hardware, software, and
equipment reasonably necessary for Wink to complete development
and duplicate the Pioneer environment ("Equipment"). A preliminary
list of Equipment shall be included in each Statement of Work and
may be updated from time to time by mutual agreement. Pioneer
shall retain ownership of all such Equipment, and Wink shall
return all such Equipment to Pioneer upon written request and at
Pioneer's expense. Wink will exercise the same degree of care with
the Equipment as Wink does for its own equipment.
2.4 Modifications. Wink may alter the Specifications commensurate
with good faith efforts to finalize and refine the Deliverables in
accordance with Pioneer's needs and objectives for the Licensed
Engine. Any such changes will be documented in writing and
provided to Pioneer. Any other changes to a Statement of Work may
only be made by mutual agreement and all provisions affected by
such changes shall be appropriately adjusted.
2.5 Delays. In the event Pioneer is late in the performance of its
obligations in accordance with the Development Plan, and such
delay affects Wink's obligations hereunder, Wink's performance of
such affected obligations shall be delayed by the time period
necessary to account for such delay.
2.6 Delivery and Acceptance. Upon completion, Wink shall deliver to
Pioneer each Deliverable. Accompanying the final Deliverable for a
given Statement of Work, Wink shall include test criteria that
will exercise critical functionality of such deliverables. Test
criteria will include test cases and test applications that test
for cross-platform compatibilities and for Pioneer-specific
implementation features. Within thirty (30) days after receipt,
Pioneer shall review and evaluate each Deliverable according to
Wink's test criteria if applicable and shall provide Wink with a
written acceptance of the Deliverables or a written statement of
material errors to be corrected ("Statement of Errors"). Pioneer
shall not withhold acceptance of any Deliverable unless such
Deliverable materially deviates from the Specifications. Wink and
Pioneer recognize that the Deliverables will not be effort-free.
If Pioneer provides a Statement of Errors, Wink shall use
reasonable commercial efforts to correct such errors as are
validated by Wink, if any, as soon as practicable, and to return a
copy of the updated Deliverables to Pioneer for review and
reevaluation. The foregoing procedure shall be repeated until
acceptance by Pioneer of the Deliverables
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<PAGE> 4
or the parties mutually agree to cease development and terminate
this Agreement or the applicable Statement of Work. Pioneer's
failure to accept or provide a Statement of Errors within such
thirty day period shall be deemed an acceptance of such
Deliverables.
2.7 Transfer of Software. Upon Pioneer's acceptance of the completed
Licensed Engine ("Final Acceptance"), Wink shall deliver to
Pioneer a master diskette or other digital storage media for use
by Pioneer in accordance with the terms of this Agreement.
2.8 Right to Pursue Other Projects. Wink is in the business of
developing and modifying the Wink Engine for itself and for
others. This Agreement shall not be construed as prohibiting Wink
from granting rights to the Licensed Engine to third parties or
Wink's further development, modification or distribution of the
Wink Engine.
2.9 Non-Recurring Engineering. In consideration of the duties and
obligations of Wink under this Section, Pioneer shall pay Wink the
nonrecurring engineering charges set forth in the applicable
Statement of Work, at the times set forth in the applicable
Statement of Work.
3. GRANT OF RIGHTS
3.1 Licensed Engine. Subject to the terms and conditions of this
Agreement, effective upon Final Acceptance, Wink grants to Pioneer
a worldwide, non-exclusive, non-transferable (except as provided
in Section 13.3), right and license, under Wink's Intellectual
Property Rights in the Licensed Engine, to (a) use, reproduce and
have reproduced the Licensed Engine, solely for the purpose of
incorporating the Licensed Engine into a Pioneer Device and as
necessary in the course of distribution and support of the
Combined Product as permitted hereunder; (b) distribute copies of
the Licensed Engine solely for incorporation into a Combined
Product which was previously acquired (directly or indirectly)
from Pioneer for use only with such previously acquired unit, and
not otherwise on a stand-alone basis; and (c) distribute the
Combined Product. Pioneer's right to distribute copies of the
Licensed Engine pursuant to Section 3.1 (b), above, is subject to
the condition that Pioneer and its Subdistributors shall observe
procedures reasonably acceptable to Wink for monitoring such stand
alone distribution of the Licensed Engine, including encryption
where distributed electronically or broadcast. All such
procedures, including related record retention and audit
procedures, shall be mutually agreed in writing by Pioneer and
Wink prior to any such distribution.
3.2 Submanufacturers. Pioneer shall have the right to provide the
Licensed Engine to its third party manufacturers (each a
"Submanufacturer"), provided that each Submanufacturer agrees in a
signed writing (i) to use and reproduce Licensed Engines and
Combined Products only for Pioneer's account, (ii) not to sell or
distribute Licensed Engines and Combined Products except to
Pioneer, (iii) to keep the
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Licensed Engine confidential pursuant to terms and conditions no
less restrictive than the terms and conditions described in
Section 10 below and (iv) that Wink is a third party beneficiary
of such agreement and may enforce such agreement directly against
such Submanufacturer. Pioneer's provision of the Licensed Engine
to such Submanufacturer shall in all instances be subject to (a)
Pioneer's assurance that it will use the same level of care in
choosing Submanufacturers for Pioneer Devices incorporating the
Licensed Engine as it does for its other products, and will take
all reasonable steps to prevent unauthorized disclosure of Wink
Confidential Information, and (b) Pioneer's prompt notification to
Wink if Pioneer knows or believes that a Submanufacturer has
breached the provisions of subsection (i) - (iv) above. In the
event that Pioneer desires to provide the Licensed Engine to a
Submanufacturer without also providing such Submanufacturer with
software owned by Pioneer, Pioneer's provision of the Licensed
Engine to such Submanufacturer shall be subject to Wink's written
approval (not to be unreasonably withheld) of such
Submanufacturer. Pioneer shall use commercially reasonable efforts
to ensure that all Submanufacturers abide by the terms of their
written agreements described herein and keep Wink apprised of its
activities in enforcing such agreements.
3.3 Subdistributors. Pioneer may exercise its distribution rights
hereunder through the use of Subdistributors; provided, that each
Subdistributor must agree in a signed writing, prior to obtaining
any copy of the Licensed Engine from Pioneer, to be bound by all
applicable restrictions on Pioneer set forth in this Agreement.
Such writing shall provide that Wink is a third party beneficiary
of such agreement and may enforce such agreement directly against
such Subdistributor. Pioneer shall promptly notify Wink if Pioneer
has reason to believe that any of Pioneer's Subdistributors may
not be abiding by such restrictions. Pioneer shall diligently
police and enforce such restrictions including specific measures
reasonably requested by Wink from time to time.
3.4 Proprietary Notices. All copies of the Licensed Engine reproduced
or distributed by Pioneer shall contain copyright and other
proprietary notices in the same manner in which Wink incorporates
such notices in the Licensed Engine or in any other manner
requested by Wink. Wink's current copyright and proprietary
notices are set forth in Exhibit B. In addition, at Wink's
request, Pioneer shall mark the Pioneer Device with such patent
notices as may be permitted or required under Title 35, United
States Code. Pioneer shall incorporate such notices not more than
90 days after the date on which Wink provides the form of notice
and will use its best efforts to incorporate such notices sooner.
3.5 Limitations. Pioneer shall not modify, prepare derivative works
of, reverse engineer, disassemble, decompile, or otherwise attempt
to obtain access to the source code of the Licensed Engine.
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3.6 System Operator License Terms. Pioneer shall ensure that it and
any of its Subdistributors supply the Combined Product subject to
written agreements incorporating the system operator license terms
attached as Exhibit C.
4. LICENSE FEES
4.1 Per-Copy Royalty. In consideration for the rights and licenses
granted to it under Section 3 above. Pioneer shall pay a per-copy
royalty as set forth in the applicable Statement of Work. The
royalty shall be due either at the time of distribution of the
Combined Product or at the time of distribution of a Licensed
Engine for incorporation into a previously distributed Pioneer
Device as set forth in the Statement of Work with respect to the
particular Combined Product.
4.2 Payments. Pioneer shall make royalty payments to Wink within
forty-five (45) days after the end of each calendar quarter, with
respect to Combined Products or Licensed Engines, as applicable
distributed in such calendar quarter. Such payments shall be
accompanied by a written report which details by product and
customer, with respect to the applicable calendar quarter (i) the
number of Combined Products distributed by Pioneer to
Subdistributors, (ii) the number of copies of the Licensed Engine
distributed by Pioneer and its Subdistributors, (iii) the royalty
due Wink with respect to Combined Products or Licensed Engines, as
applicable distributed during such calendar quarter showing a
calculation of such amounts, and (iv) the number of copies of the
Licensed Engine (including without limitation Updates) or Combined
Products distributed by Pioneer or its Subdistributors for which
no royalty is due under Sections 4.4 or 4.5. Wink acknowledges
that specific customer information is Confidential Information.
4.3 Advance Royalties. Pioneer shall pay Wink the non-refundable
advance royalty payments set forth in each applicable Statement of
Work, at the times set forth in each applicable Statement of Work.
All advances paid by Pioneer hereunder shall be credited against
Pioneer's, royalty payments under Section 4.2.
4.4 Distribution of Updates. Pioneer shall not incur a royalty with
respect to its or its Subdistributors distribution of Updates to a
previously distributed version of the Licensed Engine.
4.5 Promotional Units. Pioneer may distribute a reasonable number of
Combined Products (not to exceed 200 per calendar quarter) as
promotional units, without incurring a royalty therefor to Wink,
provided such promotional units are distributed by Pioneer free of
charge.
4.6 Currency; Taxes. All payments hereunder shall be in United States
dollars. All payments by Pioneer shall be made free and clear of,
and without reduction for, any sales, use, value added, or similar
taxes, other than taxes based on the net income of
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Wink, including Japanese withholding tax. Any such taxes which are
otherwise imposed on payments to Wink shall be the sole
responsibility of Pioneer. With respect to that portion of the
Wink payments attributable to a royalty or license fee and that
portion of the Support Fees attributable as a royalty or license
fee, Pioneer shall withhold the amount of income taxes levied by
the Government of Japan and shall promptly make payment of the
withheld amount to the appropriate tax authorities of the
Government of Japan and shall transmit to Wink tax certificates
issues by said tax authorities sufficient to enable Wink to
support a claim for United States foreign tax credit in respect to
such withheld taxes so paid by Pioneer. Pioneer shall send Wink
copies of the "Application Form for Income Tax Convention between
the USA and Japan" (the "Form") to be filed with the appropriate
tax authorities of the Government of Japan in order to take
advantage of the lower tax rate of ten percent (10%) instead of
the standard twenty percent (20%), as those percentages may be
amended form time to time. Upon receipt of the Form, Wink shall
execute the Form and promptly return two executed copies of the
Form to Pioneer so that Pioneer may file the executed Form with
the appropriate tax authorities prior to Pioneer's remittance. In
case that Wink fails to return the Form in due course, Wink agrees
that the rate of twenty percent (20%) or amended rate shall apply
until Wink returns the executed Form to Pioneer.
4.7 Books and Records; Audit. Pioneer agrees to maintain, and to
require that each third party who distributes the Licensed Engine
maintain and provide to Pioneer, until two (2) years after the
earlier of (i) the termination of this Agreement or (ii) the last
shipment of a Combined Product or the Licensed Engine hereunder,
complete and current books, records and accounts regarding all
copying and distribution activities pursuant to this Agreement and
the payments due to Wink thereon. Pioneer agrees to allow Wink or
its designee to audit and examine such books, records and accounts
and media delivered to Pioneer no more than once each calendar
quarter, during Pioneer's normal business hours, to verify the
accuracy of the reports and payments made to Wink under this
Section 4 and compliance with the terms of this Agreement. In the
event such audit determines that Pioneer has not paid for all of
the copies of Combined Products and Licensed Engines distributed,
Pioneer agrees to pay, in addition to any damages to which Wink
might be entitled, the amount of such shortfall plus interest at a
rate of one and one-half percent (1.5%) per month or the highest
rate allowed by law, whichever is lower. The cost of such audit
shall be borne by Wink, provided that if any such audit reveals an
underpayment to Wink of at least five percent (5%), Pioneer shall
reimburse to Wink its costs of such audit.
5. WARRANTY
5.1 Product Warranty. Wink warrants to Pioneer that under ordinary use
the Licensed Engine shall function substantially in conformance
with the Specifications for a period of ninety (90) days after
Pioneer's Final Acceptance.
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5.2 Defects not Covered by Warranty. Wink's warranty shall not extend
to problems in the Licensed Engine that result from: (i) Pioneer's
or any of its customer's failure to implement any Updates to the
Licensed Engine which are provided by Wink; (ii) changes to the
operating system or environment or to Pioneer Devices which
adversely affect the Licensed Engine; (iii) any alterations of or
additions to the Licensed Engine performed by parties other than
Wink without Wink's prior written authorization; (iv) use of the
Licensed Engine in a manner inconsistent with the Specifications
or in a manner in which it was not intended; or (v) combination of
the Licensed Engine with other products not supplied by Wink or
specifically identified in the applicable Specifications as
compatible with the Licensed Engine, which problems do not affect
the Licensed Engine standing alone.
5.3 Exclusive Remedy. Wink's sole obligation and Pioneer's exclusive
remedy under the above warranty shall be for Wink to use
commercially reasonable efforts at Wink's facilities to correct
reproducible errors in the Licensed Engine to the extent necessary
bring it into conformity with Wink's warranty set forth above.
5.4 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY, WINK
MAKES AND PIONEER RECEIVES NO WARRANTIES WITH RESPECT TO THE
LICENSED ENGINE, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND
WINK SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR
PURPOSE. Wink does not warrant that operation of the Licensed
Engine will be error free.
6. PROPERTY RIGHTS
Pioneer agrees that as between Pioneer and Wink, Wink owns all
right, title and interest in the Licensed Engine and all modifications and
derivatives thereof including all Intellectual Property Rights. Except as
expressly provided in Section 3, Wink does not grant to Pioneer any right, title
or interest in the Licensed Engine, whether by implication, estoppel or
otherwise. All rights with respect to the Licensed Engine not specifically
granted herein are reserved to Wink.
7. MARKETING; TRADEMARKS AND TRADE NAMES
7.1 Use of Trademarks.
7.1.1 Promotion and Advertising. During the term of this
Agreement, in the event that Pioneer or any Subdistributor
advertises, promotes or markets the functionality of the
Licensed Engine, Pioneer shall, and shall require its
Subdistributors to, use the trademarks, marks, trade names,
logos, and other product and company identifiers of Wink
that Wink may adopt, from time to time ("Wink Trademarks").
Use of the Wink Trademarks shall be consistent with Wink's
trademark usage policy which Wink may adopt from time to
time
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and of which Wink has notified Pioneer. Pioneer and its
Subdistributors may use trade names, marks or trademarks in
addition to the Wink Trademarks in connection with the
Combined Product.
7.1.2 Approval of Representations. All representations of Wink's
Trademarks that Pioneer or its Subdistributors intend to
use shall first be submitted to Wink for approval (which
shall not be unreasonably withheld) of design, color, and
other details, or shall be exact copies of those used by
Wink. To ensure trademark quality, within a reasonable time
prior to Pioneer's first commercial shipment of the
Combined Product bearing one or more Wink Trademarks,
Pioneer shall supply to Wink one such Combined Product for
inspection and testing by Wink to ensure that such Combined
Product conforms to Wink's standards of quality for
products sold under the Wink Trademarks. In no event shall
Pioneer commence commercial shipment of any such Combined
Product (except as set forth above) under the Wink
Trademarks without Wink's prior written approval.
7.1.3 Restrictions. At no time during or after the term of this
Agreement shall either party register, attempt to register
or cause the registration of any of the trademarks of the
other party which give rise to the likelihood of confusion.
Except as expressly set forth herein, nothing herein shall
grant to either party any right, title or interest in the
other party's trademarks. At no time during or after the
term of this Agreement shall either party challenge or
assist others to challenge the other party's trademarks or
the registration thereof or attempt to register any
trademarks, marks or trade names confusingly similar to
those of the other party.
7.2 Marketing and Promotion. Pioneer shall promote the functionality
of the Licensed Engine in its presentations to customers and in
its marketing materials as a prominent feature of the Combined
Product.
7.3 Wink Markings and User Interface Elements.
7.3.1 Remote Button. All remote controls that Pioneer markets
for use with Combined Products shall contain a dedicated button
for enabling the functionality of the Licensed Engine ("Wink
Button"). The Wink Button shall include a marking chosen by Wink,
on and/or adjacent to the Wink Button. For each remote, the
location and size of the Wink Button shall be mutually agreed
upon, but shall be as prominent as buttons and markings for the
menu, info, guide and select options on any such remote.
7.3.2 Manuals. Pioneer shall ensure that manuals, or any other
documentation describing functionality of the Licensed
Engine will contain information on use of the Licensed
Engine functionality and Wink copyright and proprietary
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notices. The content and location of such information and
notices shall be mutually agreed upon, but shall be in the
same place, the same size and same prominence as similar
information for other functionality.
7.3.3 Device Specific and On-screen Information. Wink will
provide to Pioneer artwork for a logo to be placed on all
Combined Products. Pioneer agrees to silk screen or
similarly affix this logo in a prominent location on each
Combined Product. Pioneer shall ensure that: (i) if a
Combined Product has a main menu or menu with similar
functionality, a menu item will be reserved for Wink, which
will allow users to access information regarding the
Licensed Engine functionality, the content of screen and
name of menu item in menu shall be mutually agreed upon by
the parties; and (ii) if a Combined Product has the
capability to display help screens that include
descriptions of device or remote control functionality,
information regarding Licensed Engine functionality shall
be provided, the content and style of such information
shall be mutually agreed to by the parties.
7.3.4 Splash Screens. Wink shall have the right to include a
splash screen that shall be displayed from time to time and
that will contain information, including without
limitation, Wink markings, and copyright and other
proprietary right notices to be mutually agree upon with
respect to placement and timing.
7.4 Press Releases. The parties intend to cooperate and participate in
public relations programs to promote the Licensed Engine and the
relationship between the parties. Appropriate personnel from each
party shall participate in such public relations programs. The
parties shall cooperate with respect to and mutually approve (not
to be unreasonably withheld or delayed) all press releases issued
by either party with respect to this Agreement or the parties'
relationship. Unless otherwise agreed in writing by the parties,
each press release issued pursuant to this Section shall contain:
(I) in the body of the release, the name and location of both
parties and a quote from an executive of both parties; (ii) in a
footnote at the end of the release, both parties' proprietary
notices with respect to technology discussed in the body of the
release. Whenever feasible, the press release shall also include
the logo of each party.
7.5 Disclosures of Terms. Each party agrees not to disclose the terms
of this Agreement to any third party without the other's written
consent in its sole discretion, except to such party's
accountants, attorneys and other professional advisors, or as
required by securities or other applicable laws. Notwithstanding
this paragraph, each party shall have the right to say the
following in private meetings with customers, prospective
customers, or prospective investors:
o Pioneer and Wink are working together.
o Pioneer is licensing Wink's technology.
o Wink is porting the Wink Engine to Pioneer set-tops.
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8. TRAINING, SUPPORT AND MAINTENANCE
8.1 Maintenance. Wink agrees to make available to Pioneer, at no
charge to Pioneer, all Updates released by Wink and permit Pioneer
to distribute Updates to its Subdistributors and Submanufacturers
for their use consistent with this Agreement. Pioneer shall
promptly notify its Submanufacturers and Subdistributors of the
availability of each Update and Pioneer shall require its
Submanufacturers and shall use reasonable commercial efforts to
require its Subdistributors to promptly begin using each such
Update in place of the previous version of the Licensed Engine.
Pioneer shall be responsible for making such Updates available to
its customers.
8.2 Technical Support. Wink shall make available to Pioneer technical
support, as set forth in Exhibit D. Wink may subcontract its
technical support obligations and shall notify Pioneer as to the
appropriate contact to obtain support.
8.3 Equipment. In order to facilitate Wink's performance of the
support activities contemplated herein, Pioneer shall, at its own
expense, continue to provide Wink with Equipment (as defined in
Section 2.3). In the event that Pioneer fails to provide Equipment
or is late in the performance of its obligations with respect to
this Section and such delay affects Wink's obligations under this
Section, Wink's performance of such affected obligations shall be
delayed by an appropriate time period.
8.4 Training. Wink shall make available, at Wink's facilities,
training for Pioneer employees from time to time as mutually
agreed, at rates and costs to be agreed upon but not to exceed
$1000 per person per day.
8.5 Travel Requirements. If in the performance of Wink's obligations
under this Agreement the parties mutually agree that Wink
employees or contractors must travel from Wink's facility, Pioneer
shall pay and/or promptly reimburse Wink for, all reasonable
travel (if by air, coach class), room and board, car rental and
other similar expenses associated with such travel. Any travel
expenses approved in writing by Pioneer shall be deemed reasonable
by virtue of such approval.
9. TERM AND TERMINATION
9.1 Term. This Agreement shall commence on the Effective Date and
shall continue in full force and effect for a term of five (5)
years from the first commercial shipment of Combined Product by
Pioneer. The term of this Agreement may be extended by mutual
agreement of the parties.
9.2 Termination for Cause. If either party materially defaults in the
performance of any provision of this Agreement, the non-defaulting
party may give written notice to the defaulting party that if the
default is not cured within thirty (30) days this Agreement shall
be terminated. If the non-defaulting party gives such notice and
the default is
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not cured within thirty (30) days, this Agreement shall terminate
immediately upon notice by the non-defaulting party. For the
purposes of determining a material default by Wink based on late
or non-delivery of a Deliverable, Wink shall not be in material
default of this Agreement unless it fails to deliver a Deliverable
within six (6) months of the date such Deliverable is due;
provided that Pioneer has fulfilled all its obligations with
respect to such Deliverable and in such event the cure period
provided for above shall be ninety (90) days.
9.3 Termination for Insolvency. Either party may terminate this
Agreement upon written notice upon: (i) the institution by or
against the other party of insolvency, receivership or bankruptcy
proceedings or any other proceedings for the settlement of the
other party's debts, (ii) the other party's making an assignment
for the benefit of its creditors, or (iii) the other party's
dissolution or ceasing to conduct business as a going concern.
9.4 Effect of Termination. Upon the expiration or termination of this
Agreement, the following provisions shall take effect:
9.4.1 Subject to the provisions of Section 9.5, the rights and
licenses granted to Pioneer under this Agreement shall
automatically terminate, and Pioneer and its
Subdistributors shall immediately cease distribution of
Licensed Engines and a use of the Wink Trademarks,
provided, however, that if the Agreement is terminated by
Pioneer due to Wink's material breach or insolvency,
Pioneer may, at its option, continue to use, reproduce, and
distribute the Licensed Engine under the right and license
granted hereunder, subject to the payment of the royalties
and other provisions of Section 4;
9.4.2 Rights of end users to use the Licensed Engine as part of a
Combined Product shall continue in effect according to
their terms and conditions;
9.4.3 Within ten (10) days after such expiration or termination,
except as provided. in Section 9.6, or the case where
Pioneer elects to continue the license pursuant to Section
9.4.1 above, Pioneer shall return, and shall certify to
Wink the return of, all copies of the Licensed Engine and
all Wink Confidential information (as defined in Section
10.1) in its or its Submanufacturers' possession at the
time of expiration or termination. Wink shall return, and
shall certify to Pioneer the return of, all Pioneer
Confidential Information in its possession at the time of
expiration or termination. Notwithstanding the foregoing,
Pioneer may except upon termination by Wink (i) maintain a
single copy of the Licensed Engine and (ii) retain any
Confidential Information necessary for support, subject to
the provisions of Section 10, both solely to provide
support to its permitted Subdistributors and end users; and
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(b) The parties agree to enter into a source code escrow
agreement with a mutually selected escrow agent. Wink
agrees to deposit the Wink Engine source code upon final
technical acceptance of the Wink Engine by Pioneer. Pioneer
shall be entitled to the release of such source code during
any time period in which: (i) Wink is subject to the
jurisdiction of any bankruptcy court or (ii) Wink is
material breach of the provisions of section 5, which
material breach has not been cured within (90) days after
Pioneer's written notice to Wink thereof. The foregoing is
subject, however, to the condition that Pioneer is not at
that time in material breach of any of its obligations
under this Agreement, and such breach has not been cured
within (90) days after written notice thereof by Wink.
Pioneer shall assume all start-up fees, annual renewal
fees, deposit fees and any and all other fees due to such
escrow agent.
Upon any release of the Wink Engine source code to
Pioneer, (i)Pioneer shall have a non-exclusive,
non-transferable license to use such source code solely to
support and maintain the Combined Product until the
expiration or termination of Pioneer's rights subject to
section 9.4.1 and only during the time that the release
condition exists, (ii) such source code shall be treated by
Pioneer as Confidential Information of Wink under the
provisions of Section 10 hereof . As soon as the release
condition ceases to exist, Pioneer shall immediately return
the source code and all modifications thereto made by
Pioneer, as well as the current source code version
provided by Wink, to the escrow agent for re-deposit and
Pioneer shall delete any and all copies of the source code
from Pioneer computers or electronic storage media and
destroy all paper copies of source code.
Pioneer will use the source code at only one
facility, to be designated by Pioneer and communicated in
writing to Wink and the escrow agent prior to release of
the source code. The source code will be installed on a
computer system at the designated location which is (a)
accessible only to Pioneer employees who need access in
order to effect the purposes of this Agreement and (b) not
accessible through a modem, network, or other means of
external communications. Pioneer agrees to keep a written
record of all persons authorized to access the source code
and will store the source code in a locked facility with
limited access when not in use. In addition, Pioneer agrees
to inform all employees who are given access to the source
code that they are the confidential material of Wink
licensed to Pioneer as such. Access to the source code will
be limited to those Pioneer employees needing such access
to effect the purposes of this Agreement. Pioneer will be
fully responsible for the conduct its employees, agents,
and representatives who in any way breach this agreement.
Pioneer will enter into a confidentiality agreement with
each Pioneer employee who is given access to the source
code, which agreement will incorporate the protections and
restrictions set forth herein. Pioneer will notify Wink
promptly in the event of any breach of its security where
it
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appears that any source code was misappropriated, disclosed
in violation of this Agreement or exposed to loss, and
Pioneer will take all actions required to recover the
source code in the event of loss or misappropriation or to
otherwise prevent its unauthorized disclosure or use. At
any time upon request by Wink, Pioneer will provide Wink
with the names of all persons who have access the source
code.
9.4.4 Pioneer shall pay all outstanding amounts owed to Wink
within ninety (90) days. In the event Wink is performing
development tasks for Pioneer at the time of any
termination, Pioneer shall also pay to Wink the portion of
the next milestone that is proportional to the amount of
work completed by Wink for that milestone.
9.4.5 The provisions of Sections 4.7, 5, 6, 9, 10, 11, 12, and 13
shall survive the expiration or termination of this
Agreement for any reason.
9.5 Sell-off Period. In the event of the expiration of this Agreement
or a termination by Pioneer, Pioneer may, subject to the
provisions of Section 4 (including without limitation Pioneer's
obligation to pay royalties in connection with all distributions)
dispose of its inventory of Combined Products on hand, for a
period not to exceed sixty (60) days after the effective date of
such expiration or termination (the "Sell-Off Period"), and in
connection therewith, Pioneer shall use the Wink Trademarks during
the Sell-Off Period pursuant to the provisions of Section 7.
9.6 Destruction of Inventory. Within ten (10) days after the end of
the Sell-Off Period, Pioneer shall destroy, and shall certify to
Wink the destruction of, all copies of the Licensed Engine in its
or its Subdistributors' or Submanufacturers' possession.
10. CONFIDENTIALITY
10.1 Obligation of Confidentiality. The parties acknowledge that each
may have access to certain information and materials concerning
the other's business, plans, customers, technology and products
that is confidential ("Confidential Information"). Each party
agrees that it shall not use in any way, for its own account or
the account of any third party, nor disclose to any third party,
except as may be expressly permitted under this Agreement, any
such Confidential Information revealed to it by the other party
and shall take every reasonable precaution to protect the
confidentiality of such information. Upon request by either party,
the other party shall advise whether or not it considers any
particular information or materials to be confidential.
10.2 Exceptions. Information shall be deemed not to be Confidential
Information hereunder if such information:
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10.2.1 Is or becomes part of the public domain through no fault
or breach on the part of the receiving party;
10.2.2 Is known to the receiving party prior to the disclosure by
the disclosing party and such knowledge can be shown by
written records;
10.2.3 Is subsequently rightfully obtained by the receiving party
from a third party who has the legal right to disclose it;
10.2.4 Is independently developed by the receiving party without
the use of any Confidential Information or any breach of
this Agreement;
10.2.5 Is approved for public release by the disclosing party; or
10.2.6 Is required to be disclosed by judicial action provided
that the receiving party has first given the disclosing
party reasonable notice of such requirement and fully
cooperates with the disclosing party in seeking
confidential treatment for any such disclosure.
10.3 Injunctive Relief. The parties acknowledge that any breach of the
provisions of this Section may cause irreparable harm and
significant injury to an extent that may be extremely difficult to
ascertain. Accordingly, each party agrees that each will have, in
addition to any other rights or remedies available to it at law or
in equity, the right to seek injunctive relief to enjoin any
breach or violation of this Section.
11. INTELLECTUAL PROPERTY, WARRANTY AND INDEMNITY
11.1 Representations and Warranties. Each party represents and warrants
that neither the execution or performance by such party of this
Agreement will violate any law, order, regulation or ruling
applicable to such party or its efforts hereunder. In addition,
Wink represents and warrants that as of the Effective Date, no
action or proceeding alleging intellectual property infringement
by the Wink Engine is proceeding against Wink.
11.2 Indemnity. Wink agrees, at its expense, to defend, or at its
option to settle, any claim, suit, action or proceeding brought
against Pioneer, Subdistributors, and/or Customers by a third
party alleging that the Licensed Engine used as authorized
hereunder infringes the copyright, trade secret, trademark or U.S.
patent rights of such third party (an "Action"), and to pay any
settlement or final judgment entered thereon against Pioneer,
subject to the limitations set forth hereafter. Wink shall be
relieved of its obligations hereunder unless Pioneer gives Wink
(i) prompt written notice of an Action, (ii) sole control over the
defense or settlement of the Action and (iii) reasonable
assistance in the defense or settlement thereof. If it is, or in
the opinion of Wink may be, determined by competent authority that
the Licensed Engine or any part
-15-
<PAGE> 16
thereof, or the sale, distribution or use thereof as permitted
hereunder infringes any patent, copyright, trade secret or
trademark of a third party or is enjoined, then Wink at its sole
option and expense may: (a) procure for Pioneer the right under
such patent, copyright, trade secret or trademark to use, as
mentioned in this Agreement reproduce and distribute the Licensed
Engine or such part thereof or such trademark as authorized in
this Agreement; (b) replace the Licensed Engine or such part
thereof or such trademark with other suitable software or
trademark without material degradation in performance or
functionality; (c) modify the Licensed Engine or such part thereof
or such trademark to avoid infringement without material
degradation in performance or functionality; (d) if (a)(b) or (c)
are not commercially reasonable, (d) replace or modify the License
Engine or portion thereof to disable the infringing portion
reducing performance or functionality but retaining some
commercial viability of the product or (e) if none of the
foregoing are commercially reasonable after diligent attempts by
Wink to pursue such alternatives, terminate this Agreement with
respect to the infringing product in whole or in part.
11.3 Limitations. The foregoing indemnity shall not apply to an Action
to the extent it arises out of (i) any modification of the
Licensed Engine by a party other than Wink, (ii) any combination
of the Licensed Engine with hardware and/or software (including
software written using the Wink Authoring Tool or using the Wink
APIs) not supplied by Wink, or (iii) any trademarks, trade names
or other brandings not supplied by Wink.
11.4 Disclaimer. THE FOREGOING PROVISIONS OF THIS SECTION 11 STATE THE
ENTIRE LIABILITY AND OBLIGATION OF WINK AND THE EXCLUSIVE REMEDY
OF PIONEER WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY PATENT,
COPYRIGHT, TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL PROPERTY
RIGHT.
12. INDEMNITY BY PIONEER
Except with respect to any claim, suit, action or proceeding for which
Wink is obligated to indemnify under Section 11, Pioneer agrees, at its expense,
to defend, or at its option to settle, any claim, suit, action or proceeding
brought against Wink by a third party arising out of Pioneer's use of the
Licensed Engine or exercise of the rights and licenses granted hereunder, and to
pay any settlement or final judgment entered thereon against Wink, subject to
the limitations set forth hereafter. Pioneer shall be relieved of its
obligations hereunder unless Wink gives Pioneer (i) prompt written notice upon
becoming aware of the existence of any such claim, suit, action or proceeding,
(ii) sole control over the defense or settlement of such claim, suit, action or
proceeding and (iii) reasonable assistance in the defense or settlement thereof.
-16-
<PAGE> 17
13. GENERAL
13.1 Governing Law and Jurisdiction. This Agreement shall be governed
by and construed under the laws of the State of California,
without reference to conflict of laws principles.
13.2 Import & Export Controls. Pioneer understands that Wink is subject
to regulation by agencies of the U.S. government which prohibit
export or diversion of certain products and technology to certain
countries. Any and all obligations of Wink including without
limitation obligations to provide products, technology,
documentation, or technical assistance, will be subject in all
respects to such United States laws and regulations that will from
time to time govern the license and delivery of technology and
products abroad or to foreign nationals by persons subject to the
jurisdiction of the United States. Pioneer warrants that it will
comply in all respects with all applicable export and reexport
restrictions. Pioneer warrants that it will not, and will take all
actions which may be reasonably necessary to assure that its
Subdistributors and end users do not, contravene such United
States laws or regulations.
13.3 No Assignment. This Agreement shall not be assigned by either
party without the prior written consent of the other party, which
consent shall not be unreasonably withheld, except that either
party may assign its rights and obligations hereunder to any
entity (i) which controls, is controlled by or is under common
control with such party or (ii) which acquires all or
substantially all of the assets or business of such party to which
this Agreement pertains, provided in both cases that such entity
shall assume in writing or by operation of law such party's
obligations under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns.
13.4 Independent Contractors. The relationship of the parties
established by this Agreement is that of independent contractors,
and nothing contained in this Agreement shall be construed to (i)
give either party the power to direct and control the day-to-day
activities of the other, (ii) constitute the parties as partners,
joint venturers, co-owners or otherwise as participants in a joint
or common undertaking, or (iii) allow either party to create or
assume any obligation on behalf of the other party for any purpose
whatsoever.
13.5 Compliance with Laws. In exercising its rights under this license,
each party shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental
body having jurisdiction over the exercise of rights under this
license.
13.6 Notices. All notices under this Agreement shall be in writing and
sent by (i) certified air mail, return receipt requested, postage
prepaid or (ii) commercial courier service.
-17-
<PAGE> 18
If properly addressed to or delivered at the address for each
party set forth above, a notice shall be deemed given upon
delivery or, where delivery cannot be effected due to the actions
of the addressee, upon tender.
13.7 Entire Agreement. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements,
understandings, proposals and representations by the parties,
including without limitation the memorandum of understanding
between, the parties dated July 1, 1996.
13.8 No Waiver. Failure by either party to enforce any provision of
this Agreement will not be deemed a waiver of future enforcement
of that or any other provision.
13.9 No Oral Modification. No alteration, amendment, waiver,
cancellation or any other change in any term or condition of this
Agreement shall be valid or binding on either party unless
mutually agreed in writing.
13.10 Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions
hereof in any other language shall not be binding on the parties.
All communications and notices to be made or given pursuant to
this Agreement shall be in the English language.
13.11 Use of "Including". Use of the word "including" in this Agreement
is intended to be illustrative and not limiting.
13.12 Limitation of Liability. EXCEPT WITH RESPECT TO WINK'S OBLIGATIONS
TO INDEMNIFY FOR COPYRIGHT, TRADE SECRET OR TRADE MARK
INFRINGEMENT CLAIMS (BUT NOT PATENT) UNDER SECTION 11, IN NO EVENT
SHALL WINK BE LIABLE TO PIONEER OR ANY THIRD PARTY IN THE
AGGREGATE FOR ANY AMOUNT IN EXCESS OF THE AMOUNTS PAID (AND THE
AMOUNTS WHICH HAVE ACCRUED HEREUNDER BUT HAVE NOT BEEN PAID) BY
PIONEER HEREUNDER. IN NO EVENT SHALL WINK BE LIABLE TO PIONEER,
SUBDISTRIBUTORS, AND/OR CUSTOMERS FOR LOST PROFITS, LOSS OF DATA
OR FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES
ARISING IN ANY WAY OUT OF THIS AGREEMENT, HOWEVER CAUSED AND ON
ANY THEORY OF LIABILITY. THIS LIMITATION SHALL APPLY EVEN IF WINK
KNOWS OR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY PROVIDED FOR HEREIN.
13.13 Counterparts. This Agreement may be executed in any number of
counterparts and when so executed and delivered shall have the
same force and effect as though all signatures appeared on one
document.
-18-
<PAGE> 19
13.14 Severability. The provisions of this Agreement shall be severable,
and if any provision of this Agreement shall be held or declared
to be illegal, invalid, or unenforceable, such illegal, invalid or
unenforceable provision shall be severed from this Agreement and
the remainder of the Agreement shall remain in full force and
effect, and the parties shall negotiate a substitute, legal, valid
and enforceable provision that most nearly reflects the parties'
intent in entering into this Agreement.
13.15 Basis of Bargain. Wink and Pioneer acknowledge and agree that
Wink's entering into this Agreement and the amount of Pioneer's
royalty hereunder have been done or set in reliance upon the
limitations of liabilities and disclaimers of warranty set forth
in this Agreement, and that the same form an essential basis of
the parties' bargain.
-19-
<PAGE> 20
IN WITNESS WHEREOF, the parties by their duly authorized
representatives have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. PIONEER ELECTRONIC CORPORATION
By: /s/ Maggie Wilderotter By: /s/ Hiroshi Aiba
----------------------- ---------------------------------
Name: Maggie Wilderotter Name: Hiroshi Aiba
Title: President & CEO Title: Managing Director, President,
Business Systems Company
-20-
<PAGE> 21
EXHIBIT A-1
STATEMENT OF WORK
1. Device
Wink and Pioneer agree that Wink shall port the Wink Engine to the Pioneer
BA-V2000 Set-Top Box.
2. Specifications
See attached Addendum to Exhibit A-1
3. Development Activities and Schedule
<TABLE>
<CAPTION>
RESPONSIBLE COMPLETION MILESTONE
TASK PARTY DATE PAYMENT
- - ---- ----------- ----------- ----------
<S> <C> <C> <C>
Signing of Letter of Intent Pioneer 1 July 1996 yes
Delivery of development equipment as required to a location Pioneer 1 Aug 1996 no
specified by Wink
Delivery by Wink of BA-V2000 Emulator for use in Wink Wink 15 Oct 1996 yes
Studio
Delivery of Technology License Agreement Wink 11 Nov 1996 . no
Signing of Technology License Agreement Pioneer 1 May 1997 yes
Delivery by Wink of Project Plan for development of Wink Wink 1 May 1997 yes
Engine Version 1.0 as customized for Pioneer BA-V2000
First Delivery of Head-End Materials and Equipment to Wink Pioneer 5 May 1997 no
On-site support at Wink to set up head-end and set-top boxes Pioneer 5 May 1997 no
Delivery by Wink of Alpha version of object code of Wink Wink 15 May 1997 yes
Engine Version 1.0 as customized for BA-V2000
Final Delivery of Head-End Materials and Equipment to Wink Pioneer 1 June 1997 no
Delivery by Wink of Beta version of object code of Wink Wink 15 June 1997 no
Engine Version 1.0 as customized for BA-V2000
Acceptance of final version of object code of Wink Engine Pioneer 1 Aug 1997 yes
Version 1.0 as customized for BA-V2000
</TABLE>
<PAGE> 22
4. Materials and Equipment
First Delivery of Head-End Materials and Equipment
XIV. 1 Norpak DIU, capable of inserting data on two
lines of VBI on one channel
XV.1 Modulator
XVII. 1 Out-of-band transmitter
XVII. 1 copy Zeus Controller Software, or equivalent
software/hardware necessary to mimic functionality
XVIII. 2 Receivers
XIX. 1 set of licenses for development software for STB,
including pSOS, MRI compiler, SDS, SourceSafe, and
NMAKER
XX. 1 Pioneer BA-V2000 STB
Final Delivery of Head-End Materials and Equipment
I. Additional Norpak DIU(s), altogether capable of inserting data on
two lines of VBI on three separate channels
II. 3 Additional Modulators
III. 5 Additional Pioneer BA-V2000 STBs
5. Payment Schedule: All amounts in US Dollars.
<TABLE>
<CAPTION>
ROYALTY
EVENT NRE PAYMENT PAYMENT
<S> <C> <C>
Signing of Letter of Intent [ * ] [ * ]
Delivery by Wink of BA-V2000 Emulator for use in [ * ] [ * ]
Wink Studio
Signing of Technology License Agreement [ * ]
Delivery by Wink of Project Plan for development of [ * ]
Wink Engine Version 1.0 as customized for
Pioneer BA-V2000
Delivery by Wink of Alpha version of object code of [ * ]
Wink Engine Version 1.0 as customized for BA-
V2000
Acceptance of final version of object code of Wink [ * ] [ * ]
Engine Version 1.0 as customized for BA-V2000
Totals: [ * ] [ * ]
</TABLE>
- - ----------
* Confidential treatment has been requested with respect to
certain portions of this exhibit pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.
Omitted portion shave been filed with the Commission.
-2-
<PAGE> 23
6. Per Copy Royalty: [ * ]
WINK COMMUNICATIONS, INC. PIONEER ELECTRONIC CORPORATION LTD.
/s/ Maggie Wilderotter /s/ Hiroshi Aiba
- - --------------------------------- -------------------------------------
Signature Signature
Maggie Wilderotter Hiroshi Aiba
- - --------------------------------- -------------------------------------
Name Name
Managing Director
President
President/CEO Business Systems Company
- - --------------------------------- -------------------------------------
Title Title
1/5/98 12/26/97
- - --------------------------------- -------------------------------------
Date Date
-3-
<PAGE> 24
EXHIBIT B
PROPRIETARY NOTICES
1. Screens displayed to the End-Users from time to time shall contain, at a
minimum, the following:
Copyright 199_ Wink Communications, Inc.
Patent Pending.
2. Wink, the Wink eye and "i" shall be marked with either "Registered in U.S.
Patent and Trademark Office" or with the letter R enclosed within a circle.
<PAGE> 25
EXHIBIT C
SYSTEM OPERATOR LICENSE TERMS
Use of the Wink Engine software ("the Software") that operates
with the [PIONEER DEVICE] is subject to these license terms.
THE SOFTWARE IS OWNED BY WINK COMMUNICATIONS, INC. ("WINK") AND
ITS SUPPLIERS AND IS COPYRIGHTED AND LICENSED TO YOU ("System Operator" or
"You") NOT SOLD.
System Operator has the nonexclusive revocable right to use the
Software only with the [PIONEER DEVICE] in connection with providing a cable or
similar service to end users who will be using the device and tile Software
functionality. You may not copy, sublicense, modify, reverse engineer,
decompile, or disassemble (except to the extent applicable laws specifically
prohibit such restriction) the Software, in whole or in part, or disclose any of
the Software to third parties. You may not transfer or distribute the Software
or your license separately from the [PIONEER DEVICES] on which it operates. If
you do any of these acts, your license and right to use the Software is
automatically terminated. Wink has the right to terminate your license if you
fail to comply with these license terms. You will not remove any copyright
notice from the Software and agree to prevent any unauthorized copying of the
Software.
THE SOFTWARE IS PROVIDED "AS IS". WINK MAKES NO WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR NONINFRINGEMENT. YOU BEAR THE RISK RELATING TO OPERATION OF THE SOFTWARE.
WINK SHALL NOT BE LIABLE TO YOU FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES HOWEVER BASED ARISING OUT OF OR IN
CONNECTION WITH THIS LICENSE OR ANY ACTS OR OMISSIONS ASSOCIATED THEREWITH OR
RELATING TO THE USE OF THE SOFTWARE.
You are responsible for operation of your system and service.
Wink assumes no liability relating to the service and System Operator hereby
indemnifies Wink from any claims or liabilities arising out of or relating to
the products or services provided by System Operator.
Government Use. If Licensee is an agency, department, or other
entity of the United States Government ("Government"), Licensees use,
duplication, reproduction, release, modification, disclosure or transfer of the
Licensed Products, or of any related documentation of any kind, 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. The Licensed Products are
commercial. The use of the Licensed Products by any Government agency,
department, or other entity of the Government, is further restricted in
accordance with the terms of this Agreement, or any modification hereto.
Licensee will
<PAGE> 26
affix the following legend upon delivery of each of the Licensed Products which
are the subject of this Agreement:
Use, duplication, reproduction, release, modification, disclosure
or transfer of this commercial product and accompanying
documentation, is restricted in accordance with FAR 12.212 and
DFARS 227.7202, and by a license agreement.
Contractor/manufacturer is: Wink Communications. The Software and
accompanying documentation are deemed to be "commercial computer
software" and "commercial computer software documentation",
respectively, pursuant to DFAR Section 227.7202 and FAR Section
12.212, as applicable. Any use, modification, reproduction,
release, performing, displaying or disclosing of the software and
accompanying documentation by the U.S. Government shall be
governed solely by the terms of this Agreement and shall be
prohibited except to the extent expressly permitted by the terms
of this Agreement.
-2-
<PAGE> 27
EXHIBIT D
SUPPORT
The following provisions govern the support to be provided by Wink to Pioneer
for the Licensed Engine.
1. Contact People. Pioneer shall appoint two (2) individuals within
its organization who will serve as primary contacts between it
and Wink to receive support ("Contact People"). All of Pioneer's
support inquiries shall be initiated through the Contact People.
2. Support Obligations. Pioneer will be responsible for providing
First Level Support and Second Level Support (as defined below)
to its Subdistributors and other customers with respect to the
Licensed Engine. Wink will provide Third Level Support (as
defined below) for the Licensed Engine in the manner specified in
these support terms.
3. Support Levels. Levels of customer support are defined as follows:
(a) "First Level Support" shall mean: (i) generating product
information; (ii) providing configuration support; (iii)
collection of relevant technical problem identification
information; (iv) filtering user errors from real technical
problems; and (v) solving simple problems by reference to existing
documentation.
(b) "Second Level Support" shall mean First Level Support plus
providing the following areas of support: (i) isolating the
problem to determine that it is a problem with the Licensed
Engine; (ii) recreating the problem in a lab simulation and/or
through interoperability testing; (iii) determining whether or not
the problem is a defect; (iv) collecting and analyzing diagnostic
data; and (v) defining an action plan with the customer to solve
the problem.
(c) "Third Level Support" shall mean: (i) confirming duplication of
the problem and validating that it's a defect; (ii) fixing
software bugs or generating workarounds.
4. Third Level Support.
(a) Escalation. Pioneer can escalate a problem to Third Level Support,
once Pioneer exhausts the items enumerated above in First and
Second Level Support. When escalating, Pioneer shall provide
enough information to allow Wink to duplicate the problem.
(b) Assignment of Severity Level. When a Third Level support call
comes into Wink from Pioneer, the parties will mutually assign a
Severity Level as specified below that describes the nature of the
call and how critical it is to Pioneer's customer base(s).
<PAGE> 28
(c) Response: Wink agrees to use commercially reasonable efforts to
meet the response times for the respective problems commensurate
with the severity of the error as specified below:
<TABLE>
<CAPTION>
Frequency of
Severity Level Definition First Response Time Status Update
- - -------------- -------------------------------------------- ------------------- ------------------
<S> <C> <C> <C>
Critical Bug causes a crash and/or data loss to 4 business hours Each business day
a part or all of the system
High Bug causes a feature to violate a 4 business hours Each business day
performance specification (i.e.,
feature consistently does not work as
specified, or not at all)
Medium Bug causes an occasional failure of a 1 business day Weekly
feature (i.e., feature fails in specific
cases)
Low Bug is characterized by a "glitch" that 1 business day Weekly
does not affect a feature's
performance (e.g., confusing
messages, typo-graphical errors,
visual abnormalities, etc.)
Doc Error Error in documentation 2 business days
</TABLE>
(d) Support. Wink agrees to provide Third Level Support
from 9 a.m. to 6 p.m. (San Francisco time) on
business days ("Support Hours"). Support requests
shall be submitted by Pioneer via email.
5. Exclusions. Wink's support obligations shall not extend to problems that
result from: (i) Pioneer's failure to implement any Updates to the
Licensed Engine which are provided by Wink; (ii) changes to the operating
system or environment or Pioneer Devices which adversely affect the
Licensed Engine; (iii) any alterations of or additions to the Licensed
Engine performed by parties other than Wink or Wink's authorized
Subcontractors; (iv) use of the Licensed Engine in a manner inconsistent
with the applicable Specifications or in a manner for which such Licensed
Engine was not intended; or (v) combination of the Licensed Engine with
other products not supplied by Wink, which problems do not affect the
Licensed Engine standing alone. Errors arising from the foregoing may be
addressed by Wink at its then current hourly rates.
6. Fees. In consideration for the support of the Licensed Engine
provided by Wink under this Exhibit, Pioneer shall pay an annual fee of
25,000 as prepaid support for fees for up to 125 hours of support. Any
additional support will be provided at Wink's then current hourly rates.
The fee does not include travel expenses (air, lodging, food, local
transport). The first support period
-2-
<PAGE> 29
will begin on the date of Final Acceptance and the fees for such period
are due upon execution of this Agreement. The fees for any renewal period
are due in advance within 60 days prior to the beginning of the renewal
period. Travel availability is not guaranteed. The support terms will
automatically renew unless one party notifies the other of its intent not
to renew.
7. Change. These support terms are subject to change annually. Any
changes will be documented in writing at least 90 days prior to the
renewal date.
-3-
<PAGE> 1
EXHIBIT 10.22
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is made as of
June 8, 1995 (the "Effective Date"), between Wink Communications, Inc., a
California corporation with offices at 2061 Challenger Drive, Alameda, CA 94501
("Wink") and General Instrument Corporation of Delaware, a Delaware corporation
with offices at 2200 Byberry Road, Hatboro, PA 19040 ("GI").
WHEREAS, Wink is the developer of an authoring tool,
platform-independent software protocol and a software engine implementing and
interpreting the protocol, which protocol and engine can be used to create and
deliver interactive television applications;
WHEREAS, GI is a leading developer and manufacturer of television
set-top terminals and other equipment used in cable television and related
industries; and
WHEREAS, the parties wish that Wink adapt its software engine for use on
GI's set-top terminals and certain of such other equipment; and
WHEREAS, GI desires that Wink grant GI certain rights to Wink's software
engine and protocol, and Wink desires to grant such rights, all subject to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. DEFINITIONS
1.1 "Development Schedule" shall mean the schedule for completion of the
Development Activities set forth in Exhibit A hereto.
1.2 "Specifications" shall mean the technical and other specifications
for the Deliverables and the Development Activities to be developed by the
parties as described below and in Exhibit A hereto and as set forth thereafter
in Exhibit B hereto.
1.3 "Wink Engine" shall mean Winks software engine described in Exhibit
C hereto, in machine executable, object code format, as adapted by Wink as part
of the Development Activities, and any and all Updates thereto.
<PAGE> 2
1.4 "Development Activities" shall mean the development work to be
performed by Wink pursuant to this Agreement and Exhibit A hereto.
1.5 "Milestone" shall mean each milestone identified in Exhibit A
hereto.
1.6 "Deliverables" shall mean each Deliverable identified in Exhibit A
hereto, to be delivered at the time of each completion of a Milestone by Wink.
1.7 "Task Description" shall mean the description of the Development
Activities set forth in Exhibit A hereto.
1.8 "Intellectual Property Rights" shall mean all current and future
worldwide patents and other patent rights, copyrights, mask work rights, trade
secrets, and all other intellectual property rights, including without
limitation all applications and registrations with respect thereto.
1.9 "Update" shall mean a new version of the Wink Engine which contains
Error corrections or minor new features or functionality, but which is not a New
Product, in each case as determined in Wink's sole and reasonable discretion as
follows. An Update shall be designated by a change in the digit or digits to the
right of the decimal point in the version number. In the case of the version
numbers described in Exhibit A hereto, Updates shall be designated by a change
to any one of the digits denoted as follows (using the letter "x" as a
placeholder): 0.xxx, 1.xxx.
1.10 "New Product" shall mean a software product which contains major
new features or functionality and which Wink offers to its customers at a
separate price, in each case as determined in Wink's sole and reasonable
discretion as follows. A New Product shall be designated by a change in the
digit or digits to the left of the decimal point in the version number.
1.11 "GI Device" shall mean any set-top terminal manufactured by GI or
its third party manufacturers for GI, or any module of such a terminal, in which
GI may elect, from time to time and in its sole and reasonable discretion, to
include the Wink Engine, and for which, as mutually agreed by the parties, a
compatible Wink Engine has either been developed, or will be developed
hereunder. GI Devices shall include, without limitation, the CFT 2200 analog
terminal and associated Feature Expansion Module, the DCT digital terminal, the
LinX interactive module, and the Consumer C-Band Satellite Receiver.
1.12 "Combined Product" shall mean a GI Device containing the Wink
Engine embedded in a ROM or flash ROM chip.
1.13 "Error Correction" shall mean an error correction by Wink to fix a
reproducible programming error resident in the Wink Engine which prevents the
Wink Engine from conforming to the Specifications, and which is discovered by
Wink or GI and, if discovered by GI, reported to Wink with sufficient
information to allow Wink to reproduce such error.
-2-
<PAGE> 3
1.14 "Protocol" shall mean Wink's Interactive Communicating Applications
Protocol.
2. DEVELOPMENT, DELIVERY AND ACCEPTANCE
2.1 Development. Wink agrees to perform the Development Activities in
accordance with the Task Description and Specifications. In connection
therewith, GI shall (i) assist Wink in producing the Specifications and (ii)
provide other necessary materials and information, as mutually agreed by the
parties in the specifications or otherwise. The parties may agree on additional
Development Activities and Task Descriptions by amending Exhibit A hereto. All
development work shall be at Wink's sole expense, except as set forth in
Section 4 below.
2.2 Provision of Hardware. GI shall provide all equipment reasonably
necessary for Wink's performance of the Development Activities to Wink at GI's
cost therefor; provided, that Wink shall use such equipment only for the
Development Activities. Without limiting the foregoing, such equipment may be
described in Exhibit A hereto.
2.3 Modifications. Wink shall be permitted, upon written approval by GI
in each instance, to alter the Specifications commensurate with good faith
efforts to finalize and refine the Deliverables in accordance with GI's needs
and objective for the Wink Engine.
2.4 Delivery and Acceptance.
2.4.1 Wink shall use all reasonable commercial efforts to
complete the Development Activities and each Milestone in accordance with the
Development Schedule. Upon completion of each Milestone, Wink shall deliver to
GI all applicable Deliverables for evaluation by GI pursuant to Section 2.4.2
below. In the event GI is late in the performance of its obligations with
respect to the Development Activities and such delay affects Wink's obligations
hereunder, Wink's performance of such affected obligations shall be delayed by
the same time period.
2.4.2 Within thirty (30) days after receipt, for the
Specifications and Development Schedule, or as soon as reasonably practicable,
but not more than sixty (60) days after receipt, for Deliverables other than
the Specifications and Development Schedule, GI shall review and evaluate such
Deliverables and shall provide Wink with a written acceptance of the
Deliverables, or a written statement of errors to be corrected. GI shall not
withhold acceptance of any Deliverable (except the Specifications and
Development Schedule) except in the event that a reproducible programming
error, discovered by GI and promptly reported to Wink, is present within such
Deliverable and represents a deviation from the Specifications. In addition, GI
shall not withhold acceptance due to factors external to the Deliverables or
under GI's control. GI's failure to provide an acceptance or statement of
errors within such thirty or sixty day period (as applicable) shall be deemed
an acceptance of such Deliverables. When errors are identified and confirmed,
Wink shall use all reasonable commercial efforts to correct such errors, if
any, as soon as practicable, but not more than sixty (60) days after GI's
provision of the statement of errors, and to return a copy of the updated
Deliverables to GI for review and reevaluation in accordance with the foregoing
procedure.
-3-
<PAGE> 4
The foregoing procedure shall be repeated until acceptance by GI of the
Deliverables or the parties mutually agree to cease development and terminate
this Agreement, with Wink returning to GI any and all royalty advances paid by
GI under Section 4.3 hereof which have not been credited against GI's royalty
obligations-under Section 4.2 hereof.
2.5 Transfer of Software. Upon GI's acceptance of all non-Specification
Deliverables pertaining to a particular development project, Wink shall deliver
to GI a master diskette or other digital storage media (the "Master Media")
containing the Wink Engine for use by GI in accordance with the terms of this
Agreement, including without limitation Section 3.
2.6 Right to Pursue Other Projects. The parties acknowledge and
understand that, independent of the development efforts hereunder, both Wink
and GI have been and continue to be actively engaged in research and
development in the field of the Development Activities and in the course of
such research and development may have developed or may hereafter develop
similar software to the Wink Engine; provided that in GI's case, such similar
software shall be developed without use of or reference to the Wink Engine. In
addition, Wink may develop or modify the Wink Engine for itself or for others.
The parties agree that this Agreement shall not be construed as (i) prohibiting
such independent research and development, either on their own behalf or under
contract with others, (ii) precluding either party from developing, acquiring,
utilizing or distributing such similar software without obligation the other
party so long as such research and development or such party do not otherwise
breach the terms of this Agreement or (iii) prohibiting such development or
modification of the Wink Engine by Wink. Such Submanufacturer with software
owned by GI, GI's provision of the Wink Engine to such Submanufacturer shall be
subject to (a) Wink's written approval (not to be unreasonably withheld) of
such Submanufacturer, and (b) GI's indemnification and holding Wink harmless
from and against any loss, cost, liability or expense (including Wink's
reasonable attorneys' fees) arising out of or related to a breach of the
provisions of subsections (i) - (iv) above by such Submanufacturer.
3.3 Subdistributors. GI may exercise its distribution rights hereunder
through the use of subsidiaries, affiliates, distributors, resellers, cable
system operators, value-added resellers, dealers or sales representatives
("Subdistributors"); provided, that each Subdistributor must agree in a signed
writing, prior to obtaining the Wink Engine from GI, to be bound to the
restrictions on GI set forth in Sections 3.1(b), 3.4, 3.5, 4.7, 7, 8.2, 13,
16.4 and 16.7 of this Agreement.
3.4 Proprietary Notices. All copies of the Wink Engines reproduced or
distributed by GI shall contain copyright and other proprietary notices in the
same manner in which Wink incorporates such notices in the Wink Engine's or in
any other manner reasonably requested by Wink.
3.5 Limitations. GI shall not modify, prepare derivative works of,
reverse engineer, disassemble, decompile, or otherwise have or attempt to
obtain access to the source code of the Wink Engine, except as permitted under
the provisions of Section 15.
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3.6 Enforcement. GI shall (i) use commercially reasonable efforts to
ensure that all Subdistributors and Submanufacturers abide by the terms of
their written agreements described herein and (ii) keep Wink apprised of its
activities in enforcing such agreements.
4. COMPENSATION
4.1 Non-Recurring Engineering. In consideration of the duties and
obligations of Wink under Section 2, GI shall pay Wink the amounts set forth in
Exhibit A hereto, at the times set forth in Exhibit A hereto. Any payments
based upon completion of any Milestone shall not be payable until GI's
acceptance of that Milestone pursuant to Section 2.4. Wink recognizes that GI
values time-to-market as an advantage against GI's competitors who may also use
Wink's software engine. As a result, Wink has, as of the Effective Date,
provided GI with a "head start" in the development of a Wink Engine for the CFT
2200, and Wink agrees to allocate engineering resources sufficient to target
delivery of the Wink Engine for GI Devices other than the CFT 2200 on a
schedule that is ahead of Wink's targeted delivery of Wink's software engine
for any other third party, provided that (i) GI has performed and is performing
its obligations hereunder, and (ii) GI demonstrates significant commitment to
Development Activities in a timely manner as compared to such third party. For
purposes of this Section 4.1, "significant commitment to Development Activities
in a timely manner as compared to a third party" means that for any given GI
Device for which GI wishes development by Wink to occur, GI (a) has paid
development fees and provided working prototype hardware to Wink, and (b) has
cooperated with Wink to finalize mutually agreeable Specifications, and that
the foregoing conditions have been met by GI before they have been met by a
third party for that third party's development activities.
4.2 Per-Copy Royalty. In consideration for the rights and licenses
granted to it under Section 3 above, for each copy of (i) the Combined Product
distributed by GI to a Subdistributor and (ii) the Wink Engine distributed on a
stand-alone basis to a GI Device by GI or a Subdistributor for use with a
particular unit of a GI Device, GI shall pay Wink the per-copy royalty set
forth in Exhibit A hereto. GI and its Subdistributors shall have no obligation
to pay more than one royalty for any particular unit of a GI Device or Combined
Product, except as set forth in Section 4.4. In the event that GI or a
Subdistributor distributes a Combined-Product to an end user for which a
royalty is or has been paid and thereafter accepts a return of the same unit of
Combined Product, GI or such Subdistributor may redistribute such unit of
Combined Product without owing an additional royalty hereunder to Wink. In
addition, GI shall have no obligation to pay any royalty for any products which
do not incorporate the Wink Engine or any portion thereof.
GI shall make royalty payments to Wink within thirty (30) days after the
end of each calendar quarter during the term hereof, with respect to
distributions by GI in such calendar quarter. Such payments shall be
accompanied by a written report which details, with respect to the applicable
calendar quarter (i) the number of Combined Products distributed by GI to
Subdistributors, (ii) the number of copies of the Wink Engine for which a
royalty is due hereunder distributed by GI and its Subdistributors other than
as part of a Combined Product, (iii) the royalty due Wink with respect to
Combined Products and copies of the Wink Engine distributed during
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such calendar quarter, (iv) the number of copies of the Wink Engine (including
without limitation Updates) or Combined Products distributed by GI or its
Subdistributors for which no royalty is due under the exceptions to this
Section 4.2 set forth in Sections 4.4 or 4.5 and (v) where applicable, a
summary of payments by GI pursuant to Section 11.5 hereof. Subject to the
provisions of Section 14, GI in its sole discretion shall determine its
marketing strategy with respect to any and all of its products except as may be
expressly set forth herein, and nothing in this Agreement shall be construed as
a representation, warranty or agreement with respect to the success of such
strategy or a commitment with respect to the volume of any such products.
4.3 Advance Royalties. GI shall pay Wink the non-refundable royalty
advances set forth in Exhibit A hereto, at the times set forth in Exhibit A
hereto. All advances paid by GI hereunder shall be credited against GI's
royalty payments under Section 4.2.
4.4 Distribution of Updates. GI shall not incur a royalty with respect
to its or its Subdistributors' distribution of Updates (as permitted by Section
8.2 hereof) unless (1) such Update is the first Wink Engine to be distributed
to or with a particular unit of a GI Device or (2) the version number of a Wink
Engine previously distributed to or with such unit has a lower digit to the
left of the decimal point than does the subsequently distributed Wink Engine.
Notwithstanding (2) above, any distribution by GI or its Subdistributors of a
version number which has the number "1" to the left of the decimal point where
the previously distributed version has a "0" to the left of the decimal point
shall not incur a royalty to Wink.
4.5 Promotional Units. GI may distribute a reasonable number of Combined
Products (not to exceed 1,000 per calendar quarter) as promotional units,
without incurring a royalty therefor to Wink under the provisions of section
4.2.
4.6 Currency; Taxes. All payments hereunder shall be in United States
dollars. GI's non-recurring engineering fees and royalty payments do not
include any governmental taxes or charges of any kind that may be applicable to
the distribution of the Combined Products or Wink Engines or to payments to
Wink hereunder, excluding only taxes based on Wink's net income. GI shall pay
or reimburse Wink for all such taxes and charges levied against Wink in a
timely manner.
4.7 Books and Records; Audit. GI agrees to maintain, and to use
commercially reasonable efforts to ensure that each third party who distributes
the Wink Engine maintain and provide to GI, until two (2) years after the
earlier of (i) the termination of this Agreement or (ii) the last shipment of
the Wink Engine hereunder, complete and current books, records and accounts
regarding all copying and distribution activities pursuant to this Agreement,
the payments due to Wink thereon, and payments by GI in accordance with Section
11.5. GI agrees to allow Wink's independent certified public accountant the
right to audit and examine such books, records and accounts and the Master
Media delivered to GI no more than once each calendar quarter during GI's
normal business hours, upon seven (7) business days' prior written notice, to
verify the accuracy of the reports and payments made to Wink under this Section
4. Such independent C.P.A. shall enter into, a confidentiality agreement
containing terms substantially similar to Section 10 hereof, prior to
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any such audit and examination. In addition, such C.P.A. shall report to Wink
only whether or not a shortfall or overpayment has occurred, and the amount of
any such shortfall or overpayment. In the event such audit determines that GI
has not paid for all of the copies of Combined Products and Wink Engines
distributed, GI agrees to pay, in addition to any damages to which Wink might
be entitled, the amount of such shortfall. In the event such audit determines
that GI has overpaid Wink for all of the copies of Combined Products and Wink
Engines distributed, Wink agrees to pay the amount of such overpayment. If any
such audit reveals an underpayment to Wink of at least Five Thousand Dollars
(US$5,000) or ten percent (10%), whichever is greater, GI shall reimburse to
Wink its costs of such examination.
5. WARRANTY
5.1 Product Warranty. Wink's warrants to GI that, for a period of three
(3) years after GI's acceptance of each non-Specification Deliverable, the Wink
Engine (as it is then-constituted) shall function without defects under
ordinary use that cause it not to be in substantial conformance with the
Specifications. Wink does not warrant that the Wink Engines will meet all of
GI's requirements, except as set forth in the Specifications.
5.2 Defects not Covered by Warranty. Wink's warranty shall not extend to
problems in the Wink Engine that result from: (i) GI's failure to implement any
Error Corrections or Updates to the Wink Engine which are provided by Wink, to
the extent the same are made available to GI free of charge and without
material degradation in function and/or performance; (ii) changes to the
operating system or environment or GI Devices which adversely affect the Wink
Engine (except to the extent the Wink Engine may be deemed to be an operating
system or environment); (iii) any alterations of or additions to the Wink
Engine performed by parties other than Wink or on Wink's behalf; (iv) use of
the Wink Engine in a manner for which it was not designed; (v) accident,
negligence, or misuse of the Wink Engine by any party other than Wink
personnel; (vi) combination of the Wink Engine with other products not supplied
by Wink (except the hardware of the GI Device), which problems do not affect
the Wink Engine standing alone; or (vii) operation of the Wink Engine outside
of environmental specifications. As used in Subsection 5.2(iii), "on Wink's
behalf" shall mean, with respect to a third party, that Wink has authorized
such third party to perform such alterations or additions and shall mean, with
respect to GI, that Wink has given its written authorization for GI to perform
such alterations or additions.
5.3 Exclusive Remedy. Wink's sole obligation and GI's exclusive remedy
under the above warranty shall be for Wink to use all reasonable efforts to
make modifications and Error Corrections to the Wink Engines to bring them into
conformity with Wink's warranty set forth above; provided, that Wink shall have
no obligation to correct all errors in the Wink Engine.
5.4 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY,
WINK MAKES AND GI RECEIVES NO WARRANTIES WITH RESPECT TO THE WINK
ENGINE, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND WINK SPECIFICALLY
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DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY, NONINFRINGEMENT OR FITNESS
FOR A PARTICULAR PURPOSE.
6. PROPERTY RIGHTS
GI agrees that prior to, on and after the Effective Date Wink owns and
shall own all right, title and interest in (a) the Wink Engines and all
modifications and derivatives thereof and (b) all Intellectual Property Rights
relating to the design, manufacture, marketing, operation or service of the
Wink Engines. Wink shall grant to GI, and does hereby grant to GI, a
non-exclusive, non-transferable, royalty-free, perpetual license to use and
copy any and all modifications to and the portions of the derivatives of the
Wink Engine made by GI; provided, that GI's license in such modifications and
derivative portions shall be subject to Wink's underlying rights in the Wink
Engine; and further provided, that GI's license in such modifications and
derivative portions shall not affect GI's obligation to pay royalties under
Article 4 with respect to GI's license to the underlying Wink Engine set forth
in Article 3. The results of the parties' collaboration with respect to this
Agreement shall be owned by the party to whose product the collaboration
pertains, subject to each party's copyrights, patents and trademark rights, and
subject to any non-disclosure agreement that GI and Wink may hereafter enter
into with respect to such collaboration. Each party shall do all things now or
hereafter reasonably requested by the other party to confirm and protect the
other party's ownership of intellectual property rights contemplated by this
Section 6. Except as expressly provided in Section 2, Wink does not grant to GI
any right, title or interest in the Wink Engines, whether by implication,
estoppel or otherwise. All property rights with respect to the Wink Engine and
the Protocol not specifically granted herein are reserved to Wink.
7. MARKETING; TRADEMARKS AND TRADE NAMES
7.1 Use of Trademarks. During the term of this Agreement, in the event
that GI or its Subdistributors advertises, promotes or markets the Wink Engine
or its functionality, whether as stand alone or as part of the Combined Product
or any value-added product incorporating the Combined Product, GI shall, and
shall ensure that its Subdistributors shall, advertise, promote and market the
Wink Engine, the Combined Products and any value-added products incorporating
the Combined Products, under the trademarks, marks, trade names, logos, and
other product and company identifiers of Wink that Wink may adopt from time to
time ("Wink Trademarks"). With respect to distribution of the Combined
Products, the Wink Trademarks shall be permanently affixed (for example, not by
a sticker or decal) to the Combined Products, in a prominent location (similar
in concept to the presentation of the Dolby Stereo logo "ODD", as such logo
exists in the marketplace on the Effective Date), and shall be presented
distinctly, legibly, and in a size no smaller than the sample trademark
provided in the attached Exhibit D and no large than two times the sample
trademark provided in the attached Exhibit D. GI has paid no consideration for
the use of the Wink Trademarks as set forth herein. GI and its Subdistributors
may use trade names, marks or trademarks in addition to the Wink Trademarks in
connection with the Combined Product. At no time during or after the term of
this Agreement shall GI register, attempt to register or cause the registration
of any of the Wink Trademarks other than in Wink's name, at Wink's specific
written
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request and at Wink's expense, except in the event GI adopts, uses or acquires
a trademark, mark or trade name substantially similar to a Wink Trademark prior
to Wink's adoption, use or acquisition of such Wink Trademark.
7.2 Proprietary Rights. Except as expressly set forth herein, nothing
herein shall grant to GI or its Subdistributors any right, title or interest in
the Wink Trademarks. At no time during or after the term of this Agreement
shall GI or its Subdistributors challenge or assist others to challenge the
Wink Trademarks or the registration thereof or attempt to register any
trademarks, marks or trade names confusingly similar to those of Wink, except
in the event GI or its Subdistributors adopt, use or acquire a confusingly
similar trademark, mark or trade name prior to Wink's adoption, use or
acquisition of such Wink Trademark.
7.3 Approval of Representations. All representations of Wink's
Trademarks that GI or its Subdistributors intend to use shall first be
submitted to Wink for approval (which shall not be unreasonably withheld) of
design, color, and other details, or shall be exact copies of those used by
Wink, and shall conform to any reasonable trademark usage guidelines adopted by
Wink and supplied to GI. To ensure trademark quality, within a reasonable time
prior to GI's first commercial shipment of the Combined Product or any
value-added product incorporating the Combined Product (where the components of
the value-added product affect, in GI's reasonable discretion, the performance
of the Wink Engine) bearing one or more Wink Trademarks, GI shall supply to
Wink one such Combined Product or product for inspection and testing by Wink to
ensure that such Combined Product or value-added product conforms to Wink's
standards of quality for products sold under the Wink Trademarks. In no event
shall GI commence commercial shipment of any such Combined Product or other
such value-added product incorporating the Combined Product (except as set
forth above) under the Wink Trademarks without Wink's prior written approval.
7.4 Terms of this Agreement; Press Releases. The parties shall cooperate
and participate in public relations programs to promote the Wink Engine and the
relationship between the parties. Appropriate personnel from each party shall
participate in such public relations program. The parties shall cooperate with
respect to and mutually approve (not to be unreasonably withheld or delayed)
all press releases issued by either party with respect to this Agreement or the
parties' relationship. Such approval is intended to protect the timing of
disclosure of the availability of the Wink Engine and the Combined Product and
of the existence of the parties' relationship, as well as to ensure proper
references, accurate information and correct proprietary notices and
information. Unless otherwise agreed in writing by the parties, each press
release issued pursuant to this Section 7.4 shall contain: (i) in the body of
the release, the name and location of both parties and a quote from an
executive officer of both parties; (ii) in a footnote at the end of the
release, both parties' proprietary notices with respect to technology discussed
in the body of the release. Whenever feasible, the press release shall also
include the logo of each party. Each party agrees not to disclose the terms of
this Agreement to any third party without the other's written consent in its
sole discretion, except as required by securities or other applicable laws and
to such party's accountants, attorneys and other professional advisors.
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8. TRAINING, SUPPORT AND MAINTENANCE
8.1 Error Corrections. Wink shall use all reasonable and diligent
efforts to make Error Corrections to the Wink Engines in a time frame
commensurate with the level of severity of the error. GI shall have the right
to provide such Error Corrections free of additional charge to its
Subdistributors, Submanufacturers for their use consistent with this Agreement.
8.2 Updates. Wink may, during the term of this Agreement, develop
Updates to the Wink Engine. During the term of this Agreement, and subject to
the provisions of Sections 4.2 and 4.4 hereof, Wink agrees to make available to
GI all such Updates and permit GI to distribute Updates to its Subdistributors
and Submanufacturers for their use consistent with this Agreement. GI shall
promptly notify its Submanufacturers and Subdistributors of the availability of
each Update and, with respect to any and all Updates which do not delete
functionality existing in previous versions or materially degrade the
functionality of the Wink Engine, GI shall require (in the case of any
Submanufacturer) or request (in the case of any Subdistributor) them to
promptly using each such Update in place of the previous version of the Wink
Engine.
8.3 Provision of Hardware. GI shall provide to Wink all equipment
reasonably necessary for Wink's performance of its obligations under this
Section 8 at GI's cost therefor; provided, that Wink shall use such equipment
only for the performance of its obligations under this Section 8. Without
limiting the foregoing, such equipment may be described in Exhibit A hereto. In
the event GI is late in the performance of its obligations with respect to this
Section 8.3 and such delay affects Wink's obligations under this Section 8,
Wink's performance of such affected obligations shall be delayed by the same
time period.
8.4 Travel Requirements. In the event that, in the performance of its
obligations under this Section 8 or under Section 2, it is mutually agreed by
the parties that Wink engineering employees or contractors shall travel from
Wink's facility, GI shall pay and/or promptly reimburse Wink for, all
reasonable travel (if by air, coach class), room and board, car rental and
other similar expenses associated with such travel, which expenses are approved
in writing by GI prior to their incurrance; provided that Wink shall not be
paid and/or reimbursed for employee or contractor time expended with respect to
such travel. Any such travel expenses approved in writing by GI shall be deemed
reasonable by virtue of such approval.
8.5 Applicability of Support Obligations. Wink shall at all times have
the obligation to support only the then-current Updated version of the Wink
Engine, as well as the immediately prior Updated version of the Wink Engine;
provided, that when a new Update is released, Wink will continue to support the
older of the two prior Updated versions for a period of six (6) months after
the date of such release.
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9. TERM AND TERMINATION
9.1 Term. This Agreement shall commence on the Effective Date and shall
continue in full force and effect for an initial term of five (5) years from
the Effective Date, unless earlier terminated in accordance with sections 9.b.
or 9.c. below or Section 11.2(d). Unless terminated pursuant to Sections 9.b or
9.c below, this Agreement may be renewed by GI for an additional five (5) year
term upon giving Wink at least sixty (60) days' written notice prior to the
expiration of the initial term.
9.2 Termination for Cause. If either party defaults in the performance
of any provision of this Agreement, and the default is one which is reasonably
susceptible of cure, then, in addition to any other remedy which may be
available to the non-defaulting party at law or equity, the non-defaulting
party may give written notice to the defaulting party that if the default is
not cured within thirty (30) days this Agreement shall be terminated. If the
non-defaulting party gives such notice and the default is not cured within
thirty (30) days, this Agreement shall terminate immediately upon notice by the
non-defaulting party. If the default is one which is not reasonably susceptible
of cure, this Agreement shall terminate immediately upon the giving of notice
by the non-defaulting party, with no cure period provided.
9.3 Termination for Insolvency. This Agreement shall terminate upon
written notice given by a party, at such party's option and without further
notice, upon the earlier of: (i) the institution by or against the other party
of insolvency, receivership or bankruptcy proceedings or any other proceedings
for the settlement of the other party's debts, (ii) the other party's making an
assignment for the benefit of its creditors, (iii) the other party's
declaration in writing of its inability to pay debts as they become due, or
(iv) the other party's dissolution or ceasing to conduct business as a going
concern.
9.4 Termination for Convenience. GI may terminate this Agreement for any
reason or no reason in its entirety at any time by giving Wink at least sixty
(60) days, prior written notice of such termination.
9.5 Effect of Termination. Upon the expiration or termination of this
Agreement, the following provisions shall take effect:
9.5.1 Subject to the provisions of Section 9.6, the rights and
licenses granted to GI under this Agreement shall automatically terminate, and
GI and its Subdistributors shall immediately cease all use of the Wink
Trademarks;
9.5.2 Any and all sublicenses for end use for the Wink Engine or
GI Devices granted by GI or its Subdistributors shall continue in effect
according to their terms and conditions;
9.5.3 Within ten (10) days after such expiration or termination,
GI shall return, and shall certify to Wink the return of, all Master Media and
all Wink Confidential Information in
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its or its Submanufacturers' possession at the time of expiration or
termination. In addition, Wink shall return, and shall certify to GI the return
of, all GI Confidential Information in its possession at the time of expiration
or termination. GI shall not make or retain any Master Media, copies of the
Wink Engines, or any other materials containing confidential information of
Wink entrusted to GI. Notwithstanding the foregoing, GI may (i) maintain a
single copy of the Master Media and (ii) retain any Confidential Information
necessary for support, subject to the provisions of Section 10, both solely to
provide support to its Subdistributors and to end users in existence as of the
effective date of expiration or termination; and
9.5.4 The provisions of Sections 5, 6, 9, 10, 11, 12, 13, 14 and
16 shall survive the expiration or termination of this Agreement for any
reason.
9.6 Sell-off Period. In the event of the expiration of this Agreement or
a termination by GI, GI may, subject to the provisions of Section 4 (including
without limitation GI's obligation to pay royalties in connection with all
distributions) dispose of its inventory of Wink Engines and Combined Products
on hand, for a period not to exceed one hundred and eighty (180) days after the
effective date of such expiration or termination (the "Sell-off Period"), and
in connection therewith, GI shall use the Wink Trademarks during the Sell-off
Period pursuant to the provisions of Section 7.
9.7 Destruction of Inventory. Within thirty (30) days after (i) the end
of the Sell-off Period, in the event of the expiration or termination of this
Agreement by GI or (ii) the effective date of termination, in the event of a
termination by Wink, GI shall destroy, and shall certify to Wink the
destruction of, all copies of the Wink Engine in its or its Subdistributors' or
Submanufacturers' possession.
10 CONFIDENTIALITY
10.1 Obligation of Confidentiality. The parties acknowledge that by
reason of their relationship to each other hereunder, each may have access to
certain information and materials concerning the other's business, plans,
customers, technology and products that is confidential and of substantial
value to that other party, which value would be impaired if such information
were disclosed to third parties ("Confidential Information"). Without limiting
the foregoing, Confidential Information shall include the source code of the
Wink Engine. Each party agrees that it shall not use in any way, for its own
account or the account of any third party, nor disclose to any third party,
except as may be expressly permitted under this Agreement, any such
Confidential Information revealed to it by the other party and shall take every
reasonable precaution to protect the confidentiality of such information. Upon
request by either party, the other party shall advise whether or not it
considers any particular information or materials to be confidential, provided
that the Wink Engine shall at all times be deemed Confidential Information of
Wink. Neither party shall develop or have developed any software programs
utilizing any of the other party's Confidential Information.
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10.2 Exceptions. Information shall not be deemed Confidential
Information hereunder if such information:
10.2.1 Is or becomes part of the public domain through no fault
or breach on the part of the receiving party;
10.2.2 Is known to the receiving party prior to the disclosure
by the disclosing party and such knowledge can be shown by written records;
10.2.3 Is subsequently rightfully obtained by the receiving
party from a third party who has the legal right to disclose it;
10.2.4 Is independently developed by the receiving party without
the use of any Confidential Information or any breach of this Agreement;
10.2.5 Is approved for public release by the disclosing party;
or
10.2.6 Is required to be disclosed by judicial action provided
that the receiving party has first given the disclosing party reasonable notice
of such requirement and fully cooperates with the disclosing party in seeking
confidential treatment for any such disclosure.
11. INTELLECTUAL PROPERTY, WARRANTY AND INDEMNITY
11.1 Warranty. Each party represents and warrants that neither the
execution or performance by such party of this Agreement, nor the consummation
of any transactions herein does or will violate any law, order, regulation or
ruling applicable to such party or its efforts hereunder. In addition, Wink
represents and warrants that (a) as of the Effective Date, no action or
proceeding alleging intellectual property infringement by the Wink Engine has
been threatened or is proceeding against Wink (nor, insofar as Wink is aware,
against any entity from which Wink has obtained any rights related to the Wink
Engine), (b) it has the exclusive right to license the Intellectual Property
Rights in and to the Wink Engine to GI and (c) the Wink Engine does not
infringe upon or violate any patent in the U.S. or any country listed in
Exhibit F, as the same may be amended from time to time, or any copyright,
trade secret or trademark. GI's exclusive remedy, and Wink's sole liability,
for a breach by Wink of the warranties of subsections (b) and (c) above shall
be Wink's indemnity set forth in this Section 11.
11.2 Indemnity. Wink agrees to defend, or at its option to settle, any
claim, suit, action or proceeding -brought against GI by a third party as a
result of Wink's breach of its warranties under 11. 1 (b) and (c) above (an
"Action"), and to pay any settlement or final judgment entered thereon against
GI, subject to the limitations set forth hereafter. Wink shall be relieved of
its obligations hereunder unless GI gives Wink (i) prompt written notice upon
becoming aware of the existence of an Action, (ii) sole control over the
defense or settlement of the Action and (iii) reasonable assistance in the
defense or settlement thereof. If it is, or in the opinion of Wink may be,
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determined by competent authority that the Wink Engines or any part thereof, or
the sale, distribution or use thereof as permitted hereunder infringes any
United States patent issued as of the Effective Date, or any copyright, trade
secret or trademark of a third party or is enjoined, then Wink at its sole
option and expense may (a) procure for GI the right under such patent,
copyright, trade secret or trademark to use, reproduce and distribute the Wink
Engines or such part thereof or such trademark; (b) replace the Wink Engines or
such part thereof or such trademark with other suitable software or trademark
without material degradation in performance or functionality; (c) suitably
modify the Wink Engines or such part thereof or such trademark to avoid
infringement without material degradation in performance or functionality; or
(d) if none of the foregoing are reasonably feasible, terminate this Agreement
and refund to GI all amounts paid by GI hereunder.
11.3 Limitations. The foregoing indemnity shall not apply to an Action
to the extent it arises out of (i) any modification of the Wink Engines by a
party other than Wink or on Wink's behalf, (ii) any combination of the Wink
Engines with hardware and/or software not supplied by Wink (except the hardware
of the GI Device), which infringement does not cover the Wink Engine standing
alone, or (iii) any trademarks, trade names or other brandings not supplied by
Wink. As used in Subsection 11.3(i), "on Wink's behalf" shall mean, with
respect to a third party, that Wink has authorized such third party to perform
such modifications and shall mean, with respect to GI, that Wink has given its
written authorization for GI to perform such modifications.
11.4 Disclaimer. THE FOREGOING PROVISIONS OF THIS SECTION 11 STATE THE
ENTIRE LIABILITY AND OBLIGATION (EXPRESS, IMPLIED, STATUTORY, IN ANY
COMMUNICATION WITH WINK OR OTHERWISE) OF WINK AND THE EXCLUSIVE REMEDY OF GI
AND ITS SUBDISTRIBUTORS WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY PATENT,
COPYRIGHT, TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT BY THE
WINK ENGINES OR ANY PART THEREOF.
11.5 Investigation by Wink. With respect to any and all countries set
forth in Exhibit F hereto, as the same may be amended from time to time, which
have not acceded to the Patent Cooperation Treaty of the World Intellectual
Property Organization, Wink shall have the right, at GI's expense, to conduct
reasonable activities to reduce the risk and costs of Wink's obligations under
this Section 11 with respect to such country by performing patent searches,
prosecuting patent applications, obtaining opinions by patent counsel, and
other similar activities which are reasonably necessary or useful in reducing
the risk of patent infringement or improving one's position in patent
litigation. Wink shall, wherever possible, obtain initial estimates for such
activities prior to conducting them and promptly provide such estimates to GI.
GI shall pay and/or reimburse Wink for all third party bills, invoices, and
similar third party requests for payment with respect to such activities, and
GI shall be entitled to credit any and all such payments against its royalty
obligations under Section 4.2 of this Agreement.
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<PAGE> 15
12. INDEMNITY BY GI
Except with respect to any claim, suit, action or proceeding arising out
of any intellectual property infringement by the Wink Engine, GI agrees to
defend, or at its option to settle, any claim, suit, action or proceeding
brought against Wink by a third party arising out of (i) the manufacture, use
or sale of the Wink Engines or Combined Products or (ii) GI's or its
Subdistributors' modification, use or distribution of the Wink Engines and the
Documentation, and to pay any settlement or final judgment entered thereon
against Wink, subject to the limitations set forth hereafter. GI shall be
relieved of its obligations hereunder unless Wink gives GI (i) prompt written
notice upon becoming aware of the existence of any such claim, suit, action or
proceeding, (ii) sole control over the defense or settlement of such claim,
suit, action or proceeding and (iii) reasonable assistance in the defense or
settlement thereof.
13. EXPORT ADMINISTRATION ACT
GI agrees that unless prior written authorization is obtained from the
Bureau of Export Administration or the Export Administration Regulations
explicitly permit the reexport without such written authorization, it shall not
export, reexport, or transship, directly or indirectly, the Products or any
technical data disclosed or provided to GI, or the direct product of such
technical data, to any country in country groups Q, S, W, Y, or Z (as defined
in the Export Administration Regulations from time to time) or to any other
country as to which the U.S. Government (i) requires written authorization
before exporting products to such country or (ii) has placed an embargo against
the shipment of products, which is in effect during the term of this Agreement.
14. REPURCHASE OF COMMON STOCK
In the event GI has not distributed at least 500,000 units of the
Combined Product on or before the third anniversary of the Effective Date, then
Wink shall have the right (which right shall be assignable by Wink) to
repurchase all shares of Wink common stock previously sold to GI at a purchase
price of $5.00 per share for a total consideration of $275,000, payable by
check, wire transfer or offset of any outstanding indebtedness of GI to Wink
under this Agreement or otherwise. Such right shall be exercisable at any time
within sixty (60) days after such third anniversary. GI agrees to execute any
documents and take any action reasonably necessary to effect such repurchase.
15. ESCROW
The parties agree to enter into a mutually agreed escrow agreement in
substantially similar form as Exhibit E hereto, with Data Securities
International, Inc. as the escrow agent. Pursuant to such agreement, Wink shall
deposit and maintain the Wink Engine source code. Subject to the provisions of
Exhibit E, GI shall be entitled to the release of such source code during any
time period in which: (i) Wink is subject to the jurisdiction of any bankruptcy
court or (ii) Wink is in material breach of the provisions of Sections 5 or 8,
which material breach has not been cured
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<PAGE> 16
within thirty (30) days after GI's written notice to Wink thereof. The
foregoing is subject, however, to the condition that GI is not at that time in
material breach of any of its obligations under this Agreement, and such breach
has not been cured within thirty (30) days after written notice thereof by
Wink. Wink and GI shall share equally all start-up fees, annual renewal fees,
deposit fees and any and all other fees due to such escrow agent.
With respect to the Initial Deposit and Supplemental Deposits made by
Wink (as defined in Exhibit E and including all updates made to the Initial
Deposit), Wink warrants that, to the best of Wink's knowledge, each such
Deposit shall be complete and represent the then-most current version of the
Wink Engine.
Upon any release of the Wink Engine source code to GI, subject to the
provisions of Exhibit E, (i) GI shall have a non-exclusive, non-transferable
license to use such source code solely to support and maintain the Combined
Product until the expiration or termination of GI's rights under Section 3 and
only during the time that the release condition exists, (ii) such source code
shall be treated by GI as Confidential Information of Wink under the provisions
of Section 10 hereof and (iii) Wink shall, within ten (10) days of such
release, provide to GI the most current version of the Wink Engine, including
all Error Corrections and Updates for the Wink Engine for all GI Devices. As
soon as the release condition ceases to exist, GI shall immediately return the
source code and all modifications thereto made by GI, as well as the current
source code version provided by Wink, to the escrow agent for re-deposit and GI
shall delete any and all copies of the source code from GI's computers.
GI will use the source code solely at its facility at 2200 Byberry Road,
Hatboro, Pennsylvania. The source code will be installed on a computer system
which is (a) accessible only to GI employees who need access in order to effect
the purposes of this Agreement and (b) not accessible through a modem or other
means of external communication. GI agrees to keep a written record of all
persons authorized to access the source code and will store the source code in
a locked facility with limited access when not in use. In addition, GI agrees
to inform all employees who are given access to the source code that they are
the confidential material of Wink licensed to GI as such. Access to the source
code will be limited to those GI employees needing such access to effect the
purposes of this Agreement. GI will be fully responsible for the conduct of its
employees, agents and representatives who in any way breach this Agreement. GI
will enter into a confidentiality agreement with each GI employee who is given
access to the source code, which agreement will incorporate the protections and
restrictions set forth herein. GI will notify Wink promptly in the event of any
breach of its security where it appears that any source code was
misappropriated, disclosed in violation of this Agreement or exposed to loss,
and GI will take all actions reasonably required to recover the source code in
the event of loss or misappropriation or to otherwise prevent its unauthorized
disclosure or use. At any time upon request by Wink, GI will provide Wink with
the names of all persons who have accessed the source code.
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<PAGE> 17
16. GENERAL
16.1 Governing Law and Jurisdiction. This Agreement shall be governed by
and construed under the laws of the State of California, without reference to
conflict of laws principles.
16.2 No Assignment. This Agreement and any rights or obligations of GI
or Wink hereunder shall not be assigned by either party without the prior
written consent of the other party, which consent shall not be unreasonably
withheld, except that either party may assign its rights and obligations
hereunder to any entity (i) which controls, is controlled by or is under common
control with such party or (ii) which acquires all or substantially all of the
assets or business of such party to which this Agreement pertains, provided in
both cases that such entity shall assume in writing or by operation of law such
party's obligations under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and assigns.
16.3 Independent Contractors. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) allow either party to
create or assume any obligation on behalf of the other party for any purpose
whatsoever.
16.4 Compliance with Laws. In exercising its rights under this license,
each party shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
16.5 Notices. All notices under this Agreement shall be in writing and
sent by (i) certified air mail, return receipt requested, postage prepaid or
(ii) commercial courier service. If properly addressed to or delivered at the
address for each party set forth above, a notice shall be deemed given upon
delivery or, where delivery cannot be effected due to the actions of the
addressee, upon tender.
16.6 Entire Agreement. This Agreement represents the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
or contemporaneous agreements, understandings, proposals and representations by
the parties, including without limitation the memorandum of understanding
between the parties dated November 17, 1994.
16.7 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER (i) IN THE AGGREGATE FOR ANY AMOUNT IN EXCESS OF THE AMOUNTS PAID
(AND THE AMOUNTS WHICH HAVE ACCRUED HEREUNDER BUT HAVE NOT BEEN PAID) BY GI
HEREUNDER AND (ii) FOR LOST PROFITS, LOSS OF DATA OR FOR ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN ANY WAY OUT OF THIS
AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF
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<PAGE> 18
LIABILITY. As used in this Section 16.7, "lost profits" shall not include, in
the case of an infringement of intellectual property rights or the disclosure
of source code, actual damages (including without limitation entitlement to a
reasonable royalty, as measured by the royalty rate provided for in this
Agreement) suffered as a result of such infringement or disclosure, but shall
include any profits made by an infringer or discloser. THIS LIMITATION SHALL
APPLY EVEN IF SUCH PARTY KNOWS OR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY PROVIDED FOR HEREIN.
16.8 Counterparts. This Agreement may be executed in any number of
counterparts and when so executed and delivered shall have the same force and
effect as though all signatures appeared on one document.
16.9 Severability. The provisions of this Agreement shall be severable,
and if any provision of this Agreement shall be held or declared to be illegal,
invalid, or unenforceable, such illegal, invalid or unenforceable provision
shall be severed from this Agreement and the remainder of the Agreement shall
remain in full force and effect, and the parties shall negotiate a substitute,
legal, valid and enforceable provision that most nearly reflects the parties'
intent in entering into this Agreement.
16.10 Basis of Bargain. Wink and GI acknowledge and agree that Wink's
entering into this Agreement and the amount of GI's royalty hereunder have been
done or set in reliance upon the limitations of liabilities and disclaimers of
warranty set forth in this Agreement, and that the same form an essential basis
of the, parties' bargain.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. GENERAL INSTRUMENT
CORPORATION OF DELAWARE
By: /s/ Brian P. Dougherty By: /s/ Richard S. Friedland
Name: BRIAN P DOUGHERTY Name: Richard S. Friedland
Title: PRESIDENT Title: President/C.O.O.
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<PAGE> 19
EXHIBIT A
DEVELOPMENT
1. Development Task Description
Wink shall adapt its software engine to be compatible with the CFT 2200
analog terminal with GI's Feature Expansion Module. As and when the parties
agree on a commercially reasonable amount of development fees, milestones and
Specifications for other GI Devices, Wink shall adapt its software engine to be
compatible with GI Devices other than the CFT 2200 analog terminal with GI's
Feature Expansion Module.
2. Specifications
The Specifications shall be developed by the parties and accepted by GI.
Upon GI's acceptance thereof, the Specifications shall be set forth in Exhibit
B hereto. Any modifications to the accepted Specifications shall be made only
upon the mutual written agreement of the parties.
3. Development Schedule and Milestones
<TABLE>
<CAPTION>
Deliverer and
Milestone Deliverables Completion Date Payment
--------- ------------ --------------- -------
<S> <C> <C> <C>
Signing (completed) [ * ]
Memorandum of
Understanding
Draft Wink: Draft (completed) [ * ]
Specifications Specifications
Firmware GI: Initial GI (completed) [ * ]
delivery #1 Server Layer API's
Firmware GI: Initial GI 5/01/95 [ * ]
delivery #2 Server Layer
object code
</TABLE>
- - --------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
-19-
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
Hardware GI: 1 CFT 2200 5/01/95 [ * ]
delivery #1 unit and I data
inserter unit
Firmware GI: Final Server 5/15/95 [ * ]
delivery #3 Layer API's and
object code
(including changes
requested by Wink,
such as to the OSD
Server API)
Hardware GI: 9 CFT 2200 6/01/95 [ * ]
delivery #2 units and 1 data
inserter unit
Delivery of Wink: Speci- (completed) [ * ]
specifications fications
Delivery of Wink: Confirmation 6/15/95 [ * ]
Development of Development
Schedule Schedule
Delivery Wink: Wink Engine 9/18/95 [ * ]
of Wink Engine Version 1.0 object
Version 1.0 code
Acceptance of Wink: Wink Engine To be agreed by [ * ]
Wink Engine Version 0.75 the parties in
Version 0.75 object code a signed writing
Acceptance Wink: Wink Engine To be agreed by [ * ]
of Wink Engine Version 1.0 the parties in
Version 1.0 object code a signed writing
</TABLE>
4. Per Copy Royalty:
[ * ]
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<PAGE> 21
5. Royalty Advances:
[ * ]
Event Advance Amount
Signing Memorandum of [ * ]
Understanding
Effective Date [ * ]
GI's Acceptance of [ * ]
the Specifications
GI's Acceptance of [ * ]
Wink Engine
Version 0.5, 1.0
WINK COMMUNICATIONS, INC. GENERAL INSTRUMENT
CORPORATION OF DELAWARE
By: /s/ Brian P. Dougherty By: /s/ Richard S. Friedland
Name: Brian P. Dougherty Name: Richard S. Friedland
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<PAGE> 22
EXHIBIT D
SAMPLE WINK TRADEMARK
[see attached page]
-22-
<PAGE> 23
EXHIBIT D
Sample Wink Trademark
[LOGO NOT SHOWN]
Dimensions:
0.45"w x 0.38"h
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<PAGE> 24
EXHIBIT E
TECHNOLOGY ESCROW AGREEMENT
Account Number 2309030-00001-0709006
This Technology Escrow Deposit Agreement including any Exhibits and Addenda
("Agreement") is effective this 14th day of June (the "Effective Date") by and
between Data Securities International, Inc. ("Escrowholder"), Wink
Communications, Inc., and General Instrument Corporation ("Licensee").
Notices to Licensor, Licensee and Escrowholder should be sent to the parties as
identified in the attached Exhibit A.
WHEREAS, Licensor has or will enter into a contract ("License Agreement") with
the Licensee for the use of proprietary technology and other materials of
Licensor ("Licensed Materials");
WHEREAS, Licensor and Licensee desire this Technology Escrow Agreement to be
supplementary to said contract pursuant to 11 U.S.C. Section 365(n);
WHEREAS, Licensor has deposited or will deposit with Escrowholder the related
proprietary data to provide for retention and controlled access for Licensee
under the conditions specified below;
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in consideration of the promises, mutual covenants and
conditions contained herein, the parties hereto agree as follows:
1. Licensor Deposit Account. Following the execution of this Agreement and
the payment of the set-up and deposit fees to Escrowholder, Escrowholder
shall open a Deposit Account for Licensor and Licensee. The opening of
the account means that Escrowholder shall establish an account ledger in
the name of the Licensor and Licensee and that Licensor and Licensee
shall receive renewal notices as provided in Section 7. Unless and until
Licensor makes an Initial Deposit with Escrowholder, Escrowholder shall
have no obligation to Licensor and Licensee except as defined by this
Section.
2. Initial Deposit. The "Initial Deposit" will consist of all material
initially supplied by Licensor to Escrowholder as specified by an
accompanying document called a "Description of Deposit Materials"
hereinafter referred to as an Exhibit B. Licensor shall make the Initial
Deposit within thirty (30) days after the effective date of this
Agreement. Escrowholder shall issue to Licensor and Licensee a copy of
the Exhibit B within ten (10) days of acceptance by Escrowholder of the
Initial Deposit.
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<PAGE> 25
3. Deposit Updates. Licensor hereby agrees to update the Deposit with
Escrowholder with Deposit materials (i) representing Error Corrections
and Updates to the previously escrowed materials for Wink Engines for
all GI Devices (all as defined in the License Agreement), other than
error corrections, updates, enhancements or releases which represent
customized versions of the previously escrowed materials made at the
direction of a third party licensee, promptly after such Error
Corrections and Updates are made, but no more than three times each
calendar year and (ii) representing adaptations to GI Devices (as
defined in the License Agreement) other than the CFT 2200, within thirty
(30) days after their release. The "Supplemental Deposit" will include
any materials added to the Deposit. Licensor will submit the
Supplemental Deposit accompanied by an Exhibit B, revised to show
supplemental materials deposited. Within ten (10) days of acceptance by
Escrowholder of such Supplemental Deposit, Escrowholder shall notify
Licensor and Licensee by issuing a copy of the Exhibit B.
4. Deposit Inspection. Upon the receipt of the Initial Deposit materials
and any Deposit Changes, Escrowholder will visually match the listed
items on the Exhibit B to the labeling of such materials. Escrowholder
shall not be responsible for verifying the contents or validating the
accuracy of Licensor's labeling. Acceptance of the Deposit will occur
only when Escrowholder concludes that the Deposit Inspection is
complete.
5. Licensee Registration Account. Following the execution of this Agreement
and the payment of the registration fee to Escrowholder, Escrowholder
shall open a Registration Account for Licensee. The opening of the
Registration Account means that Escrowholder shall establish an account
ledger in the name of the Licensee and that Licensee shall receive
renewal notices as provided in Section 7. Unless and until Licensor
makes an Initial Deposit of Materials with Escrowholder, Escrowholder
shall have no obligation to Licensee except as defined by this section.
6. Deposit Obligations of Confidentiality. Escrowholder agrees to establish
a receptacle in which it shall place the Deposit and shall put the
receptacle under the control of one or more of its officers, selected by
Escrowholder, whose identity shall be available to Licensor and Licensee
at all times. Escrowholder shall exercise a professional level of care
in carrying out the terms of this Agreement. Escrowholder acknowledges
Licensor's assertion that the Deposit shall contain proprietary data of
Licensor and that Escrowholder has an obligation to preserve and protect
that confidentiality. Except as provided in this agreement, Escrowholder
agrees that it shall not divulge, disclose, otherwise make available to
third parties, or make any use whatsoever of the Deposit, or of any
information provided to it by Licensor in connection with this
Agreement, without the express prior written consent of Licensor. This
obligation will continue indefinitely notwithstanding termination of
this agreement.
7. Term of Agreement. This Agreement shall have an initial term of one
year, commencing on the effective date of this Agreement. This Agreement
may be renewed for additional one-year periods upon receipt by
Escrowholder of the specified renewal fees. In the event that the
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<PAGE> 26
renewal fees are not received within thirty (30) days prior to the
expiration date, Escrowholder shall so notify Licensor and Licensee of
the thirty (30) day expiration period. If the renewal fees are not
received within the subsequent thirty (30) days, this Agreement will
expire without further notice and without liability of Escrowholder to
the parties of this Agreement. Licensee has the right to pay renewal
fees and other related fees. In the event Licensee pays the renewal fees
and Licensor is of the opinion that any necessary condition for renewal
is not met, Licensor may so notify Escrowholder and Licensee in writing.
The resulting dispute shall be resolved pursuant to the Dispute
Resolution Process defined in Section 11.
8. Expiry. Upon nonrenewal or other termination of this Agreement, all
duties and obligations of Escrowholder to Licensor and Licensee will
terminate. If Licensor requests the return of the Deposit, Escrowholder
shall return the Deposit to Licensor only after all outstanding invoices
and the deposit return fees are paid and thirty (30) days' prior written
notice has been provided to Licensee by Escrowholder. If the fee(s) are
not received by the anniversary date of this Agreement, Escrowholder
shall, at its option, destroy or return the Deposit to Licensor.
9. Filing for Release of Deposit of Licensee. Upon notice to Escrowholder
by Licensee of the occurrence of a release condition as defined in
Section 10, and payment of the filing for release fee, Escrowholder
shall so notify Licensor by certified mail with a copy of the notice
from the Licensee. If Licensor provides contrary instructions within ten
(10) working days of the mailing of the notice to Licensor, Escrowholder
shall not deliver the Deposit to the Licensee. "Contrary instructions"
means the filing of an affidavit or declaration with Escrowholder by an
officer of Licensor stating that a Release Condition has not occurred,
or has been cured. Escrowholder will send a copy of the affidavit or
declaration by certified mail to the Licensee who is filing for the
release of the Deposit materials. Upon receipt of contrary instructions,
Escrowholder shall not deliver a copy of the Deposit and shall continue
to store the Deposit until otherwise directed by Licensor and Licensee
jointly, or until resolution of the dispute pursuant to Section 11, or
by a court of competent jurisdiction.
10. Release of Deposit to Licensee. Release conditions are as set forth in
Section 15 of the License Agreement.
If Escrowholder does not receive contrary instructions from Licensor,
Escrowholder is authorized to release the Deposit.
11. Disputes. In the event of Escrowholder's receipt of contrary
instructions from Licensee, a dispute with respect to whether a release
condition has occurred will be deemed to be present, and Escrowholder
shall promptly notify Licensor and Licensee in writing of such dispute.
Such dispute will be settled by arbitration by one arbitrator
experienced in intellectual property matters in accordance with the
commercial rules of the American Arbitration Association (AAA); the
escrowed materials shall remain in escrow pending the outcome of
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<PAGE> 27
such arbitration. Upon receipt of Escrowholder's notice, Licensor and
Licensee will have a period of three (3) business days to select an
arbitrator. In the event Licensor and Licensee have not selected an
arbitrator by the end of the third business day following receipt of
notice by Escrowholder, the parties consent to the selection of the
arbitrator by the American Arbitration Association within two (2)
business days after the parties' failure to select. On or before the
fifth (5th) business day after his or her selection, the arbitrator
shall meet with Licensor and Licensee and shall hear testimony and other
evidence that Licensor and Licensee may wish to present on the issue of
whether a release event has occurred. The meetings shall be conducted
for a maximum of five (5) consecutive business days and shall be
conducted from 8:30 to 5:30 p.m. Licensee shall present up to two days
of evidence followed by up to two days of presentation by Licensor,
followed by a final day reserved for equal time periods of rebuttal by
each party. Within two (2) business days after the close of the
presentations, the arbitrator shall determine whether or not a release
condition has occurred, and such determination shall be binding on all
parties to this Agreement.
12. Conditions for Use Following Release. Following a release as provided in
Section 10, Licensee shall have the right to use the Licensed Materials
subject to the terms and conditions of the License Agreement. As soon as
a release condition under Section 15 of the License Agreement ceases to
exist, Licensee shall immediately return the previously escrowed
materials and all modifications thereto made by Licensee to Escrowholder
for redeposit and shall delete any and all copies of the previously
escrowed materials from Licensee's computers.
13. Indemnification. Licensor and Licensee agree to defend and indemnify
Escrowholder and hold Escrowholder harmless from and against all claims,
actions and suits, whether in contract or in tort, and from and against
any and all liabilities, losses, damages, costs, charges, penalties,
counsel fees, and other expenses of any nature (including, without
limitation, settlement costs) incurred by Escrowholder as a result of
performance of this Agreement except in the event of a judgment which
specifies that Escrowholder has acted with gross negligence or willful
misconduct.
14. Audit Rights. Escrowholder agrees to keep records of the activities
undertaken and materials prepared pursuant to this Agreement. Licensor
and Licensee will be entitled at reasonable times, during normal
business hours and upon reasonable notice to Escrowholder, during the
term of this Agreement to inspect the records of Escrowholder with
respect to this Agreement.
Licensor or Licensee will be entitled, upon reasonable notice to
Escrowholder and during normal business hours, at the facilities
designated by Escrowholder, accompanied by a designated employee of
Escrowholder, to inspect the physical status, condition and contents of
the Deposit. The Deposit may not be changed by Licensor or Licensee
during the audit.
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<PAGE> 28
15. Designated Representative. Licensor and Licensee each agree to designate
one individual to receive notices from Escrowholder and to act on behalf
of Licensor and Licensee respectively with respect to the performance of
their obligations as set forth in this Agreement and to notify
Escrowholder immediately in the manner stipulated in Exhibit A, in the
event of any change from one Designated Representative to another.
16. General. Escrowholder may act in reliance upon any written instruction,
instrument, or signature believed to be genuine and may assume that any
person giving any written notice, request, advice or instruction in
connection with or relating to this Agreement has been duly authorized
to do so. Escrowholder is not responsible for failure to fulfill its
obligations under this Agreement due to causes beyond its control.
This Agreement is to be governed by, and construed in accordance with,
the laws of the State of California.
This Agreement, including the Exhibits and Addenda hereto, constitutes
the entire Agreement between the parties concerning the subject matter
hereof, and will supersede all previous communications, representations,
understandings, and agreements, either oral or written, between the
parties.
If any provision of this Agreement is held by any court to be invalid or
unenforceable, that provision will be severed from this Agreement and
any remaining provisions will continue in full force.
17. Fees. All service fees will be due in full at the time of the request
for service. Renewal fees will be due in full upon the receipt of
invoice unless otherwise specified by the invoice. For the purpose of
annual renewal fees the effective date of this Agreement will be the
anniversary date. Invoiced fees must be paid within sixty (60) days of
receipt of invoice or Escrowholder may terminate this Agreement. If
payment is not timely received by Escrowholder, Escrowholder will have
the right to accrue and collect interest at the rate of one and one-half
percent per month (18% per annum) from the date of invoice of all late
payments.
All service fees and annual renewal fees will be those specified in
Escrowholder's Schedule of Fees in effect at the time of renewal, or
request for service, except as otherwise agreed. For any increase in
Escrowholder's standard fees, Escrowholder shall notify Licensor and
Licensee at least ninety (90) days prior to any renewal of this
Agreement. For any service not listed on the Schedule of Fees,
Escrowholder shall provide a quote prior to rendering such service.
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<PAGE> 29
<TABLE>
<S> <C> <C>
Licensor (Wink): Licensee (GI): Data Securities International, Inc.
By: /s/ Brian P. Dougherty By: /s/ Richard S. Friedland By: /s/ Kathleen M. Lamms
Date: 6/8/95 Date: 6/6/95 Date: 6/14/95
</TABLE>
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<PAGE> 30
EXHIBIT A TO ESCROW AGREEMENT
DESIGNATED CONTRACTS
DESIGNATED CONTACT
Account Number_____________________________
<TABLE>
<CAPTION>
Notices, Deposit Material returns and
communication, including delinquencies Invoices to Depositor
to Depositor should be addressed to: should be addressed to:
<S> <C> <C>
Company Name: Wink Communications, Inc. Wink Communications, Inc.
Address: 2061 Challenger Drive 2061 Challenger Drive
Alameda, CA 94501 Alameda, CA 94501
Designated Contact: Mr. Gary Hammer Contact: Ms. Chanel Aquino
Telephone: (510) 337-6313 (510) 337-6301
Facsimile: (510) 337-2960 (510) 337-2960
</TABLE>
State of Incorporation: California
<TABLE>
<S> <C>
Notices and communication, including delinquencies Invoices to Preferred Registrant to
Preferred Registrant should be addressed to: should be addressed to:
Company Name: General Instrument Corporation ___________________________________
Address: Communications Division ___________________________________
2200 Byberry Rd. ___________________________________
Hatboro, PA 19040 ___________________________________
Designated Contact: Christine Rizzo Contact: Accounts Payable
Telephone: (215) 442-6947 Main # (215) 674-4800
Facsimile: (215) 956-6408
Also Robert Burke, Project Manager,
Ted Michaeld
</TABLE>
Requests from Depositor or Preferred Registrant to change the Designated
Contact should be given in writing by the Designated Contact or an authorized
employee of Depositor or Preferred Registrant.
Invoice inquiries and fee
-30-
<PAGE> 31
Contracts, Deposit Material and notices to remittances to DSI should be
DSI should be addressed to: addressed to:
DSI DSI
Contract Administration Accounts Receivable
Suite 200 Suite 1450
9555 Chesapeake Drive 425 California Street
San Diego, CA 92123 San Francisco, CA 94104
Telephone: (619) 694-1900 (415) 398-7900
Facsimile: (619) 694-1919 (415) 398-7914
Date:__________________________________
-31-
<PAGE> 32
EXHIBIT B TO ESCROW AGREEMENT
DESCRIPTION OF DEPOSIT MATERIAL
-32-
<PAGE> 33
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number__________________________________________________
Depositor Company Name__________________________________________________
DEPOSIT TYPE:_____Initial_____Supplemental________Replacement
If Replacement:______Destroy Deposit______Return Deposit
ENVIRONMENT:
Host System CPU/OS_____________Version__________Backup_______________________
Source System CPU/OS______________Version___________Compiler
Special
Instructions:__________________________________________________________________
_______________________________________________________________________________
DEPOSIT MATERIAL:
Exhibit B Name_______________________________________Version___________________
Item label description
Media Quantity
For Depositor, I certify that For DSI, I received the above
the above described Deposit described Deposit Material
Material was sent to DSI: subject to the terms on the
reverse side of this Exhibit:
By_____________________________
By__________________________________
Print Name_____________________ Print
Name___________________________
Date____________________________ Date of
Acceptance____________________
Copyright 1983, 1994 DSI ISE__________EX.
B#_________________
M92EBv2
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<PAGE> 34
EXHIBIT F
PATENT COUNTRIES
United Kingdom (Northern Ireland, Scotland, Wales, England)
Ireland
Australia
Canada
New Zealand
Brazil
Spain
Mexico
Argentina
Chile
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<PAGE> 35
ADDENDUM TO DEVELOPMENT AND LICENSE AGREEMENT
THIS ADDENDUM (the "Addendum") made as of this 24th day of January, 1997
is to that certain Development and License Agreement dated June 8, 1995 (the
"Agreement") by and between Wink Communications, Inc. ("Wink") and General
Instrument Corporation of Delaware ("GI").
BACKGROUND
Wink has adapted the Wink Engine for certain GI Devices provided for in
the Agreement and GI desires that Wink adapt the Wink Engine for additional GI
Devices under the terms and conditions set forth in the Agreement. The parties
wish to provide a mechanism for future development for other GI Devices under
the Agreement by incorporating references to a Statement of Work.
AGREEMENT
1. Terms used in this Addendum with the initial letter capitalized which are
not otherwise defined shall have the meanings set forth in the Agreement for
such terms. All terms and conditions of the Agreement shall remain in full
force and effect.
2. The agreement is amended as follows:
2.1 References to "Statement of Work". After each occurrence of
the words "Exhibit A hereto" in the Agreement, except in Section 1.2, the words
"or the applicable Statement of Work" are added.
2.2 Section 1.2. The words "Exhibit A hereto and as set forth
thereafter in Exhibit B hereto" in Section 1.2 are deleted and replaced with
the words "Exhibits A and B hereto or the applicable Statement or Work."
2.3 Definition of Statement of Work. The following paragraph is
added after Section 1.14:
"1.15 "Statement of Work" shall mean the one or more document(s)
to be mutually agreed upon and executed by the parties setting forth the
Deliverables, Development Activities, Development Schedule, Milestones,
Specifications, Task Description, compensation terms, and other related terms
and conditions with respect to each GI Device for which the parties mutually
agree to port the Wink Engine. Each Statement of Work shall be attached as an
Exhibit to this Agreement and shall be labeled and numbered successively as
Exhibit S (e.g., Exhibit S-1, S-2, etc.).
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<PAGE> 36
2.4 Priority of Statement of Work. The following paragraph is added after
Section 16.10:
16.11 Priority. All terms and conditions of this Agreement shall apply
to each Statement of Work, except to the extent such Statement of Work
expressly states otherwise."
WINK COMMUNICATIONS, INC. GENERAL INSTRUMENT
CORPORATION OF DELAWARE
By: /s/ Maggie Wilderotter By: /s/ Edward D. Breen
Name: Maggie Wilderotter Name: Edward D. Breen
Title: President and CEO Title: Vice and President, GI
Communications Division
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<PAGE> 37
EXHIBIT S-1
DEVELOPMENT OF WINK ENGINE FOR DCT-1000
STATEMENT OF WORK
1. Device. This Statement of Work relates to the development to be done to port
the Wink Engine to the GI DCT 1000 Set-Top Box.
2. Specifications. (to be delivered)
3. Project Managers. GI will assign an ISV manager and an engineering point of
contact with responsibility for coordinating the activities under this
Statement of Work. These GI personnel will give a top priority to this project.
4. Loan of GI Equipment. GI shall reasonably support Wink's development
activities by lending to Wink the following equipment (the "Equipment"):
5 DCT-1000 set-top boxes and 1 OM-1000 within fifteen (15) days
following the execution of this Statement of Work;
10 DCT-1000 set-top boxes within forty-five (45) days following the
execution of this Statement of Work
There are no charges by GI for the loan of the Equipment. Such loaned Equipment
shall remain GI's property at all times while on loan to Wink and Wink
acknowledges that it shall have no property interest in the Equipment. The
Equipment is loaned to Wink solely for use by Wink in performance of its
obligations under this Statement of Work and shall not be used by Wink for any
other purpose. Unless extended by the mutual consent of the parties, Wink shall
return the Equipment to GI no later than December 31, 1997, in the same
condition as when delivered to Wink, ordinary wear and tear excepted.
5. Development Activities and Schedule. The Development Activities and Schedule
will be jointly prepared and agreed upon by the parties prior to January 31,
1997.
6. NRE Fees.
(a) GI shall pay a [*] non-recurring engineering fee within
thirty (30) days following the execution of this Statement of Work.
(b) GI shall pay an additional [*] non-recurring engineering fee
within thirty (30) days following the receipt by GI of customer orders for GI
Devices containing the Wink Engine (DCT-1000) with an aggregate Wink License
Fee of [*].
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<PAGE> 38
(c) GI shall pay an additional [ * ] non-recurring engineering
fee as follows:
Wink shall receive [ * ] of the Wink License Fee received by GI until
[ * ] has been paid; provided that GI receives Wink's prior consent,
which consent shall not be unreasonably withheld, if such Wink License
Fee would be less than [ * ] per copy. Such payments shall be due within
thirty (30) days after the end of each month in which invoices for a GI
Device containing the Wink Engine (DCT-1000) have been issued to a GI
customer.
6. Per Copy Royalty. For each copy of the Wink Engine (DCT-1000) distributed, GI
shall pay Wink the following per copy royalty in accordance with Section 4 of
the Agreement:
[ * ] of the Wink License Fee received by GI; provided that GI receives
Wink's prior consent, which consent shall not be unreasonably withheld,
if such Wink License Fee would be less than [ * ] per copy.
7. Wink License Fee. For purposes of this Statement of Work, the "Wink License
Fee" shall be equal to the gross price charged by GI to its customers in respect
of the license to the Wink Engine (DCT-1000), or, if no price is separately
stated, the amount of the purchase price of the GI Device reasonably allocable
to such license.
WINK COMMUNICATIONS, INC. GENERAL INSTRUMENT
CORPORATION OF DELAWARE
/s/ Maggie Wilderotter /s/ Edward D. Breen
- - ---------------------- -------------------
Signature Signature
Maggie Wilderotter Edward D. Breen
- - ------------------ ---------------
Name Name
President and CEO Vice President & President GI Communications
- - ----------------- --------------------------------------------
Division
--------
Title Title
January 30, 1997 January 24, 1997
- - ---------------- ----------------
Date Date
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<PAGE> 39
[COMPANY LOGO]
General Instrument Corporation
GI Communications Division
2200 Byberry Road
Hatboro, Pennsylvania 19040
Tel 215 674 4800
January 24, 1997
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: Matt Trifiro
Re: Travel Requirements for Development of Wink Engine for DCT-1000
Dear Matt:
General Instrument understands that, in the performance of Wink's obligations to
develop the Wink engine for the DCT-1000 pursuant to the Statement of Work
(Exhibit S-1) effective January 24, 1997, Wink shall require two engineers to
travel from Wink's facility to General Instrument for a period of two weeks per
month for six months. Please accept this letter as General Instrument's
authorization of such travel requirements; provided such travel expenses are
approved in accordance with Section 8.4 of the Development and License Agreement
dated June 8, 1995.
Regards,
Edward D. Breen
Vice President and President,
GI Communications Division
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<PAGE> 40
[COMPANY LOGO]
WINK COMMUNICATIONS
30 January 1997
VIA AIRBORNE EXPRESS
General Instrument Corporation
GI Communications Division
2200 Byberry Road
Hatboro, Pennsylvania 19040
Attn: Lee S. Zimmerman
Dear Lee,
Enclosed are the following documents executed on behalf of Wink Communications,
Inc:
1 Addendum to Development and License Agreement; and
2. Statement of Work (Exhibit S-1).
Thank you for your assistance in completing this Agreement.
Sincerely,
/s/ Chanel S. Aquino
Manager, Administration
-40-
<PAGE> 41
[COMPANY LOGO]
General Instrument Corporation Lee S. Zimmerman
GI Communications Division Assistant General
Counsel
2200 Byberry Road
Hatboro, Pennsylvania 19040
Tel 215 957 8302 Fax 215 956 6408
-41-
<PAGE> 42
January 24, 1997
VIA FEDERAL EXPRESS
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: Matt Trifiro
Dear Matt:
Enclosed are the following documents executed on behalf of General Instrument:
1. Addendum to Development and License Agreement ("Addendum");
2. Statement of Work (Exhibit S-1); and
3. Travel Authorization Letter.
Please arrange for Maggie Wilderotter to sign the Addendum and Statement of Work
and return an executed set of documents to my attention.
It has been a pleasure working with you on this matter.
Regards,
/s/ Lee S. Zimmerman
Lee S. Zimmerman
Enclosures
cc: David Robinson
Denton Kanouff
-42-
<PAGE> 43
SECOND ADDENDUM
TO
DEVELOPMENT AND LICENSE AGREEMENT
THIS SECOND ADDENDUM (the "Second Addendum") made as of this 18th day of
August, 1997, between Wink Communications, Inc. ("Wink") and NextLevel Systems,
Inc. ("NLS") is to that certain Development and License Agreement dated June 8,
1995, as amended by the Addendum to Development and License Agreement dated as
of January 24, 1997 (the "Agreement") by and between Wink and General Instrument
Corporation of Delaware.
BACKGROUND
Wink and NLS desire to promote the Wink ITV technology and to showcase
the features of the CFT 2200 by providing up to one million Wink Engines for the
CFT 2200 free of charge to certain cable system customers. Wink and NLS also
desire to market jointly this offer to the specified cable system customers
under the terms and conditions set forth herein,
AGREEMENT
1. Terms used in this Addendum with the initial letter capitalized which are not
otherwise defined shall have the meanings set forth in the Agreement for such
terms. Except as specifically modified herein, all terms and conditions of the
Agreement shall remain in full force and effect,
2. The agreement is amended as follows:
2.1 Promotional Units. Section 4.5 shall be amended and restated in its
entirety as follows:
"4.5 Promotional Units.
(a) NLS may distribute a reasonable number of Combined
Products (not to exceed 1,000 per calendar quarter) as
promotional units, without incurring a royalty therefore
to Wink under the provisions of Section 4.2.
(b) In an effort to promote the Wink ITV technology and to
showcase the features of NLS's CFT 2200, the parties
agree to provide up to one million Wink Engines for the
CFT 2200 (including Wink Engines included in Combined
Products) free of charge to certain cable system
customers identified on Exhibit H hereto ("CFT 2200
Promotional Customers") under the following conditions:
(i) the CFT 2200 Promotional Customer enters into a
licensing agreement with Wink and commits to deploy
Enhanced Broadcasting applications (i.e.
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<PAGE> 44
program-synchronous applications) prior to December 31,
1997; (ii) the CFT 2200 Promotional Customer shall be
entitled to receive up to that number of free Wink
Engines equal to the number of CFT 2200 units deployed
or in inventory at the time of Wink conversion (i.e.
installation), (iii) systems that desire only Wink
virtual channel applications (" CableSoft Systems")
shall become CFT2200 Promotional Customers in the event
that CableSoft pays to Wink $1,250.00 per month per
system until such time as the CFT2200 Promotional
Customer deploys Enhanced Broadcasting applications,
limited to (5) systems and a total of 150,000 free Wink
Engines of the one million Wink Engine total; and (iv)
NLS shall not incur a royalty to Wink under the
provisions of Section 4.2 for any Wink Engines
distributed to CFT 2200 Promotional Customers and in
consideration of this royalty waiver, NLS agrees that it
shall waive the Wink engine license fee payable by such
CFT 2200 Promotional Customers.
(c) Wink and NLS may add or delete CIFT 2200 Promotional
Customers listed on Exhibit H or change the number of
free Wink Engines distributed upon mutual agreement of
the parties; provided that the number of free Wink
Engines shall not exceed one million.
(d) Notwithstanding anything contained herein to the
contrary, NLS is not consenting to waive any fees
associated with NLS field engineering support or other
technical assistance or services required to install or
launch Wink services, even if such waiver is a condition
of deployment by a CFT 2200 Promotional Customer. Such
field engineering support or other technical services
shall be billed by NLS at NLS's standard rates then in
effect either to the CFT 2200 Promotional Customer or
(at Wink's option) to Wink."
2.2 Joint Marketing to CFT 2200 Promotional Customers. The following
paragraph is added after Section 7.4:
"7.5 Joint Marketing to CFT 2200 Promotional Customers. Wink and
NLS shall cooperate and work together in presenting the offer of free Wink
Engines to the CFT 2200 Promotional Customers as a joint offer from both
companies. No third party has the right to make the free engine offer to any
CIFT 2200 Promotional Customer or any other customer. The parties intend to
promote both program synchronous and program asynchronous (virtual channel)
applications."
3. Transfer to NextLevel Systems, Inc. Wink acknowledges and agrees that as a
result of the reorganization of General Instrument Corporation, all rights and
obligations of General Instrument Corporation of Delaware under the Development
and License Agreement, as amended, have been
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<PAGE> 45
assigned and delegated to NLS and that neither General Instrument Corporation
nor General Instrument Corporation of Delaware shall have any further
obligations under the Development and License Agreement, as amended.
WINK COMMUNICATIONS, INC. NEXT LEVEL SYSTEMS, INC.
By: /s/ Maggie Wilderotter By: /s/ Dan Moloney
Name: Maggie Wilderotter Name: Dan Moloney
Title: CEO & President Title: Vice President and General Manager,
Analog Network Systems - Broadband
Networks Group
-45-
<PAGE> 46
EXHIBIT H
CFT 2200 PROMOTIONAL CUSTOMERS
<TABLE>
<CAPTION>
Customer Est. 1997 Customer Est.
1998
<S> <C> <C> <C>
Engines (000)
Engines (000)
TW Manhattan 30 Intermedia Carolinas 16
TW Tampa 120 Cox Macon 30
TW Orlando 140 Cox Hampton Roads 50
TW Columbus 110 Comcast Midwest 30
TW Cincinnati 100
TW Raleigh 50 Falcon Malibu 10
TKR/TCl Piscataway 50 Cogeco Quebec 30
MediaOne Pompano/ 50 Cablevision Cleveland 35
Jacksonville/Ventura
TOTAL 851
</TABLE>
-46-
<PAGE> 1
EXHIBIT 10.23
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is made as of
15 Jan 96 (the "Effective Date"), between Wink Communications, Inc., a
California corporation with offices at 2061 Challenger Drive, Alameda, CA 94501
("Wink") and Scientific-Atlanta, a Georgia corporation having with offices at
One Technology Parkway South, Norcross, GA 30092 ("S-A").
1. BACKGROUND
A. Wink is a software developer that has been developing a software
protocol for delivering interactive applications synchronized with or
independent of television programs and advertisements. Wink is in the business
of customizing and licensing its software engine (the "Wink Engine TM") that
decodes the protocol and displays the interactive applications overlaid on a
television screen.
B. S-A is a manufacturer of satellite and cable communications
equipment, including analog and digital home communications terminals ("HCTs")
such as those currently designated 8600x, 8600xd and 8600xdi.
C. Wink and S-A desire that Wink develop and grant to S-A the right to
embed a customized version of the Wink Engine on S-A's HCTs to be distributed
worldwide within such HCTs.
The terms of the Agreement are as follows:
2. DEFINITIONS
2.1 "Development Schedule" shall mean the schedule for completion of
the Development Activities set forth in Exhibit A hereto.
2.2 "Exhibit A" shall mean the exhibits attached hereto as Exhibit
A. There shall be one Exhibit A for each S-A Device to which the
Wink Engine is ported.
2.3 "Specifications" shall mean the technical and other
specifications for the Deliverables to be developed by the
parties as described below and in Exhibit A hereto and as set
forth thereafter in Exhibit B hereto.
2.4 "Wink Engine" shall mean Wink's software engine described in
Exhibit C hereto, in machine executable, object code format, as
adapted by Wink, and any and all Updates thereto.
2.5 "Milestone" shall mean each milestone identified in Exhibit A
hereto.
2.6 "Deliverables" shall mean each Deliverable identified in Exhibit
A hereto, to be delivered at the time of each completion of a
Milestone by Wink.
2.7 "Initial Product" shall mean the final release of version 1.0 of
any product and the first version of a New Product (e.g. any
product labeled version x.0).
2.8 "Intellectual Property Rights" shall mean all current and future
worldwide patents and other patent rights, copyrights, mask work
rights, trade secrets, and all other intellectual property
rights, including without limitation all applications and
registrations with respect thereto.
<PAGE> 2
2.9 "Licensed Technology" shall mean version 1.0 and any Updates
(version 1.x) of the Wink Engine in object code format, and any
related documentation which Wink may create, in Wink's sole
discretion, for public distribution with Versions 1.0 and 1.x of
the Wink Engine.
2.10 "Subdistributors" shall mean entities authorized by S-A to
distribute the Licensed Technology including, without
limitation, subsidiaries, affiliates, distributors, resellers,
system operators, value-added resellers, dealers or sales
representatives.
2.11 "Update" shall mean a new version of the Wink Engine which
contains Error Corrections or minor new features or
functionality, but which is not a New Product, in each case as
determined in Wink's sole discretion as follows. An Update shall
be designated by a change in the digit or digits to the right of
the decimal point in the version number. In the case of the
version numbers described in Exhibit A hereto, Updates shall be
designated by a change to any one of the digits denoted as
follows (using the letter "x" as a placeholder): 1.xxx
2.12 "New Product" shall mean a software product which contains major
new features or functionality and which Wink offers to its
customers at a separate price, in each case as determined in
Wink's sole discretion as follows. A New Product shall be
designated by a change in the digit or digits to the left of the
decimal point in the version number.
2.13 "S-A Device" shall mean any S-A analog or digital home
communications terminal ("HCT") including those currently
designated as 8600x, 8600xd and 8600xdi or a separate plug-in
device for S-A HCTs (e.g. the Genius card for the 8600x).
2.14 "Combined Product" shall mean an S-A Device containing the Wink
Engine embedded in a ROM or flash ROM chip.
2.15 "Error Correction" shall mean an error correction by Wink to fix
a reproducible programming error resident in the Wink Engine
which prevents the Wink Engine from conforming to the
Specifications, and which is discovered by Wink or S-A and, if
discovered by S-A, reported to Wink with sufficient information
to allow Wink to reproduce and locate such error.
2.16 "Protocol" shall mean Wink's Interactive Communicating
Applications Protocol.
3. DEVELOPMENT, DELIVERY AND ACCEPTANCE
3.1 Development. Wink agrees to port and customize the Licensed
Technology to one S-A's 8600x HCT or plug-in device, as
designated in Exhibit A. Wink also agrees to port the Licensed
Technology to other devices for additional NRE Fees, as set
forth in Exhibit A. Wink agrees to perform such Development
Activities in accordance with the Task Description and
Specifications. In connection therewith, S-A shall (i) assist
Wink in producing the Specifications and (ii) provide other
necessary materials and information, as mutually agreed by the
parties in the Specifications or otherwise. The parties may
agree on additional Development Activities and Task Descriptions
by amending Exhibit A hereto.
3.2 Provision of Software. Hardware and Equipment. S-A shall provide
all hardware, software, and equipment ("Equipment") reasonably
necessary for Wink to duplicate the S-A environment, and all
Equipment that is used to perform the activities in Exhibit A or
in support thereof pursuant to Section 9.2 and not expected to
be used by Wink for porting to devices other than those
described in Exhibit A, to Wink at S-A's cost therefor,
provided, that Wink shall use such Equipment only for the
Development Activities or as otherwise provided for in Section
9.2. A preliminary list of Equipment is included in Exhibit A,
such list shall exclude PCs and Sun workstations, but may
include any such PCs or Sun
-2-
<PAGE> 3
workstations that are part of a combined product provided by S-A or by
third parties for development of S-A platforms. The list in Exhibit A
may be updated from time to time by mutual agreement. S-A shall retain
ownership of all such software, hardware and equipment provided to Wink,
and Wink shall return all such software, hardware and equipment to S-A
promptly upon request by S-A; provided that Wink's development and
support obligations under this Section 3.2 and Section 9.2 below shall
terminate to the extent software, hardware or equipment returned to S-A
is required by Wink to fulfill its obligations.
3.3 Modifications. Wink may, upon written approval by S-A in each
instance, which approval shall not be unreasonably withheld,
alter the Specifications commensurate with good faith efforts to
finalize and refine the Deliverables in accordance with S-A's
needs and objective for the Wink Engine.
3.4 Delivery and Acceptance.
3.4.1 Wink shall use all reasonable commercial efforts to
complete each Milestone in accordance with the
Development Schedule. Upon completion of each Milestone,
Wink shall deliver to S-A all applicable Deliverables
for evaluation by S-A pursuant to Section 3.4.2 below.
In the event S-A is late in the performance of its
obligations with respect to Section 3.1 and such delay
affects Wink's obligations hereunder, Wink's performance
of such affected obligations shall be delayed by the
same time period.
3.4.2 Within thirty (30) days after receipt, S-A shall review
and evaluate such Deliverables and shall provide Wink
with a written acceptance of the Deliverables or a
written statement of errors to be corrected. S-A shall
not withhold acceptance of any Deliverable (except the
Specifications and Development Schedule) unless such
Deliverable materially deviates from the Specifications,
and such deviation is documented and promptly reported
to Wink. S-A's failure to provide an acceptance or
statement of errors within such thirty day period (as
applicable) shall be deemed an acceptance of such
Deliverables. When deviations from the Specifications
are identified and confirmed, Wink shall use all
reasonable commercial efforts to correct such
deviations, if any, as soon as commercially reasonable
practicable, and to return a copy of the updated
Deliverables to S-A for review and reevaluation in
accordance with the foregoing procedure. The foregoing
procedure shall be repeated until acceptance by S-A of
the Deliverables or the parties mutually agree to cease
development and terminate this Agreement.
3.5 Transfer of Software. Upon S-A's acceptance of all Deliverables
(other than Specifications and Development Schedule) pertaining
to a particular development project, Wink shall deliver to S-A a
master diskette or other digital storage media (the "Master
Media") containing the Wink Engine for use by S-A in accordance
with the terms of this Agreement, including without limitation
Section 4.
3.6 Delivery Outside of California. Tangible property will not be
delivered within the State of California unless such delivery is
by means of remote telecommunications or unless the parties
hereto are satisfied that such transfer will not incur a sales
or use tax liability. Any attempted transfer contrary to the
terms hereof will be void and of no effect. If the delivery is
made by remote telecommunications, the parties will keep a
detailed contemporaneous log documenting each transmission by
date, time, place, and the individuals responsible for such
transmission.
3.7 Right to Pursue Other Projects. The parties acknowledge and
understand that, independent of the development efforts
hereunder, Wink and S-A each have been and continue to be
actively engaged in research and development in the field, and
in the course of such research and development may have
developed or may hereafter develop similar software to the Wink
Engine; provided that in S-A's case, such similar software shall
be developed without use of, or reference to, materials or
information provided by Wink under this Agreement. In addition,
Wink may develop or modify the Wink Engine for itself or for
others. The parties agree that this Agreement shall not be
construed as (i) prohibiting such independent
-3-
<PAGE> 4
research and development, either on their own behalf or under
contract with others, (ii) precluding either party from
developing, acquiring, utilizing or distributing such similar
software without obligation the other party so long as such
research and development or such party do not otherwise breach
the terms of this Agreement or (iii) prohibiting such
development or modification of the Wink Engine by Wink.
4. GRANT OF RIGHTS
4.1 Wink Engine. Subject to the terms and conditions of this
Agreement, Wink grants to S-A a worldwide, non-exclusive,
non-transferable (except as provided in Section 15.3), right and
license, under all of Wink's Intellectual Property Rights in and
to the Licensed Technology, to (a) reproduce and have reproduced
the Licensed Technology, and to use the Protocol as necessary or
useful therefor in conjunction with the use of the Licensed
Technology, solely (i) for the purpose of loading the data into
the memory element of the device (e.g. ROM or flash ROM chip)
containing the Licensed Technology with one unit of an S-A
Device to create the Combined Product or (ii) as necessary in
the course of distribution and support of the Combined Product
as permitted hereunder; and (b) distribute the Licensed
Technology, and to use the Protocol as necessary or useful
therefor in conjunction with the use of the Licensed Technology,
either (i) as part of the Combined Product or (ii) through a
one-time (not including transmission of Updates) transmission of
the Licensed Technology through coaxial cable, satellite
transmission or other electronic transmission to a unit of an
S-A Device which was previously acquired from S-A, for use only
with such previously acquired unit.
S-A's license under subsection 4.1 (b)(ii) is subject to the
conditions that (x) S-A and its Subdistributors shall observe
procedures reasonably acceptable to Wink for monitoring the
distribution of the Licensed Technology, and record retention
and audit procedures mutually agreed in writing by S-A and Wink
prior to any such distribution, in order to permit accurate and
complete counting and to reasonably enforce compliance with the
licenses granted to such Subdistributor of each S-A Devices in
which the Licensed Technology was incorporated, or to which the
Licensed Technology was transmitted, and (y) S-A and its
Subdistributors shall implement measures reasonably acceptable
to Wink, including without limitation encryption, to prevent
interception of transmissions of Licensed Technology by third
parties. Any such monitoring and encryption procedures agreed to
in writing by S-A and Wink shall be deemed reasonable by virtue
of such agreement.
4.2 Have Reproduced. S-A shall have the right to provide the
Licensed Technology to its third party manufacturers for ROM and
flash ROM chips (each a "Submanufacturer", provided that each
such third party manufacturer shall agree in a signed writing
(i) to manufacture Wink Engines and Combined Products only for
S-A's account, (ii) not to sell or distribute Wink Engines and
Combined Products except to S-A, (iii) to keep the Licensed
Technology confidential pursuant to terms and conditions no less
restrictive than the terms and conditions of the parties'
Non-Disclosure Agreement described in Section 11 below and (iv)
that Wink is a third party beneficiary of such agreement and may
enforce such agreement directly against such third party
manufacturer. In the event that S-A desires to provide the
Licensed Technology to a Submanufacturer without also providing
such Submanufacturer with software owned by S-A, S-A's provision
of the Wink Engine to such Submanufacturer shall be subject to
(a) Wink's written approval (not to be unreasonably withheld) of
such Submanufacturer, (b) S-A's assurance that it will use the
same level of care in choosing Submanufacturers for S-A Devices
incorporating the Wink Engine as it does for its other products,
and will take all reasonable steps to prevent unauthorized
disclosure of Wink Confidential Information, (c) S-A's prompt
notification to Wink if S-A knows or believes that a
Submanufacturer has breached the provisions of subsection (i) -
(iv) above.
4.3 Subdistributors. S-A may exercise its distribution rights
hereunder through the use of Subdistributors; provided, that
each Subdistributor must agree in a signed writing, prior to
obtaining the Licensed Technology from S-A, to be bound by all
applicable restrictions on S-A set forth in this Agreement. S-A
shall ensure that Wink is a third party beneficiary of such
agreement and may enforce such agreement
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directly against such Subdistributor. S-A shall promptly notify
Wink if S-A has reason to believe that any of S-A's
Subdistributors may not be not abiding by such restrictions. S-A
shall, and shall cooperate with Wink at Wink's request to,
diligently police and enforce such restrictions.
4.4 Proprietary Notices. All copies of the Licensed Technology
reproduced or distributed by S-A shall contain copyright and
other proprietary notices in the same manner in which Wink
incorporates such notices in the Licensed Technology or in any
other manner requested by Wink. Wink's current copyright and
proprietary notices are set forth in Exhibit F. In addition, all
memory devices or other devices that are shipped by S-A which
contain the Wink Engine shall be permanently and legibly marked
with such patent notice as may be permitted or required under
Title 35, United States Code. In the event marking of the memory
device or other device is not commercially reasonable, S-A shall
permanently and legibly mark the S-A Device into which such
memory device is incorporated with such patent notice as may be
permitted or required under Title 35, United States Code.
4.5 Limitations. S-A shall not modify, prepare derivative works of,
reverse engineer, disassemble, decompile, or otherwise have or
attempt to obtain access to the source code of the Licensed
Technology, except as permitted under the provisions of Sections
10.7.
4.6 Enforcement. S-A shall (i) use commercially reasonable efforts
to ensure that all Submanufacturers abide by the terms of their
written agreements described herein and (ii) keep Wink apprised
of its activities in enforcing such agreements.
4.7 End-User Terms. S-A shall ensure that an end-user license
agreement substantially similar to the agreement attached hereto
as Exhibit E is set forth in the manual for the Combined
Product, in the same form and in the same location as any other
product and/or software protection terms are set forth in such
manual.
4.8 Most Favored Licensee. In the event that Wink grants a license
to a similarly situated third party to distribute or otherwise
copy the Wink Engine (including versions of the Wink Engine
which are ported or otherwise adapted to meet the requirements
of the third party) for royalty payments which are more
favorable to the licensee than those provided to S-A hereunder,
Wink shall promptly notify S-A of such grant and S-A shall have
the right to require that the royalty payments provided for
hereunder be reduced to match those extended to such third
party; provided that S-A adopts all of the terms and conditions
contained in such third party agreement. This Section 4.8 shall
not apply unless such third party agreements are similar in all
material respects, including without limitation, the following:
(i) that the Wink Engine will be incorporated into devices
similar to S-A Devices, (ii) that the third party expects to
grant licenses or distribute a comparable volume of Wink
Engines, (iii) that the third party requires substantially the
same amount of development and maintenance effort on the part of
Wink, (iv) that the third party payments are comparably
structured.
4.9 License by Wink. Without S-A's prior written approval, Wink may
not license, sell or otherwise authorize the use of the Licensed
Technology to any person or entity for use on any S-A Device if
S-A is also offering, or willing to offer, on commercially
reasonable terms a license to the Licensed Technology to such
person or entity for use on such S-A Device. If S-A is not
offering, and is not willing to offer, on commercially
reasonable terms, a license to the Licensed Technology to such
person or entity for use on such S-A Device, Wink may license
the Licensed Technology to such person or entity for use on such
S-A Device only after it has repaid S-A the NRE fees paid by S-A
pursuant to Section 5.1 below for the development of the
Licensed Technology for such S-A Device. Nothing in this Section
4.9 shall prevent Wink from licensing a version of the Wink
Engine for use on any S-A Devices for which the Licensed
Technology has not been previously adopted, provided that (i) no
modification or adaptation of such S-A Device is required by S-A
nor is S-A required to provide any other assistance or support
to Wink or its prospective licensee, and (ii) except as
otherwise required for Wink to perform its obligations under
this
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Agreement, nothing in this Agreement grants to Wink any license
or other rights (by implication or otherwise) in any patents,
proprietary information, trade secrets or other intellectual
property of S-A relating to such S-A Device.
5. COMPENSATION
5.1 Non-Recurring Engineering. In consideration of the duties and
obligations of Wink under Section 3, S-A shall pay Wink the
amounts set forth in Exhibit A times set forth in Exhibit A
hereto.
5.2 Per-Copy Royalty. In consideration for the rights and licenses
granted to it under Section 4 above, for each copy of (i) the
Combined Product distributed by S-A or a Subdistributor and (ii)
the Wink Engine transmitted to an S-A Device by S-A or a
Subdistributor for use with a particular unit of an S-A Device,
that is distributed by a Subdistributor pursuant to a agreement
with S-A, S-A shall pay Wink the per-copy royalty set forth in
Exhibit A hereto.
S-A and its Subdistributors shall have no obligation to pay more
than one royalty for any particular unit of an S-A Device or
Combined Product, except as set forth in Section 5.5. In the
event that S-A or a Subdistributor distributes a Combined
Product to an end user for which a royalty is or has been paid
and thereafter accepts a return of the same unit of Combined
Product, S-A or such Subdistributor may redistribute such unit
or a substitute unit of Combined Product to the same End-User
without owing an additional royalty hereunder to Wink. In
addition, S-A shall have no obligation to pay any royalty for
any products which do not incorporate the Wink Engine or any
portion thereof.
5.3 Payments. S-A shall make royalty payments to Wink within
forty-five (45) days after the end of each calendar quarter
during the term hereof, with respect to distributions by S-A in
such calendar quarter. Such payments shall be accompanied by a
written report which details by product and customer, with
respect to the applicable calendar quarter (i) the number of
Combined Products distributed by S-A to Subdistributors, (ii)
the number of copies of the Wink Engine for which a royalty is
due hereunder distributed by S-A and its Subdistributors other
than as part of a Combined Product, (iii) the royalty due Wink
with respect to Combined Products and copies of the Wink Engine
distributed during such calendar quarter, and (iv) the number of
copies of the Licensed Technology (including without limitation
Updates) or Combined Products distributed by S-A or its
Subdistributors for which no royalty is due under the exceptions
to Section 5.2 set forth in Sections 5.5 or 5.6. Subject to the
provisions of Section 8, S-A in its sole discretion shall
determine its marketing strategy with respect to any and all of
its products except as may be expressly set forth herein, and
nothing in this Agreement shall be construed as a
representation, warranty or agreement with respect to the
success of such strategy or a commitment with respect to the
volume of any such products.
5.4 Advance Royalties. S-A shall pay Wink the non-refundable royalty
advances set forth in Exhibit A hereto, at the times set forth
in Exhibit A hereto. All advances paid by SA hereunder shall be
credited against S-A's royalty payments under Section 5.2.
5.5 Distribution Of Updates. S-A shall not incur a royalty with
respect to its or its Subdistributors' distribution of Updates
(as permitted by Section 9.2 hereof) unless (1) such Update is
the first Wink Engine to be distributed to or with a particular
unit of an S-A Device or (2) if this Agreement is amended to
include future versions of the Wink Engine, the version number
of a Wink Engine previously distributed to or with such unit has
a lower digit to the left of the decimal point than does the
subsequently distributed Wink Engine.
5.6 Promotional Units. S-A may distribute a reasonable number of
Combined Products (not to exceed 200 per calendar quarter) as
promotional units, without incurring a royalty therefor to Wink
under the provisions of Section 5.2.
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5.7 Currency; Taxes. All payments hereunder shall be in United
States dollars. All payments by S-A shall be made free and clear
of, and without reduction for, any and all taxes, including,
without limitation, sales, use, value added, withholding, or
similar taxes, other than taxes which are imposed by the United
States or any political subdivision thereof based on the net
income of Wink. Any such taxes which are otherwise imposed on
payments to Wink shall be the sole responsibility of S-A;
provided, however, to the extent Wink recoups any such
withholding tax, as a result of actually reducing its United
States income tax liability as a result of a credit for such
withholding tax, S-A shall be allowed to reduce royalties due
Wink for the quarter in which such amounts were so recouped. S-A
shall provide Wink with official receipts issued by the
appropriate taxing authority or such other evidence as is
reasonably requested by Wink to establish that such taxes have
been paid.
5.8 Books and Records: Audit. S-A agrees to maintain, and to require
that each third party who distributes the Wink Engine maintain
and provide to S-A, until two (2) years after the earlier of (i)
the termination of this Agreement or (ii) the last shipment of
the Wink Engine hereunder, complete and current books, records
and accounts regarding all copying and distribution activities
pursuant to this Agreement, the payments due to Wink thereon,
and payments by S-A in accordance with Section 11.5. S-A agrees
to allow Wink or its designee to audit and examine such books,
records and accounts and the Master Media delivered to S-A no
more than once each calendar quarter, during S-A's normal
business hours, to verify the accuracy of the reports and
payments made to Wink under this Section 5. In the event such
audit determines that S-A has not paid for all of the copies of
Combined Products and Wink Engines distributed, S-A agrees to
pay, in addition to any damages to which Wink might be entitled,
the amount of such shortfall plus interest at a rate of one and
one-half percent (1.5%) per month or the highest rate allowed by
law, whichever is lower. The cost of such audit shall be borne
by Wink, provided that if any such audit reveals an underpayment
to Wink of at least five percent (5%), S-A shall reimburse to
Wink its costs of such audit.
6. WARRANTY
6.1 Product Warranty. Wink warrants to S-A that each Initial Product
and any Updates thereto shall function without defects under
ordinary use that cause it not to be in substantial conformance
with the Specifications for a period of eighteen (18) months
after S-A's acceptance of such Initial Product. Wink does not
warrant that the Wink Engines will meet all of S-A's
requirements, except as set forth in the Specifications.
6.2 Defects not Covered by Warranty. Wink's warranty shall not
extend to problems in the Wink Engine that result from: (i)
S-A's failure to implement any Error Corrections or Updates to
the Licensed Technology which are provided by Wink, to the
extent the same are made available to S-A free of charge and
without material degradation in function and/or performance;
(ii) changes to the operating system or environment or S-A
Devices which adversely affect the Wink Engine; (iii) any
alterations of or additions to the Licensed Technology performed
by parties other than Wink or on Wink's behalf, (iv) use of the
Wink Engine in a manner inconsistent with the Specifications;
(v) accident, negligence, or misuse of the Wink Engine by any
party other than Wink personnel; (vi) combination of the Wink
Engine with other products not supplied by Wink (excluding the
S-A hardware device and those third party software or hardware
products which are identified in the Specifications as
compatible with the Wink Engine), which problems do not affect
the Wink Engine standing alone; or (vii) operation of the Wink
Engine outside of environmental specifications. As used in
Subsection 6.2(iii), "on Wink's behalf" shall mean that Wink has
given its written authorization for S-A or a third party to
perform such alterations or additions.
6.3 Exclusive Remedy. Wink's sole obligation and S-A's exclusive
remedy under the above warranty shall be for Wink to use all
commercially reasonable efforts to make Error Corrections to the
Wink Engines to bring them into conformity with Wink's warranty
set forth above, at no to cost to S-A (other than as
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provided for in Section 9.4); provided, that Wink shall have no
obligation to correct all errors in the Wink Engine.
6.4 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY, WINK
MAKES AND S-A RECEIVES NO WARRANTIES WITH RESPECT TO THE WINK
ENGINE, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND WINK
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY,
NONINFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.
7. PROPERTY RIGHTS
S-A agrees that prior to, on and after the Effective Date, as between
S-A and Wink, Wink owns and shall own all right, title and interest in (a) the
Licensed Technology and all modifications and derivatives thereof and (b) all
Intellectual Property Rights relating to the design, manufacture, marketing,
operation or service of the Licensed Technology. Except as expressly provided in
Section 4, Wink does not grant to S-A any right, title or interest in the
Licensed Technology, whether by implication, estoppel or otherwise. All property
rights with respect to the Licensed Technology and the Protocol not specifically
granted herein are reserved to Wink.
8. MARKETING; TRADEMARKS AND TRADE NAMES
8.1 Use of Trademarks.
8.1.1 Promotion and Advertising. During the term of this
Agreement, in the event that S-A or its Subdistributors
advertises, promotes or markets the Wink Engine or its
functionality, whether as stand-alone or as part of the
Combined Product or any value-added product
incorporating the Combined Product, S-A shall, and shall
require any Subdistributors that advertise, promote or
market the above to, use the trademarks, marks, trade
names, logos, and other product and company identifiers
of Wink that Wink may adopt, from time to time ("Wink
Trademarks"). Use of the Wink trademarks shall be
consistent with Wink's trademark usage policy which Wink
may adopt from time to time.
8.1.2 Other Uses of Trademarks. S-A has paid no consideration
for the use of the Wink Trademarks as set forth herein.
S-A and its Subdistributors may use trade names, marks
or trademarks in addition to the Wink Trademarks in
connection with the Combined Product. At no time during
or after the term of this Agreement shall S-A register,
attempt to register or cause the registration of any of
the Wink Trademarks other than in Wink's name, at Wink's
specific written request and at Wink's expense, or other
trademarks which give rise to the likelihood of
confusion, except in the event S-A adopts, uses or
acquires a trademark, mark or trade name substantially
similar to a Wink Trademark prior to Wink's adoption,
use or acquisition of such Wink Trademark.
8.2 Marketing and Promotion. S-A shall aggressively promote the Wink
technology in its presentations to customers and in its
marketing materials, unless specific evidence exists that the
Wink technology is unsuitable or unmarketable to a particular
customer.
8.3 Wink Markings and User Interface Elements.
8.3.1 Remote Button. S-A shall promote and market, at a
competitive price, remote control(s) that: (a) are for
use with S-A Devices that are capable of hosting the
Wink Engine, (b) contain a dedicated button for enabling
the functionality of the Wink Engine ("Wink Button"),
where the Wink Button shall include a marking chosen by
Wink, on and/or adjacent to the Wink Button, (c) S-A
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<PAGE> 9
shall aggressively promote and market remote controls
that include the Wink Button unless specific evidence
exists that the Wink Button is unsuitable or
unmarketable to a particular customer. The location and
size of the button shall be mutually agreed to by the
parties, but such button and its markings shall be as
prominent as buttons and markings for the Menu, Info,
Guide and Select options on any such remote.
8.3.2 Manuals. S-A shall ensure that manuals, or any other
documentation describing functionality, for the S-A
Devices and remotes will contain information on use of
the Wink Engine functionality and Wink copyright and
proprietary notices. The content and location of such
information And notices shall be agreed upon by the
parties, but such information and notices shall be in
the same place, the same size and same prominence as
similar information for other functionality.
8.3.3 Device Specific On screen Information. S-A shall ensure
that: (i) If a S-A Device has a main menu or menu with
similar functionality, a menu item will be reserved for
Wink, which will allow users to access information
regarding the Wink functionality, the content of screen
and name of menu item in menu shall be mutually agreed
upon by the parties; (ii) If a S-A Device has the
capability to display help screens that include
descriptions of box device or remote control
functionality, information regarding Wink functionality
shall be provided, the content and style of such
information shall be mutually agreed to by the parties.
8.3.4 Splash Screens. Subject to Customer approval, Wink shall
have the right to include splash screen that shall be
displayed from time to time and that will contain
information, including without limitations Wink
markings, and copyright and other proprietary right
notices. S-A shall use its best efforts to obtain such
Customer approval and shall allow Wink to negotiate with
any Customer that withholds such approval.
8.4 Proprietary Rights. Except as expressly set forth herein,
nothing herein shall grant to S-A or its Subdistributors any
right, title or interest in the Wink Trademarks. At no time
during or after the term of this Agreement shall S-A or its
Subdistributors challenge or assist others to challenge the Wink
Trademarks or the registration thereof or attempt to register
any trademarks, marks or trade names confusingly similar to
those of Wink.
8.5 Approval of Representations. All representations of Wink's
Trademarks that S-A or its Subdistributors intend to use shall
first be submitted to Wink for approval (which shall not be
unreasonably withheld) of design, color, and other details, or
shall be exact copies of those used by Wink, and shall conform
to any reasonable trademark usage guidelines adopted by Wink and
supplied to S-A. To ensure trademark quality, within a
reasonable time prior to S-A's first commercial shipment of the
Combined Product or any value-added product incorporating the
Combined Product (where the components of the value-added
product affect, in S-A's reasonable discretion, the performance
of the Wink Engine) bearing one or more Wink Trademarks, S-A
shall supply to Wink one such Combined Product or value-added
product for inspection and testing by Wink to ensure that such
Combined Product or value-added product conforms to Wink's
standards of quality for products sold under the Wink
Trademarks. In no event shall S-A commence commercial shipment
of any such Combined Product or other such value-added product
incorporating the Combined Product (except as set forth above)
under the Wink Trademarks without Wink's prior written approval;
provided that if Wink has not approved or disapproved an S-A
request within twenty (20) days of its receipt by Wink, such
request shall be deemed to have been approved.
8.6 Press Releases. The parties intend to cooperate and participate
in public relations programs to promote the Wink Engine and the
relationship between the parties. Appropriate personnel from
each party shall participate in such public relations program.
The parties shall cooperate with respect to and mutually approve
(not to be unreasonably withheld or delayed) all press releases
issued by either party with respect
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to this Agreement or the parties' relationship. Such approval is
intended to protect the timing of disclosure of the availability
of the Wink Engine and the Combined Product and of the existence
of the parties' relationship, as well as to ensure proper
references, accurate information and correct proprietary notices
and information. Unless otherwise agreed in writing by the
parties, each press release issued pursuant to this Section 8.4
shall contain: (i) in the body of the release, the name and
location of both parties and a quote from an executive of both
parties; (ii) in a footnote at the end of the release, both
parties' proprietary notices with respect to technology
discussed in the body of the release. Whenever feasible, the
press release shall also include the logo of each party.
8.7 Disclosures of Terms and Relationship. Each party agrees not to
disclose the terms of this Agreement to any third party or use
the other party's name, trademark, or trade name in any
advertising press release, sales promotion or other similar
manner, without the other's written consent in its sole
discretion, except to such party's accountants, attorneys and
other professional advisors, or as required by securities or
other applicable laws. Notwithstanding this paragraph, each
party shall have the right to say the following in private
meetings with customers, prospective customers, or prospective
investors in Wink:
- Scientific-Atlanta and Wink Communications have a
long-term strategic relationship.
- Scientific-Atlanta and Wink Communications are working
together.
- Scientific-Atlanta is licensing Wink's technology.
- Wink Communications is porting the Wink Engine to
Scientific-Atlanta set-tops.
9. TRAINING, SUPPORT AND MAINTENANCE
9.1 Out of Warranty Maintenance. In addition to the support
obligations set forth in Section 6.1, Wink will provide Out of
Warranty Maintenance ("Support") as follows:
9.1.1 Updates. Wink, in its sole discretion, shall release
Updates from time to time. Wink agrees to make
available to S-A, at no charge to S-A, all such Updates
and permit S-A to distribute Updates to its
Subdistributors and Submanufacturers for their use
consistent with this Agreement. S-A shall promptly
notify its Submanufacturers and Subdistributors of the
availability of each Update and, S-A shall require (in
the case of any Submanufacturer) or request (in the case
of any Subdistributor) them to promptly begin using each
such Update in place of the previous version of the
Licensed Technology. S-A shall be solely responsible for
distributing such Updates to its customers.
9.1.2 Other Support. Wink shall make available at prices to be
determined by Wink support service packages that shall
provide for out of warranty error corrections in
addition to the Updates provided by Wink from time to
time ("Support Packages"); provided that the price of
such Support Packages shall not exceed one hundred and
twenty dollars ($120.00) per hour during the initial
term of this Agreement. Wink agrees to make available
Support Packages for the then current and immediately
prior Update (or in the case of the first Update to an
Initial Product, the Initial Product) of the Wink
Engine, and any other Update that Wink, in its sole
discretion, decides to support. Notwithstanding the
above, Support Packages shall include support for all
versions that were released within the last six (6)
months. In the case Wink releases a New Product Wink
shall offer a Support Package that provides out of
warranty error corrections for the last Update of the
previous product (e.g. Wink will support version 1.9
when version 2.0 is released) for at least one year
after the release of the New Product.
9.2 Provision of Hardware, Software and Equipment. The parties
intend that Wink have an environment in which to recreate field
situations, to allow Wink to replicate problems which may occur
in the field and to test solutions for such problems. In order
to facilitate Wink's performance of the support activities
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contemplated herein, S-A shall, at its own expense, provide Wink
with all of the hardware, Software and equipment (the
"Equipment") which is reasonably necessary to functionally
replicate a system of the type in which the Wink Engine will
actually be used. The Equipment may comprise some or all of the
same Equipment contemplated in Section 3.2. A preliminary list
of the Equipment is included in Exhibit A hereto, and shall be
updated from time to time by mutual agreement. Upon expiration
or termination of this Agreement, Wink shall return all of the
Equipment to S-A. S-A shall retain ownership of all such
Equipment, and Wink shall use the Equipment only for purposes of
its obligations with respect to this Section and Section 3.2
above. In the event that S-A is late in the performance of its
obligations with respect to this Section 9.2 and such delay
affects Wink's obligations under this section, Wink's
performance of such affected obligations shall be delayed by the
same time period. Wink shall return all such software, hardware
and equipment to S-A promptly upon request by S-A; provided that
Winks development and support obligations under this Section 9.2
and Section 3.2 above shall terminate to the extent software,
hardware or equipment returned to S-A is required by Wink to
fulfill its obligations.
9.3 Training. Wink shall provide, at Winks facilities, a training
class for four (4) S-A employees each time an Initial Product is
released, or at least once per year covering the most current
Update of each Wink Engine developed under this Agreement. In
addition, Wink shall make available training packages to train
S-A and its customers on the Wink Engine and functionality.
Training provided pursuant to such packages shall be at one
thousand dollars ($1000.00) per day, plus travel and expenses in
accordance with Section 9.4 below, and any costs for training
facilities incurred by Wink.
9.4 Travel Requirements. In the event that, in the performance of
its obligations under this Section 9, Section 6.3 or under
Section 3, it is mutually agreed by the parties that Wink
engineering employees or contractors will travel from Wink's
facility, S-A shall pay and/or promptly reimburse Wink for, all
reasonable travel (if by air, coach class), room and board, car
rental and other similar expenses associated with such travel,
which expenses are approved in writing by S-A prior to their
being incurred; provided that Wink shall not be paid and/or
reimbursed for employee or contractor time expended with respect
to such travel. Any such travel expenses approved in writing by
S-A shall be deemed reasonable by virtue of such approval.
Notwithstanding the above, if it is determined that the travel
resulted from support and maintenance for a problem caused by a
deviation of the Licensed Technology from the Specifications,
Wink shall be responsible for all such travel expenses incurred
by Wink.
10. TERM AND TERMINATION
10.1 Term. This Agreement shall commence on the Effective Date and
shall continue in full force and effect for a term of five (5)
years from the first commercial shipment of Combined Product by
S-A The term of this Agreement may be extended by mutual
agreement of the parties.
10.2 Termination for Cause. If either party materially defaults in
the performance of any provision of this Agreement, the
non-defaulting party may give written notice to the defaulting
party that if the default is not cured within thirty (30) days
this Agreement shall be terminated. If the non-defaulting party
gives such notice and the default is not cured within thirty
(30) days, this Agreement shall terminate immediately upon
notice by the non-defaulting party. For the purposes of
determining a material default by Wink based on late or
non-delivery of a Deliverable, Wink shall be presumed to be in
material default of this Agreement if, and only if, it fails to
deliver a Deliverable within one (1) year of the date such
Deliverable is due; provided that S-A has fulfilled its
obligations to provide software, hardware and equipment to Wink
with respect to such Deliverable.
10.3 Termination for Insolvency. This Agreement shall terminate upon
written notice given by a party, at such party's option and
without further notice, upon the earlier of: (i) the institution
by or against the other party of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the
settlement
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of the other party's debts, (ii) the other party's making an
assignment for the benefit of its creditors, (iii) the other
party's declaration in writing of its inability to pay debts as
they become due, or (iv) the other party's dissolution or
ceasing to conduct business as a going concern.
10.4 Effect of Termination. Upon the expiration or termination of
this Agreement, the following provisions shall take effect:
10.4.1 Subject to the provisions of Section 10.5, the rights
and licenses granted to S-A under this Agreement shall
automatically terminate, and S-A and its Subdistributors
shall immediately cease all use of the Wink Trademarks;
10.4.2 Any and all sublicenses for end use for the Wink Engine
or S-A Devices granted by S-A or its Subdistributors
shall continue in effect according to their terms and
conditions;
10.4.3 Within ten (10) days after such expiration or
termination, S-A shall return, and shall certify to Wink
the return of, all Master Media and all Wink
Confidential Information in its or its Submanufacturers'
possession at the time of expiration or termination. In
addition, Wink shall return, and shall certify to S-A
the return of, all S-A Confidential Information in its
possession at the time of expiration or termination. S-A
shall not make or retain any Master Media, copies of the
Wink Engines, or any other materials containing
confidential information of Wink entrusted to S-A.
Notwithstanding the foregoing, S-A may (i) maintain a
single copy of the Master Media and (ii) retain any
Confidential Information necessary for support, subject
to the provisions of Section 11, both solely to provide
support to its Subdistributors and to end users in
existence as of the effective date of expiration or
termination; and
10.4.4 S-A shall pay all outstanding amounts owed to Wink
within forty-five (45) days of quarter end. In the event
Wink is performing development tasks for S-A at the time
of any termination, S-A shall also pay to Wink the next
payment due under the Development Schedule; provided
however, that if the Agreement is terminated by S-A
based on a breach by Wink, then S-A shall only be
obligated to pay Wink the portion of the next milestone
that is proportional to the amount of work completed by
Wink for that milestone.
10.4.5 In the event this Agreement is terminated by S-A
pursuant to Section 10.2 above based on a Wink's failure
to deliver a Deliverable within the time period
prescribed in Section 10.2, Wink shall refund any
advance royalty payments made by S-A that have not been
applied against royalties due Wink at the time of such
termination.
10.4.6 The provisions of Sections 6, 7, 10, 11, 12, 13, and 14
shall survive the expiration or termination of this
Agreement for any reason.
10.5 Sell-off Period. In the event of the expiration of this
Agreement or a termination by S-A, S-A may, subject to the
provisions of Section 5 (including without limitation S-A's
obligation to pay royalties in connection with all
distributions) dispose of its inventory of Wink Engines and
Combined Products on hand, for a period not to exceed sixty (60)
days after the effective date of such expiration or termination
(the "Sell-Off Period"), and in connection therewith, S-A shall
use the Wink Trademarks during the Sell-Off Period pursuant to
the provisions of Section 8.
10.6 Destruction of Inventory. Within ten (10) days after (i) the end
of the Sell-Off Period, in the event of the expiration or
termination of this Agreement by S-A or (ii) the effective date
of termination, in the event of a termination by Wink, S-A shall
destroy, and shall certify to Wink the destruction of, all
copies of the Wink Engine in its or its Subdistributors' or
Submanufacturers' possession.
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<PAGE> 13
10.7 Source Code Escrow. Upon request of S-A, Wink agrees to put into
escrow a copy of the Licensed Technology in human readable
format ("Source Code"), in detail that is in accordance with the
industry standard for such Source Code. Prior to Wink putting
the Licensed Technology into escrow, the parties shall execute a
source code escrow agreement which contains the provisions
below:
10.7.1 Escrow Account. Within sixty (60) days of the signing of
an source code escrow agreement between S-A, Wink and
Data Securities International ("Escrow Agent"), Wink
agrees to place in an escrow account in California, a
copy of the Source Code. The escrow agreement shall
contain, at a the terms and conditions set forth in this
Section 10.7. S-A shall bear all fees, expenses and
other charges incurred to open and maintain such escrow
account. If S-A does not pay such charges, Wink may
close the escrow account with no further obligation to
S-A under this Section 10.7. Upon commercial release of
Updates to the Licensed Technology, Wink shall add to
the escrow account, any Updates that S-A is licensed to
receive under this Agreement; provided, however, that
Wink shall not be obligated to make deposits into the
escrow account more frequently than twice per year. Wink
shall be allowed to close the escrow account for any
product six (6) months after the release of a new
version of such product that is a New Product. If the
Escrow Agent provides the Source Code to S-A under the
escrow agreement, S-A agrees to hold all materials and
information in the escrow account in confidence pursuant
to Section 10.7.5 and Section 11 below, and not to use
such materials for any purpose other than those purposes
contemplated under Section 10.7.4 below.
10.7.2 Access. The Source Code shall remain under seal and
unopened unless a Release Condition (as defined in
Section 10.7.3 below) occurs.
10.7.3 Release. S-A shall notify Wink in writing if S-A
believes that one of the following events (the "Release
Conditions") has occurred and that it intends to seek
release of the Source Code from the escrow account: (i)
Wink's dissolution or ceasing to do business in the
normal course, or (ii) Wink's breach of its support and
maintenance obligations under Section 9.1 above if such
breach is not cured within forty-five (45) days written
notice by S-A. If Wink notifies S-A in writing that it
disputes whether any such Release Condition has
occurred, officers of each company shall negotiate for a
period of ten (10) business days to attempt to resolve
the dispute. At the end of such ten (10) business day
period, if the parties have not resolved the dispute,
the parties shall refer the matter to arbitration as
provided for in the escrow agreement. If the arbitrator
determines that S-A is entitled to the Source Code, then
Wink shall instruct the Escrow Agent to release the
Source Code to S-A. Under no circumstances shall the
Escrow Agent release the Source Code without
instructions from Wink to do so.
10.7.4 License. Upon the release of the Source Code pursuant to
Section 10.7.3 above, S-A shall have a nonexclusive,
nontransferable, with no right to sublicense, right to
use, with a right to modify and created derivative works
only for the purposes of creating Updates, and without a
right to have modified, the Source Code solely to
support and maintain the Licensed Technology. S-A shall
assign to Wink right, interest and title in any
derivative works created by S-A pursuant to this Section
10.7.4. Subject to the license granted hereunder, Wink
shall retain all copyrights and other proprietary rights
in and to the Source Code. The Source Code and any
derivative works of tile Source Code shall be subject to
the royalty obligations that are contained in this
Agreement with respect to Licensed Technology. S-A shall
have the right to copy the Source Code only to create
backup copies. S-A shall not distribute, sell,
sublicense or otherwise transfer the Source Code to a
third party. S-A's license to the Source Code shall
terminate six (6) months after the release of a new
version of the Wink Engine that is a New Product. Upon
termination, S-A shall destroy, or return to Wink, all
copies of the Source Code.
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<PAGE> 14
10.7.5 Security. In addition to the obligations set forth in
Section 11 below, S-A agrees to use the Source Code
under carefully controlled conditions for the purposes
set forth in this Agreement, and to inform all employees
who are given access to such Source Code by S-A that
such materials are confidential trade secrets of Wink
and are licensed to S-A as such. S-A shall restrict
access to such Source Code to those employees of S-A who
have agreed to be bound by a confidentiality obligation
which incorporates the protections and restrictions
substantially as set forth herein, and who have a need
to know in order to carry out the purposes of this
Agreement. S-A agrees to keep a written record of those
persons accessing such materials and will store such
materials in a locked room with limited access when not
in use. Upon request by Wink, S-A shall provide Wink
with the names of all individuals who have accessed such
materials, and shall take all actions reasonably
required to recover any such materials in the event of
loss or misappropriation, or to otherwise prevent their
unauthorized disclosure or use. S-A shall be fully
responsible for the conduct of all its employees, agents
and representatives who may in any way breach this
Agreement.
11. CONFIDENTIALITY
11.1 Obligation of Confidentiality. The parties acknowledge that by
reason of their relationship to each other hereunder, each may
have access to certain information and materials concerning the
other's business, plans, customers, technology and products that
is confidential and of substantial value to that other party,
which value would be impaired if such information were disclosed
to third parties ("Confidential Information"). Without limiting
the foregoing, Confidential Information shall include the source
code of the Wink Engine. Each party agrees that it shall, not
use in any way, for its own account or the account of any third
party, nor disclose to any third party, except as may be
expressly permitted under this Agreement, any such Confidential
Information revealed to it by the other party and shall take
every reasonable precaution to protect the confidentiality of
such information. Upon request by either party, the other party
shall advise whether or not it considers any particular
information or materials to be confidential, provided that the
Licensed Technology (except for documentation identified by Wink
as public)shall at all times be deemed Confidential Information
of Wink. Neither party shall develop or have developed any
software programs utilizing any of the other party's
Confidential Information.
11.2 Exceptions. Information shall not be deemed Confidential
Information hereunder if such information:
11.2.1 Is or becomes part of the public domain through no fault
or breach on the part of the receiving party;
11.2.2 Is known to the receiving party prior to the disclosure
by the disclosing party and such knowledge can be shown
by written records;
11.2.3 Is subsequently rightfully obtained by the receiving
party from a third party who has the legal right to
disclose it;
11.2.4 Is independently developed by the receiving party
without the use of any Confidential Information or any
breach of this Agreement;
11.2.5 Is approved for public release by the disclosing party;
or
11.2.6 Is required to be disclosed by judicial action provided
that the receiving party has first given the disclosing
party reasonable notice of such requirement and fully
cooperates with the disclosing party in seeking
confidential treatment for any such disclosure.
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<PAGE> 15
11.3 Injunctive Relief. The parties acknowledge that any breach of
the provisions of this Section 11 may cause irreparable harm and
significant injury to an extent that may be extremely difficult
to ascertain. Accordingly, each party agrees that each will
have, in addition to any other rights or remedies available to
it at law or in equity, the right to seek injunctive relief to
enjoin any breach or violation of this Section 11.
12. INTELLECTUAL PROPERTY, WARRANTY AND INDEMNITY
12.1 Warranty. Each party represents and warrants that neither the
execution or performance by such party of this Agreement, nor
the consummation of any transactions herein does or will violate
any law, order, regulation or ruling applicable to such party or
its efforts hereunder. In addition, Wink represents and warrants
that (a) as of the Effective Date, no action or proceeding
alleging intellectual property infringement by the Wink Engine
has been threatened or is proceeding against Wink (nor, insofar
as Wink is aware, against any entity from which Wink has
obtained any rights related to the Wink Engine), (b) it has the
right to license the Intellectual Property Rights in and to the
Wink Engine to S-A and (c) the Licensed Technology and the
Trademarks do not infringe any patent in the U.S., or any
copyright, trade secret or trademark. S-A's exclusive remedy,
and Wink's sole liability, for a breach by Wink of the
warranties of subsections (b) and (c) above shall be Winks
indemnity set forth in this Section 12.
12.2 Indemnity. Wink agrees, at its expense, to defend, or at its
option to settle, any claim, suit, action or proceeding brought
against S-A by a third party as a result of Wink's breach of its
warranties under 12.1(b) and (c) above (an "Action"), and to pay
any settlement or final judgment entered thereon against S-A,
subject to the limitations set forth hereafter. Wink shall be
relieved of its obligations hereunder unless S-A gives Wink (i)
prompt written notice upon becoming aware of the existence of an
Action, (ii) sole control over the defense or settlement of the
Action and (iii) reasonable assistance in the defense or
settlement thereof. If it is, or in the opinion of Wink may be,
determined by competent authority that the Licensed Technology
or any part thereof, or the sale, distribution or use thereof as
permitted hereunder infringes any patent, copyright, trade
secret or trademark of a third party or is enjoined, then Wink
at its sole option and expense may (a) procure for S-A the right
under such patent, copyright, trade secret or trademark to use,
reproduce and distribute the Licensed Technology or such part
thereof or such trademark; (b) replace the Licensed Technology
or such part thereof or such trademark with other suitable
software or trademark without material degradation in
performance or functionality; (c) suitably modify the Licensed
Technology or such part thereof or such trademark to avoid
infringement without material degradation in performance or
functionality; or (d) if none of the foregoing are commercially
reasonably feasible, terminate this Agreement in whole or in
part with respect to any country or any version of the Wink
Engine; provided that in such case Wink shall refund to S-A a
portion of royalties paid by S-A on any S-A Devices for which
S-A provides a refund to its customers in any such country or
for any such version of the Wink Engine. The proportion of
royalties to be refunded by Wink on such S-A Devices shall be
equal to the proportion of the original price charged by S-A to
its customers for the Wink Engine that is refunded by S-A to its
customers.
12.3 Limitations. The foregoing indemnity shall not apply to an
Action to the extent it arises out of (i) any modification of
the Licensed Technology by a party other than Wink or on Wink's
behalf, (ii) any combination of the Licensed Technology with
hardware and/or software (including software written using the
Wink Authoring Tool or using the Wink APIs) not supplied by Wink
(except hardware of the S-A Device and except hardware and
software specified in Specifications), or (iii) any trademarks,
trade names or other brandings not supplied by Wink. As used in
Subsection 12.3(i), "on Wink's behalf" shall mean that Wink has
given its written authorization for S-A or a third party to
perform such modifications.
12.4 Disclaimer. THE FOREGOING PROVISIONS OF THIS SECTION 12 STATE
THE ENTIRE LIABILITY AND OBLIGATION (EXPRESS, IMPLIED,
STATUTORY, IN ANY COMMUNICATION
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<PAGE> 16
WITH WINK OR OTHERWISE) OF WINK AND THE EXCLUSIVE REMEDY OF S-A
WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY PATENT,
COPYRIGHT, TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL
PROPERTY RIGHT BY THE WINK ENGINES OR ANY PART THEREOF
12.5 Indemnification Outside the U.S.. In the event that S-A from
time to time provides written notification pursuant to Section
14.6 to Wink of its desire to sell products utilizing the
Licensed Technology in any country other than the United States,
Wink shall, within thirty (30) days after receipt of any such
notice, notify S-A in writing that either (i) it has no
objection to the sale of such products in such country,
whereupon the warranty and indemnification by Wink contained in
Section 12.1 and 12.2. shall thereafter apply to such sale by
S-A, or (ii) that it will pay one-half the cost in the form of a
credit against royalties to be paid on licenses granted by S-A
in such country (but not to exceed a total of $10,000 to be paid
by Wink per country) of obtaining an infringement study or
opinion of patent counsel selected by S-A and approved by Wink,
in which event the warranty and indemnification by Wink
contained Sections in 12.1 and 12.2 shall not apply to such
sales by S-A. Wink shall be a named client of any such patent
counsel, and shall be entitled to all of the protections and
benefits resulting out of any such study or opinion that are
normally afforded to clients in such situations. In the event
S-A licenses the Licensed Technology outside the United States
without first consulting Wink pursuant to this Section 12.5, the
warranty and indemnification by Wink contained Sections in 12.1
and 12.2 shall not apply to such sales by S-A. In the event that
such study or opinion, concludes that there is a significant
risk that sales of the Licensed Technology will infringe a third
party's intellectual property rights in any such country, and
S-A nevertheless sells or licenses the Licensed Technology in
such country, S-A shall indemnify and hold harmless Wink against
third party intellectual property infringement claims based on
such sales or licenses as set forth in Section 13.1 below. If
S-A and Wink disagree as to the conclusion in any such opinion
or report, the disagreement shall be submitted for arbitration
pursuant to the Commercial Arbitration Rules of the American
Arbitration Association.
13. INDEMNITY BY S-A
13.1 Indemnity. Except with respect to any claim, suit, action or
proceeding (a) arising out of any intellectual property
infringement by the Licensed Technology (except as set forth in
(iii) below), or (b) or which is based on the failure of the
Licensed Technology to meet the Specifications, S-A agrees, at
its expense, to defend, or at its option to settle, any claim,
suit, action or proceeding brought against Wink by a third party
arising out of S-A's use of the Licensed Technology or exercise
of the rights and licenses granted hereunder, including, without
limitation: (i) the manufacture, use or sale of the Licensed
Technology or Combined Products, (ii) S-A's or its
Subdistributors' modification, use or distribution of the
Licensed Technology, and to pay any settlement or final judgment
entered thereon against Wink, subject to the limitations set
forth hereafter; or (iii) any claim that sales or licenses of
the Licensed Technology made by S-A infringe a third party's
intellectual property rights in any country in which S-A is
obligated to indemnify Wink pursuant to Section 12.5(ii) above.
S-A shall be relieved of its obligations hereunder unless Wink
gives S-A (i) prompt written notice upon becoming aware of the
existence of any such claim, suit, action or proceeding, (ii)
sole control over the defense or settlement of such claim, suit,
action or proceeding and (iii) reasonable assistance in the
defense or settlement thereof.
13.2 Disclaimer. THE FOREGOING PROVISIONS OF THIS SECTION 13 STATE
THE ENTIRE LIABILITY AND OBLIGATION (EXPRESS, IMPLIED,
STATUTORY, IN ANY COMMUNICATION WITH S-A OR OTHERWISE) OF S-A
AND THE EXCLUSIVE REMEDY OF WINK WITH RESPECT TO ANY CLAIMS
BROUGHT AGAINST WINK ARISING FROM S-A'S USE OF THE LICENSED
TECHNOLOGY OR EXERCISE OF THE RIGHTS AND LICENSES GRANTED TO S-A
HEREUNDER.
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<PAGE> 17
14. GENERAL
14.1 Governing Law and Jurisdiction. This Agreement shall be governed
by and construed under the laws of the State of California,
without reference to conflict of laws principles.
14.2 Import & Export Controls. S-A understands that Wink is subject
to regulation by agencies of the U.S. government which prohibit
export or diversion of certain products and technology to
certain countries. Any and all obligations of Wink including
without limitation obligations to provide products, technology,
documentation, or technical assistance, will be subject in all
respects to such United States laws and regulations that will
from time to time govern the license and delivery of technology
and products abroad or to foreign nationals by persons subject
to the jurisdiction of the United States. S-A warrants that it
will comply in all respects with the export and reexport
restrictions set forth in any export licenses obtained by the
Wink or S-A (if necessary). S-A warrants that it will not, and
will take all actions which may be reasonably necessary to
assure that its end-user do not, contravene such United States
laws or regulations. Such laws include without limitation:
Export Administration Regulations, 15 C.F.R. 768 et. seq.;
International Traffic in Arms Regulations, 22 C.F.R. 120 et.
seq.; Nuclear Regulatory Commission Export Regulations, 10
C.F.R. 110 et. seq; Department of Energy Export Regulations, 10
C.F.R. 8 10 et. seq.; Treasury Department Antiboycott
Regulations, IRS Code 999; and Office of Foreign Asset Control
Regulations, 31 C.F.R. 500 et. seq.
14.3 No Assignment. This Agreement and any rights or obligations of
S-A or Wink hereunder shall not be assigned by either party
without the prior written consent of the other party, which
consent shall not be unreasonably withheld, except that either
party may assign its rights and obligations hereunder to any
entity (i) which controls, is controlled by or is under common
control with such party or (ii) which acquires all or
substantially all of the assets or business of such party to
which this Agreement pertains, provided in both cases that such
entity shall assume in writing or by operation of law such
party's obligations under this Agreement. Subject to the
foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns.
14.4 Independent Contractors. The relationship of the parties
established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be
construed to (i) give either party the power to direct and
control the day-to-day activities of the other, (ii) constitute
the parties as partners, joint venturers, co-owners or otherwise
as participants in a joint or common undertaking, or (iii) allow
either party to create or assume any obligation on behalf of the
other party for any purpose whatsoever.
14.5 Compliance with Laws. In exercising its rights under this
license, each party shall fully comply with the requirements of
any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of
rights under this license.
14.6 Notices. All notices under this Agreement shall be in writing
and sent by (i) certified air mail, return receipt requested,
postage prepaid or (ii) commercial courier service. If properly
addressed to or delivered at the address for each party set
forth above, a notice shall be deemed given upon delivery or,
where delivery cannot be effected due to the actions of the
addressee, upon tender.
14.7 Entire Agreement. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements,
understandings, proposals and representations by the parties,
including without limitation the memorandum of understanding
between the parties dated August 1, 1995.
14.8 Limitation of Liability. (i) IN NO EVENT SHALL WINK BE LIABLE TO
S-A IN THE AGGREGATE FOR ANY AMOUNT IN EXCESS OF THE AMOUNTS
PAID(AND THE AMOUNTS WHICH HAVE
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<PAGE> 18
ACCRUED HEREUNDER BUT HAVE NOT BEEN PAID) BY S-A HEREUNDER AND
(ii) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR
LOST PROFITS, LOSS OF DATA OR FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN ANY WAY OUT OF THIS
AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY. As
used in this section 14.8, "lost profits" shall not include, in
the case of an infringement of intellectual property rights or
the disclosure of source code, actual damages (including without
limitation entitlement to a reasonable royalty, as measured by
the royalty rate provided for in this Agreement) suffered as a
result of such infringement or disclosure, but shall include any
profits made by an infringer or discloser. THIS LIMITATION SHALL
APPLY EVEN IF SUCH PARTY KNOWS OR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED FOR HEREIN.
14.9 Counterparts. This Agreement may be executed in any number of
counterparts and when so executed and delivered shall have the
same force and effect as though all signatures appeared on one
document.
14.10 Severability. The provisions of this Agreement shall be
severable, and if any provision of this Agreement shall be held
or declared to be illegal, invalid, or unenforceable, such
illegal, invalid or unenforceable provision shall be severed
from this Agreement and the remainder of the Agreement shall
remain in full force and effect, and the parties shall negotiate
a substitute, legal, valid and enforceable provision that most
nearly reflects the parties' intent in entering into this
Agreement.
14.11 Basis of Bargain. Wink and S-A acknowledge and agree that Wink's
entering into this Agreement and the amount of S-A's royalty
hereunder have been done or set in reliance upon the limitations
of liabilities and disclaimers of warranty set forth in this
Agreement, and that the same form an essential basis of the
parties' bargain.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. SCIENTIFIC-ATLANTA
By: /s/ Gary L. Hammer By: /s/ Michael P Harney
Name: Gary L. Hammer Name: Michael P. Harney
Title: VP, Business Development Title: VP/GM Broadband
Technologies
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<PAGE> 19
EXHIBIT A-1
DEVELOPMENT OF WINK ENGINE
for 68HC11 to reside on Genius Card
1. Device & Specifications
Wink and S-A agree that Wink shall port the Wink Engine to the 68HC11 to
reside on the S-A Genius Card containing a total of 128K Flash ROM and 128K RAM.
(Final details on memory to be available to Wink still to be determined, but it
is expected to be approximately 108K of Flash.)
The Specifications shall be developed by the parties and accepted by
S-A. Upon S-A's acceptance thereof, the Specifications shall be set forth in
Exhibit B-1 hereto. Any modifications to the accepted Specifications shall be
made only upon the mutual written agreement of the parties.
2. Development Milestones
All dates are relative -- most of them depend on prior milestones'
on-time completion. Any reference to N days after a milestone refers to calendar
days after that milestone.
<TABLE>
<CAPTION>
COMPLETION
MILESTONE DELIVERER DATE
- - --------- --------- ----
<S> <C> <C>
1. Delivery of preliminary specification (revised Wink 12/20/95
statement of work)
2. S-A's comments on preliminary specification S-A 1/31/96
3. Delivery of documents: S-A
- SM / RF-IPPV Processor Interface Spec 11/15/95
- SM Host Interface Spec 1/31/96
- Scrambler RS-485 Interface Spec 1/15/96
- SM10 User Manual 1/15/96
- ISP User Manual 1/15/96
- HEC User Manual 1/15/96
- 8600x Low-Level API Spoec (Wink has draft) 1/31/96
- File format for WSM in HEC 1/15/96
4. Delivery of hardware, software (+ licenses & docs S-A
for each):
- 3 development 8600x settops (pre-assembled) 1/15/96
- 3 ICE units 2/14/96
- 3 copies of development software 2/07/96
- 3 Genius cards 2/28/96
</TABLE>
- - ----------
(1) Specific development software (complier, including linker and
assembler) to be chosen by Wink, and Wink will arrange delivery to its own
office. It is listed as an item to be delivered by S-A because, as with all
other items to be delivered by S-A listed in Exhibit A-1, the development
software and its delivery shall be paid for by S-A. For the development software
and its delivery, such payment by S-A shall be in the form of prompt
reimbursement to Wink by S-A up to a maximum of $10,000.
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<PAGE> 20
<TABLE>
<CAPTION>
COMPLETION
MILESTONE DELIVERER DATE
- - --------- --------- ----
<S> <C> <C>
5. Support for #4: one day of on-site time at Wink's S-A 2/29/96
facilities by settop box developer to
train/demonstrate development software on development
settops
6. Delivery of development schedule Wink 3/29/96
7. Delivery of head-end equipment, licenses, support Wink 2/12/96
(after Wink's move to new office, no schedule
for 1/27-28):
- SM 10/20 (incl. diagnostic modem)
- Head End Controller (HEC)
- Information Services Provider (ISP)
- 6 Scramblers (8656x)
- 6 agile modulators
- 5 8600X devices with Genius card slot-RF
Processor
- all documentation (eg, user & admin. manuals) and
licenses re the above
- on-site visit by support person for as long as needed
to get the headend installed and Wink personnel
trained in its use & maintenance
8. S-A's comments on development schedule delivered to Wink S-A 4/12/96
* 9. Delivery of final specification, revised development schedule Wink 5/31/96
and revised milestones
10. Delivery of 5 Genius cards for development & testing S-A 6/03/96
11. Signing of documents in #9 or statement of specific concerns S-A 6/14/96
* 12. Delivery of alpha release of Wink Engine Version 1.0 Wink 9/23/926(2)
13. Delivery of beta release of Wink Engine Version 1.0 Wink 11/18/96(2)
14. Delivery of final release of Wink Engine Version 1.0 Wink 1/24/927(2)
* 15. Acceptance of final release of Wink Engine Version 1.0 S-A 2/24/97
</TABLE>
*Payments due upon this milestone (other payments also due upon milestones not
listed above). See Sections 4 & 5 below for more information.
3. Per Copy Royalty:
[*]
4. Royalty Advances:
[*] Taking into account S-A's concerns regarding attaching payments to
milestones, Wink and S-A hereby agree to amend the assignment of payments under
the Memorandum of Understanding such that the following payments are
- - --------
(2) Estimated date. Wink cannot commit to a date for this milestone
until Wink's engineers have had 30 days to evaluate working settop hardware
(i.e., until Milestone #6).
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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<PAGE> 21
due upon the following events, rather than those events described in the
Memorandum of Understanding concerning the porting of the Wink Engine for use
with PowerTV residing on a Genius card:
<TABLE>
<CAPTION>
ADVANCE AMT.
EVENT (US DOLLARS)
<S> <C>
Signing of Memorandum of Understanding [*] (paid)
Delivery of Alpha release of Wink Engine [*] (not yet paid)
(Version 1.0)
S-A's Acceptance of Licensed Technology [*] (not yet paid)
</TABLE>
5. NREs. In addition to the amount set forth above, S-A shall pay a
non-refundable NRE fee as follows:
<TABLE>
<CAPTION>
ADVANCE AMT.
EVENT (US DOLLARS)
<S> <C>
November 1, 1995 [*] (not yet paid)
Signing of Contract [*] (not yet paid)
Acceptance of final specifications [*] (not yet paid)
and revised development
schedule & milestones, by S-A
The sooner of (a) demonstration of 68HC 11 [*] (not yet paid)
Wink Engine software at National Cable Show in
May 1996 or (b) delivery of alpha release of
Wink Engine Version 1.0
S-A's Acceptance of Licensed Technology [*] (not yet paid)
</TABLE>
Wink and S-A will also mutually agree upon reasonable NRE Fees for
localization of the customized Licensed Technology for non-U.S. markets.
WINK COMMUNICATIONS, INC. SCIENTIFIC-ATLANTA
By: /s/ Gary L. Hammer By: /s/ Michael P. Harney
Name: Gary L. Hammer Name: Michael P. Harney
Title: VP, Business Development Title: VP/GM Broadband Technologies
Date: 15 Jan 96 Date:
----------------------------
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<PAGE> 22
EXHIBIT A-2
DEVELOPMENT OF WINK ENGINE
for PowerTV to reside on Genius Card
1. Device & Specifications
Wink and S-A agree that Wink shall port the Wink Engine to the PowerTV
operating system to reside on the S-A Genius Card containing 68000 and PowerTV
operating system in ROM, and a total of 512K FlashROM and 512K RAM. (Final
details on memory to be available to Wink still to be determined.)
The Specifications shall be developed by the parties and accepted by
S-A. Upon S-A's acceptance thereof, the Specifications shall be set forth in
Exhibit B-2 hereto. Any modifications to the accepted Specifications shall be
made only upon the mutual written agreement of the parties.
2. Development Milestones
<TABLE>
<CAPTION>
COMPLETION
MILESTONE DELIVERER DATE
<S> <C>
(All milestones for PowerTV Wink Engine are TBD.)
3. Per Copy Royalty:
[ * ]
4. NREs. S-A shall pay a non-refundable NRE fee
as follows:
ADVANCE AMT.
EVENT (US DOLLARS)
Signing of Memorandum of Understanding [*] (paid)
Acceptance of final specifications and [*] (not yet paid)
revised development schedule & milestones
by S-A
Delivery of alpha release of Wink Engine [*] (not yet paid)
Version 1.0
S-A's Acceptance of Licensed Technology [*] (not yet paid)
</TABLE>
Wink and S-A will also mutually agree upon reasonable NRE Fees for
localization of the customized Licensed Technology for non-U.S. markets.
-22-
<PAGE> 23
WINK COMMUNICATIONS, INC. SCIENTIFIC-ATLANTA
By: /s/ Gary L. Hammer By: /s/ Michael P. Harney
Name: Gary L. Hammer Name: Michael P. Harney
Title: VP, BUSINESS DEVELOPMENT Title: VP/GM Broadband Technologies
Date: 15 Jan 1996 Date:
---------------------------
-23-
<PAGE> 24
EXHIBIT B
SPECIFICATIONS
-24-
<PAGE> 25
EXHIBIT C
SOFTWARE PROGRAM
A platform- and user interface-independent software engine that implements
Wink's Interactive Communicating Applications Protocol ("ICAP") for the
interpretation of interactive graphical applications.
Under the terms of this Agreement, the above engine will be version 1.0 of the
Wink Engine which will be adapted for use with certain S-A Devices described in
this Agreement. All references to the Wink Engine in this Agreement shall refer
to the adapted version of the above engine.
-25-
<PAGE> 26
EXHIBIT D
SAMPLE WINK TRADEMARK
[see attached page]
-26-
<PAGE> 27
EXHIBIT E
END USER LICENSE AGREEMENT
Use of the PowerTV(TM) operating system software and other firmware
("the Software") that operates with your 8600xDI-3 Rome Communications Terminal
("HCT") provided to you by your service provider is subject to the license terms
found on this label and in your Operator's Manual.
READ THE TERMS AND CONDITIONS OF THIS LICENSE AGREEMENT CAREFULLY BEFORE
REMOVING THIS LABEL. THE SOFTWARE IS OWNED BY SCIENTIFIC-ATLANTA, INC. AND ITS
SUPPLIERS AND IS COPYRIGHTED AND LICENSED TO YOU (NOT SOLD). BY REMOVING THE
LABEL, YOU ARE ACCEPTING AND AGREEING TO THESE LICENSE TERMS. IF YOU ARE NOT
WILLING TO BE BOUND BY THE TERMS OF THIS LICENSE AGREEMENT, YOU SHOULD CALL YOUR
SERVICE PROVIDER AND ASK FOR THE REMOVAL OF YOUR HCT. THIS LICENSE AGREEMENT
REPRESENTS THE ENTIRE AGREEMENT CONCERNING THE SOFTWARE BETWEEN YOU AND
SCIENTIFIC-ATLANTA.
You have the nonexclusive revocable right to use the Software only with
the HCT that was supplied to you by your service provider. This License
Agreement does not convey to you any interest in or to the Software.
You may not copy, sublicense, modify, reverse engineer, decompile, or
disassemble (except to the extent applicable laws specifically prohibit such
restriction) the Software, in whole or in part, or disclose any of the Software
to third parties. You may not transfer the Software or your license separately
from the HCT on which it operates. If you do any of these acts, your license and
right to use the Software is automatically terminated.
The Software remains the property of Scientific-Atlanta and its
suppliers. You will not remove any copyright notice from the Software and agree
to prevent any unauthorized copying of the Software.
THIS LICENSE AGREEMENT IS EFFECTIVE WHEN YOU REMOVE THIS LABEL FROM THE
HCT AND SHALL CONTINUE UNTIL TERMINATED. You may terminate this License
Agreement at any time by returning the HCT to your service provider.
Scientific-Atlanta may terminate this License Agreement upon the breach by you
of any term. On such termination by Scientific-Atlanta, you agree to return the
HCT and Software to your service provider.
Scientific-Atlanta does not warrant that the Software is error free or
will operate in an uninterrupted manner. Scientific-Atlanta's cumulative
liability to you or any other party for any loss or damages resulting from any
claims, demands, or actions arising out of or relating to this License Agreement
shall not exceed the installation fee paid for the HCT and the Software.
SCIENTIFIC-ATLANTA MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.
SCIENTIFIC-ATLANTA SHALL NOT BE LIABLE TO YOU FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES HOWEVER BASED ARISING
OUT OF OR IN CONNECTION WITH THIS LICENSE OR ANY ACTS OR OMISSIONS ASSOCIATED
THEREWITH OR RELATING TO THE USE OF THE SOFTWARE OR HCT. SOME STATES DO NOT
ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL
DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY TO YOU.
This License Agreement shall be construed and governed in accordance
with the laws of the State of Georgia exclusive of its choice of laws
provisions. Should any term of this License Agreement be void or unenforceable,
the remaining terms shall still be valid. Failure of either party to enforce any
rights granted in this license or to take action against the other shall not be
deemed a waiver as to subsequent enforcement of rights or subsequent actions for
future breaches.
-27-
<PAGE> 28
Use, duplication or disclosure of the Wink Engine component of the
Software by the U.S. Government is subject to "Restricted Rights", as that term
is defined in the Department of Defense ("DOD") Supplement to the Federal
Acquisition Regulations ("DFARS") in paragraph 252.227-7013(c)(1) if to the DOD,
or, if the Wink Engine is supplied to any unit or agency of the U.S. Government
other than DOD, the Government's rights in Wink Engine will be as defined in
paragraph 52.227-19(c)(2) of the Federal Acquisition Regulations ("FAR").
Contractor: Wink Communications, 2061 Challenger Drive, Alameda, CA 94501.
-28-
<PAGE> 29
EXHIBIT F
PROPRIETARY NOTICES
1. Screens displayed to the End-Users from time to time shall contain, at a
minimum, the following:
Copyright 199 , Wink Communications, Inc.
--
Patents No. [Need to insert patent numbers]
------------------------
2. Memory devices containing the Licensed Technology shall be marked with, at a
minimum, the following:
Patents No. [Need to insert patent numbers]
---------------------------
3. Wink, the Wink eye and "i" shall be marked with either "Registered in U.S.
Patent and Trademark Office" or with the letter R enclosed within a circle.
-29-
<PAGE> 30
AMENDMENT NO. 1 TO DEVELOPMENT AND LICENSE AGREEMENT
THIS AMENDMENT NO. 1 TO DEVELOPMENT AND LICENSE AGREEMENT ("Amendment")
is made and entered into as of this 27th day of January, 1998, by and between
WINK COMMUNICATIONS, INC., a California corporation with offices at 2061
Challenger Drive, Alameda, CA 94501 ("Wink"), and SCIENTIFIC-ATLANTA, INC. a
Georgia corporation with offices at One Technology Parkway South, Norcross, GA
30092 ("S-A").
WITNESSETH:
WHEREAS, Wink and S-A executed a Development and License Agreement dated
as of January 15, 1996 (the "Development Agreement"); and
WHEREAS, Wink and S-A desire to amend the Development Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Section 11 of the Development Agreement is hereby amended and
restated to read in its entirety as follows:
"11. CONFIDENTIALITY
11.1 Obligation of Confidentiality. The parties acknowledge
that by reason of their relationship to each other
hereunder, they anticipate that each may have access to
certain information and materials concerning the other's
business, plans, customers, technology and products that
may be considered proprietary and/or confidential and of
substantial value to that other party, which value would
be impaired if such information were improperly used or
disclosed to third parties. The use and disclosure of
such information is subject to the provisions of this
Section 11.
11.2 Definition of "Information", "Proprietary Information"
and "Confidential Information". For purposes of this
Agreement, (i) "Information" means any communications,
materials or data in any form, including, but not
limited to, oral, written, graphic or electronic forms,
which includes designs, drawings, specifications, or
business, marketing, product performance or technical
information, relating to the products or services of
either party; (ii) "Proprietary Information" means
information which has been developed, and is owned, by
the disclosing party (the "Disclosing Party") regarding
the design, specifications or product performance of, or
other technical information concerning, the products or
services of the Disclosing Party; and (iii)
"Confidential Information" means Information which,
although not necessarily developed or owned by the
Disclosing Party, the Disclosing Party wishes to be
treated by the receiving party (the "Receiving Party")
as confidential. Both Proprietary Information and
Confidential Information must be clearly identified as
such by the Disclosing Party prior to disclosure. In the
case of written material, the Disclosing Party must
prominently label it either "PROPRIETARY INFORMATION" or
"CONFIDENTIAL INFORMATION." In the case of material
presented orally, the Disclosing Party must give advance
notification that such information will be disclosed
(including a general non-confidential and
non-proprietary description of the nature of the
information to be disclosed) and should be treated by
the Receiving Party as either "PROPRIETARY" or
"CONFIDENTIAL." In addition, the Disclosing Party must
confirm the disclosure in writing within thirty (30)
days following oral disclosure, specifically identifying
the material that the Disclosing Party deems to be
either Proprietary Information or Confidential
Information.
-30-
<PAGE> 31
It is acknowledged by the parties that Information
furnished by Wink to S-A prior to January 27, 1998 may
not have been properly marked as provided in the
preceding paragraph. Therefore, it is agreed that such
Information shall be categorized as set forth on
Schedule 11.2 attached to and incorporated in this
Agreement regardless of the marking on, or failure to
mark, such Information. Any Information delivered by
Wink to S-A which is not described on Schedule 11.2
shall not be deemed to be, and shall not be treated as,
either Proprietary Information or Confidential
Information.
11.3 Use of Information. A Receiving Party may use
Proprietary Information of a Disclosing Party only for
the purposes contemplated under this Agreement, or as
otherwise authorized by the Disclosing Party. A party
may use Confidential Information for any purpose, but
must maintain the confidentiality of such Information as
provided in Section 11.4.
11.4 Duty of Protection. For a period of three years from the
date of disclosure, a Receiving Party must protect
Proprietary Information and Confidential Information
disclosed to it by using the same degree of care, but
not less than a reasonable degree of care, to prevent
the unauthorized disclosure, dissemination or
publication of the Information as the Receiving Party
uses to protect its own Proprietary Information or
Confidential Information of a like nature. Each party
agrees to permit disclosure of the Proprietary
Information and Confidential Information only to those
of its employees who have a "need to know," and to those
third parties authorized to received such Information
under this Agreement (or otherwise authorized by the
Disclosing Party to receive such Information).
11.5 Exceptions. Information will not be deemed either
Proprietary Information or Confidential Information
under this Agreement if such information (a) is or
becomes generally available to the public or otherwise
part of the public domain through no fault or breach on
the part of the Receiving Party; (b) is known to the
Receiving Party prior to the disclosure by the
Disclosing Party and such knowledge can be shown by
adequate evidence; (c) is subsequently rightfully
obtained by the Receiving Party from a third party who
has the legal right to disclose it; (d) is independently
developed by the Receiving Party without the use of any
Proprietary Information or any breach of this Agreement;
(e) is approved for public release by the Disclosing
Party; (f) is disclosed by the Receiving Party with the
Disclosing Party's prior written approval; or (g) is
required to be disclosed by judicial action, provided
that the Receiving Party has first given the Disclosing
Party reasonable notice of such requirement and
cooperates with the Disclosing Party in seeking
confidential treatment for any such disclosure.
11.6 Injunctive Relief. The parties acknowledge that any
breach of the provisions of this Section 11 may cause
irreparable harm and significant injury to an extent
that may be extremely difficult to ascertain.
Accordingly, each party agrees that each will have, in
addition to any other rights or remedies available to it
at law or in equity, the right to seek injunctive relief
to enjoin any breach or violation of this Section 11.
11.7 Determination of Classification of Information. If a
Disclosing Party marks or otherwise identifies
Information as "PROPRIETARY" or "CONFIDENTIAL", and the
Receiving Party disagrees with such designation, the
Receiving Party shall immediately return such
Information to the Disclosing Party and the parties
shall attempt to resolve the proper designation of such
Information through mutual agreement. If the parties are
unable to reach agreement, either party may submit the
issue for determination by a single arbitrator to be
selected by the American Arbitration Association
("AAA"), which arbitrator shall be skilled and
experienced in matters of intellectual property similar
to the Information at issue. The arbitration shall be
conducted under the Commercial Arbitration Rules of the
AAA, and the decision of the arbitrator shall be
appealable to and reviewable by any court of competent
jurisdiction. Failure of a Receiving
-31-
<PAGE> 32
Party to object to any designation of Information as
"Proprietary" or "Confidential" upon receipt of such
Information or at any particular time thereafter shall
not be deemed a waiver of such objection nor be
evidence, or create any presumption, that such
Information was correctly designated."
2. Section 3.7 of the Development Agreement is hereby amended and
restated to read in its entirety as follows:
"3.7 Right to Pursue Other Projects. The parties acknowledge
and understand that, independent of the development
efforts hereunder, Wink and S-A each have been and
continue to be actively engaged in research and
development in the field of interactive television
applications, and in the course of such research and
development may have developed or may hereafter develop
similar and competing products. Such products shall be
developed without use of, or reference to, Proprietary
Information of the other party. The parties agree that
this Agreement shall not be construed as (i) prohibiting
such independent research and development, either on
their own behalf or under contract with others, or (ii)
precluding either party from developing, acquiring,
utilizing or distributing such similar and competing
products without obligation to the other party so long
as such research and development of such party does not
otherwise breach the terms of this Agreement.
3. Exhibits. The parties may amend, supplement and add Exhibits to the
Agreement from time to time as mutually agreed, and such amended and
supplemental Exhibits shall be executed by both parties. The parties shall
replace the existing Exhibits A-1 and A-2 and complete and add Exhibit B. Until
such time as such amended and completed Exhibits A-1, A-2 and B are executed,
the parties waive any breach arising out of the failure of either party to meet
the milestones set forth in the existing Exhibits. The parties covenant and
agree to continue to use reasonable efforts to complete Exhibit B and the
revisions to Exhibits A-1 and A-2.
4. Waiver. Each party hereby waives any breach arising out of or
relating to any failure by the other party to perform any of its obligations
through the date of this Amendment under Sections 3.1, 3.2, 3.4, 3.7 (other than
its obligations under Section 3.7 as amended and restated by this Amendment),
5.1, 5.4 and Section 11 (other than its obligations under Section 11 as amended
and restated by this Amendment) of the Agreement, and Exhibits A-1, A-2 and B
thereto.
5. Binding Effect. This Amendment inures to the benefit of, and is
binding upon, Wink and its respective successors and assigns, and S-A, and its
respective successors and assigns.
6. Entire Agreement. This Amendment is intended by the parties hereto to
amend and supplement the Development Agreement and, except as otherwise stated
herein, the Development Agreement shall remain in full force and effect
according to its terms.
7. Governing Law. This Amendment shall be deemed to be made in, and in
all respects shall be interpreted, construed, and governed by and in accordance
with, the laws of the State of California. No provision of this Amendment shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority or by any board of
arbitrators by reason of such party or its counsel having or being deemed to
have structured or drafted such provision.
8. Headings. The section and paragraph headings contained in this
Amendment are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Amendment.
9. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
-32-
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
WINK COMMUNICATIONS, INC.
By: /s/ Maggie Wilderotter
SCIENTIFIC-ATLANTA, INC.
By: /s/ Stephen Necessary
-33-
<PAGE> 34
SCHEDULE 11.2
Documents that contain Wink Proprietary Information
- - - Wink Release Notes on Functionality of the Wink Engine
- - - ICAP Protocol Specification, including Wink Service Map details
- - - 8600x Work Items (document provided during 8/8/97 project review meeting)
- - - Wink Engine Source Code
Documents that Contain Wink Confidential Information
- - - Wink Engine Object code and Executable Code
- - - Wink test Lists and Test Apps
- - - Spreadsheets containing Wink Business Models
- - - Architecture Proposal: S-A Gateway Options
- - - Wink Studio users Guide
- - - Meeting notes containing Wink-specific capabilities including Joint Meeting
Notes: October 16-17, 1997
- - - Wink Bugs Databases
- - - E-mails, faxes, written notes, and other documents containing system
diagrams with Wink components
- - - Wink product development schedules and future plans
- - - Functional Specification (Draft): Response Return Path for Wink Engine on
8600x w/Genius Card
- - - ICAP Protocol Overview
- - - Presentations containing Wink strategies, proposals, future features,
and system diagrams containing Wink
Components
-34-
<PAGE> 1
EXHIBIT 10.24
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (known hereafter as "the Agreement") is
by and between WINK COMMUNICATIONS, INC., a California corporation ("WINK"),
whose address is 1001 Marina Village Parkway, Alameda, CA 94501 and TAK
INTERACTIVE S.A., a French corporation (known hereafter as "TAK"), whose address
is 46 quai Alphonse Le Gallo, 921-00 Boulogne-Billancourt, France.
BACKGROUND
A. WINK has designed and developed an interactive television system of
technology and related products, services, processes and materials which
includes a proprietary software protocol for delivering interactive applications
synchronized with or independent of television programs and advertisements.
B. TAK is involved in developing and operating services in the field of
television interactivity and desires to exploit WINK's television interactivity
technology within the European market, beginning in France and expanding into
other designated European territories.
C. TAK's strategic business objective is to develop and exploit an
interactive television system within Continental Europe and establish business
and technical relationships with key partners in the domains of direct
marketing, TV channels, system operators and media planners with a view to
aggressively build a revenue stream derived from the delivery of such
interactivity technology solutions and services. The countries comprising the
territory of Continental Europe are detailed in Exhibit D.
D. TAK and WINK desire to work together to adapt and integrate the WINK
television interactivity technology into a comprehensive interactive television
system within Europe.
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.1 "Deliverables" shall mean each Licensed Product deliverable and related
documentation identified in Exhibit A hereto, to be provided to TAK at the time
of completion.
1.2 "Derivative Technology" shall mean the technology based upon the Licensed
Products developed or created by WINK during the course of its performance of
the product development, maintenance and support services for TAK, including:
(i) for copyrightable or copyrighted material, any translation (including
translation into other computer languages), porting, modification,
Page 1
<PAGE> 2
correction, addition, extension, upgrade, improvement, compilation, abridgement
or other form in which an existing work may be recast, transformed or adapted;
(ii) for patentable or patented material, any improvement thereon; and (iii) for
material which is protected by trade secret, any new material derived from such
existing trade secret material, including new material which may be protected by
copyright, patent and/or trade secret.
1.3 "Development Schedule" shall mean the schedule for completion of the WINK
software product development activities set forth in Exhibit A hereto.
1.3A "Effective Date" shall mean the latest date at which both the Agreement is
signed and Exhibits A through D are initialed by both TAK and WINK (and that the
same shall form an essential basis of the parties' bargain), provided that if
such Exhibits are not completely initialed by April 17, 1998, time being of the
essence, either party shall have the option, in its discretion, to notify the
other party that the Agreement is null and void and shall not become effective.
1.4 "Enabled Device" shall mean a television, videocassette recorder or set top
box that includes a circuit module containing the WINK Engine.
1.5 "Enhanced Broadcasting" shall mean interactive applications integrated with
video originated by a broadcaster, content provider, advertiser or cable
programming network using a Licensed Product.
1.6 "Intellectual Property Rights" shall mean all current and future worldwide
patents and other patent rights, copyrights, mask work rights, trade secrets,
and all other intellectual property rights, including without limitation all
applications and registrations with respect thereto.
1.7 "Interactive Television System" shall mean the software, hardware, tools,
and devices allowing TAK to operate and deliver interactive television services
to customers, and which may include WINK's Licensed Products.
1.8 "Interactive Communicating Application Protocol" or "ICAP" shall mean the
highly compact, platform-independent protocol for delivering applications over
any transport mechanism which WINK has created as a proprietary standard for
cross-platform applications which can be embedded in analog or digital
broadcasts.
1.9 "Licensed Products" shall mean the (i) WINK Engine 1.5, WINK Studio 2.0,
WINK Server Module Studio 1. 1, WINK Broadcast Server 2.0, WINK Ad Insertion
Server Module 1.0, WINK Response Server 1.0, WINK Online Server 1.0, (ii) all
Updates, Version Releases and Product Releases on all WINK software products
listed above, and (iii) any Derivative Technology.
1.10 "Maintenance" shall mean WINK's delivery to TAK of Updates, Version
Releases, and Product Releases.
Page 2
<PAGE> 3
1.11 "Milestones" shall mean the development project milestones, completion
dates and related payments specified on Exhibits A and B.
1.12 "Net Revenues" shall mean gross revenues collected, directly or indirectly,
by TAK, for all TAK products and services, less the revenue sharing amounts paid
to broadcasters and content providers. Revenue sharing is defined as a
percentage of the fee collected by TAK from consumers for interactive
transactions and services.
1.13 "Product Release" shall mean a major release of a Licensed Product which
contains significant new features or functionality and/or major enhancements and
is designated by a change in the digit or digits to the left of the decimal
point in the version number.
1.14 "Revenue Sharing Arrangement" shall mean a written agreement between TAK
and a television broadcasting company, advertisers or a content provider which
obligates TAK to make revenue sharing payments to such broadcasters, advertisers
or content providers on use fees collected by TAK, directly or indirectly, from
consumers for interactive transactions and services.
1.15 "Specifications" shall mean the technical and other functional
specifications for the Deliverables to be developed by the parties as described
in Exhibit A.
1.16 "Submanufacturers" shall mean third party entities authorized by TAK to
duplicate and integrate the WINK Engine into Enabled Devices.
1.17 "Support" shall mean remote, "secondary line" technical support from WINK
to TAK via phone, fax or e-mail twenty four (24) hours a day, seven (7) days a
week. "Secondary line" technical support refers to the fact that WINK shall
field calls directly from TAK, and not from TAK's customers.
1.18 "TAK Hardware Reference Design" shall mean TAK's custom microchip-based
hardware reference design which are designed to be integrated into Enabled
Devices for the purpose of implementing TAK's service offering. The first
version of the TAK Hardware Reference Design is described in the Specifications.
1.19 "Updates" shall mean updates containing error corrections or minor
enhancements to the Licensed Products created by or for WINK and designated by a
change in version number to the right of the decimal point. Updates do not
include major enhancements to the Licensed Products designated by changes in the
version number to the left of the decimal point.
1.20 "Version Release" shall mean a release of a new version of the Licensed
Products which contains error corrections or minor new features or functionality
(but not a Product Release) and is designated by a change in the digit or digits
to the right of the decimal point in the version number.
Page 3
<PAGE> 4
1.21 "WINK Ad Insertion Server Module" shall mean the object code version of
WINK's proprietary software product which enables the insertion of
advertisements or applications into video.
1.22 "WINK Broadcast Server" shall mean the object code version of WINK's
proprietary software product which schedules the addition of interactive
broadcast enhancements through vertical blanking interval lines to specific
television shows or commercials.
1.23 "WINK Engine" shall mean the (i) object code format version of WINK Engine
1.5 which decodes ICAP applications and displays the ICAP applications on a
device, and (ii) any Updates, Version Releases and Product Releases of the WINK
Engine, and (iii) other WINK-owned files that are provided with or for the WINK
Engine, and (iv) any Derivative Technology performed by WINK to customize and
adapt the WINK Engine for the TAK Hardware Reference Design and/or other
designs.
1.24 "WINK Online Server" shall mean the object code version of WINK's
proprietary software product that enables real-time two-way connections via
modem.
1.25 "WINK Response Server" shall mean the object code version of WINK's
proprietary software product that provides a mechanism to collect user responses
in a non-real time network.
1.26 "WINK Server Module Studio shall mean the object code version of WINK's
proprietary software product that authors server modules in ICAP applications
utilizing a user interface.
1.27 "WINK Studio" shall mean the object code version of WINK's proprietary
software design tool which enables television show producers, advertisers and
third party developers to create interactive television overlays and
applications.
2. TERM
2.1 This Agreement shall commence on the Effective Date, and shall continue
in effect for a period of ten (10) years ("Initial Term").
2.2 Not later than twenty-four (24) months prior to the expiration of the
Initial Term, TAK shall notify WINK in writing of TAK's intention
whether to extend the Agreement for an additional five (5) year term
(the "Extension Term"). Not later than six (6) months following WINK's
receipt of TAK's notification, WINK shall notify TAK in writing as to
whether WINK elects to accept such extension request.
2.2.1 In the event that WINK agrees to such extension request, the
license grants set forth in Sections 3.1 and 3.2 shall be so
extended provided that WINK shall have the right to adjust the
prices for the first new Version Release or Product Release of
the Licensed Products delivered after such extension date at
WINK's then current "most
Page 4
<PAGE> 5
favored nation" prices. WINK acknowledges that TAK shall be
entitled at TAK's sole option to continue employing the then
current version of the Licensed Products at the pricing rates
set forth in Sections 7 and 8. Prior to the expiration of such
Extension Term, the notification provisions of Section 2.2 shall
again apply.
2.2.2 In the event that WINK does not accept TAK's extension request,
TAK shall be entitled to unilaterally extend the Agreement for
the Extension Term. In such event, the license grants set forth
in Sections 3.1 and 3.2 shall be so extended, except as
follows:(i) such licenses shall not be exclusive, and (ii) in
lieu of the royalty fees set forth in Section 7.3, TAK shall pay
WINK [ * ] of all TAK net revenues derived solely from the
exploitation of previously installed copies of the WINK Engine.
3. LICENSE GRANTS
3.1 Subject to the terms and conditions of this Agreement, WINK grants to
TAK for the Initial Term, an exclusive, nontransferable right and
license, limited to the territory of "Continental Europe", as defined in
Exhibit D, under all of WINK's Intellectual Property Rights in and to
the Licensed Products, to use and deploy the Licensed Products as part
of an Interactive Television System business in Continental Europe as
follows: (a) use and reproduce the WINK Engine solely for the purpose of
copying such product to be integrated into Enabled Devices, including
the right to sublicense Submanufacturers to perform such integration
services; (b) sublicense the WINK Engine to device manufacturers for the
purpose of manufacturing and distributing Enabled Devices to be sold and
used in Continental Europe; and (c) sublicense the Licensed Products to
application providers and/or service providers to develop, operate, sell
and transmit applications for use as part of an Interactive Television
System in Europe. The protective provisions and form of any sublicense
granted by TAK hereunder shall be substantially consistent with the
applicable protective provisions of this Agreement (provided WINK
acknowledges that the TAK sublicense agreements may be governed by other
international elements and usages specific to TAK and its licensees,
included but not limited to choice of law provisions). TAK will inform
WINK of the name of any sublicensee.
3.2 Subject to the terms and conditions of this Agreement, WINK grants to
TAK for the Initial Term. a nonexclusive, nontransferable right and
license to the territory of the United Kingdom, under all of WINK's
Intellectual Property Rights in and to the Licensed Products, to use and
deploy the Licensed Products as part of an Interactive Television System
business in the United Kingdom as follows: (a) use and reproduce the
WINK Engine solely for the purpose of copying such product to be
integrated into Enabled Devices, including the right to sublicense
Submanufacturers to perform such integration services; (b) sublicense
the WINK Engine to device manufacturers for the purpose of manufacturing
and distributing Enabled
- - --------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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Devices to be sold and used in the United Kingdom; and (c) sublicense
the Licensed Products to application providers and/or service providers
to develop, operate, sell and transmit applications for use as part of
an Interactive Television System in the United Kingdom. The protective
provisions and form of any sublicense granted by TAK hereunder shall be
substantially consistent with the applicable protective provisions of
this Agreement (provided WINK acknowledges that the TAK sublicense
agreements may be governed by other international elements and usages
specific to TAK and its licensees), included but not limited to choice
of law provisions. TAK will inform WINK of the name of any sublicensee.
3.3 TAK shall use its reasonable best efforts to fully exploit the foregoing
license rights in all of the designated territories listed in Exhibit D.
4. EXCLUSIVITY AND NONCOMPETE
4.1 Provided that WINK meets all the deliverable dates as set forth in
Exhibit A, and related acceptance tests, if TAK has not (i) launched the
Interactive Television System service to customers in France on or
before June 30, 1999, or (ii) has not launched the Interactive
Television System service to customers in two (2) additional countries
on or before December 31, 2001, or (iii) TAK sublicensees have not
shipped a combined cumulative total of not less than one million
(1,000,000) Enabled Devices incorporating the WINK Engine by December
31, 2001, then WINK shall be entitled to notify TAK no later than March
31, 2002 of its intention to convert the foregoing Section 3.1 exclusive
license grant and appointment to a nonexclusive basis for those
countries set forth in Exhibit D, provided that TAK shall have a sixty
(60) day period following such notification to establish that the
applicable performance milestone has actually been met. Thereafter, WINK
shall promptly provide a final written notice of its intention to
convert to nonexclusive status following its review of the TAK response.
In the event of such conversion, WINK will not be entitled to the [ * ]
fee on Net Revenues as provided in Section 7.3 from the effective date
of such conversion.
4.2 Further, for each of the countries listed in Exhibit D, if by June 30,
2002, TAK interactive applications are not transmitted to Enabled
Devices by at least one major television network in each such country,
WINK shall be entitled to notify TAK no later than September 30, 2002 of
its intention to convert the foregoing Section 3.1 to a nonexclusive
license grant and appointment, provided that TAK shall have a sixty (60)
day period following such notification to establish that this
performance milestone has actually been met in a particular country.
Thereafter, WINK shall promptly provide a final written notice of its
intention to convert to nonexclusive status such countries, if any, in
which the performance requirement has not been met.
4.3 If WINK is late in meeting the deliverable dates as set forth in Exhibit
A with Deliverables which comply with the acceptance tests set forth in
Section 6. 1 0, then TAK's obligations to meet its performance
milestones under Section 4.1 and 4.2 shall be postponed by the same
period of time.
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4.4 TAK understands and acknowledges that WINK will disclose valuable WINK
Confidential Information such as business plans, Specifications,
Licensed Product design concepts and other information related to the
Licensed Products during the course of performance of this Agreement. In
consideration of the WINK disclosures, TAK agrees that during the period
commencing with the Effective Date of this Agreement and for a period of
three (3) years thereafter, TAK will not use or have used any other
interactive television system technology using Teletext transport
protocol.
5. PROPERTY RIGHTS
5.1 Prior to, on and after the Effective Date, WINK owns and shall own (a)
all right, title and interest in and to the Licensed Products and
Derivative Technology developed by WINK, (b) all Intellectual Property
Rights relating to the design, manufacture, marketing, operation or
service of the Licensed Products and Derivative Technology developed by
WINK, and (c) all files, code, or technology developed by WINK that is
related to Licensed Products and Derivative Technology (collectively,
the "WINK Property"). No transfer of ownership to the Licensed Products
and Derivative Technology, intellectual property rights, files, code or
technology has occurred or shall occur as a consequence of this
Agreement. In consideration of TAK specifying and financing Derivative
Technology development through NRE Fees, WINK shall pay TAK [ * ] of
the NRE Fees as allocated to a particular Licensed Product in Exhibit B
(i.e., Wink Engine, Wink Broadcast Server, Wink Studio) for any third
party which licenses a portion of the Derivative Technology in
connection with such Licensed Product. Such royalty payments shall be
subject to the respective reporting and audit provisions set forth in
Sections 7.1 and 7.4. WINK will inform TAK of the identity of any such
third party, provided that WINK's obligations to pay TAK a percentage of
the NRE Fees shall terminate at the point when the payments made equal
the amount of NRE Fees paid by TAK to WINK. All payments due under this
Section 5.1 shall be made within thirty (30) days following the date of
WINK's invoice.
5.2 TAK shall have the right to develop its own online server based on the
WINK data, application format and WINK protocol (ICAP) with no WINK
license fees. In such case, TAK shall have the ownership of this
developed online server and shall own all right, title and interest to
this online server.
5.3 TAK owns and shall own all title and interest in and to its own
developments including, but not limited to, its own embedded software
interfacing to the WINK Engine software based on the WINK data and
application format and WINK protocol.
6. DEVELOPMENT, DELIVERY AND ACCEPTANCE
6.1 A list of Milestones that will be performed by both WINK and TAK is
provided in Exhibit A. The parties may agree on additional Development
Activities by amending Exhibit A hereto.
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6.2 In consideration of the initial non recurring engineering fees ("NRE
Fees") to be paid by TAK to WINK under this Agreement, WINK agrees to
create customized software for the WINK Engine, WINK Studio, WINK
Broadcast Server, WINK Server Module Studio, WINK Response Server/Online
Server as per the Specifications. An anticipated list of tasks to be
done by WINK is listed as Exhibit B. Any engineering work to be done by
WINK that is outside the scope of the work listed in Exhibit B shall
incur additional NRE Fees, as agreed to in advance in writing by both
WINK and TAK. In connection therewith, TAK shall (i) assist WINK in
producing the Specifications and (ii) provide other necessary materials
and information, as mutually agreed by the parties in the Specifications
or otherwise. In consideration for the engineering development provided
under Article 6, TAK shall pay WINK initial NRE Fees as detailed in
Exhibit B according to the development confirmed by TAK and WINK.
6.3 The scope of work to be performed by WINK and the Development Schedule
with a list of Milestones and Deliverables is set forth on Exhibit A.
6.4 A list of documentation to be delivered by TAK to WINK, and WINK to TAK,
appears as Exhibit C.
6.5 WINK and TAK shall use commercially reasonable efforts to complete each
Milestone in accordance with the Development Schedule. Upon completion
of each Milestone, WINK shall deliver to TAK all applicable Deliverables
for evaluation by TAK. In the event TAK is late in the performance of
its obligations with respect to each Milestone and such delay affects
WINK's obligations hereunder, WINK's performance of such affected
obligations shall be delayed by the same time period. Similarly, in the
event that WINK is late in the performance of its obligations with
respect to each Milestone and such delay affects TAK's obligations
hereunder, TAK's performance of such affected obligations shall be
delayed by the same time period.
6.6 WINK warrants to TAK that the Licensed Products as customized for TAK
shall function in conformance with the Specifications. WINK agrees to
promptly cure any nonconformity and shall provide TAK with ongoing
corrections of any errors and "bugs" found by TAK in the Licensed
Products at no charge to TAK during the term of this Agreement. EXCEPT
AS SET FORTH IN THIS SECTION 6.6 AND SECTION 14, WINK MAKES NO
PERFORMANCE WARRANTIES ON BEHALF OF THE LICENSED SOFTWARE AND HEREBY
DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR
PURPOSE.
6.7 In order to facilitate WINK's performance of the development and support
activities contemplated herein, TAK shall, at its own expense, provide
WINK with all of the hardware, software and equipment as specified in
Exhibit A (the "Equipment") which is reasonably necessary to
functionally replicate the Interactive Television System. TAK shall
retain ownership of all such Equipment. WINK shall clearly label the
Equipment as the property of
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TAK and shall not permit any creditor liens to attach to the Equipment.
WINK shall return all such Equipment to TAK in good working order
(reasonable wear and tear excepted) promptly upon request by TAK or on
the expiration or termination of this Agreement, whichever is sooner,
except to the extent necessary for WINK to complete its development and
support obligations to TAK.
6.8 WINK agrees to perform future software customization of its Licensed
Products for countries listed in Exhibit D, and/or future software
customization of the WINK Engine to devices, platforms or future
versions of the TAK Hardware Reference Design as reasonably agreed to in
advance in writing by the parties, and WINK shall provide a quotation to
TAK for engineering/management development at the usual WINK consulting
rate in effect at the time of the quotation.
6.9 TAK shall have the right to develop its own embedded software
interfacing to WINK Engine software based on the WINK data and
application format and WINK protocol (ICAP).
6.10 TAK shall conduct acceptance tests of Deliverables following the
delivery for a period not longer than sixty (60) days. The acceptance
will be agreed between both TAK and WINK by signature of an acceptance
report. If, during the acceptance period, TAK finds that one or many
Deliverable(s) do not meet the Specifications, TAK may at its sole
discretion, notify WINK that the Deliverables do not meet the
Specifications, and return the Deliverables to WINK. Upon such
notification by TAK of WINK's failure to meet Specifications, WINK shall
have sixty (60) days to remedy such shortcomings in the Deliverables to
meet the Specifications. WINK shall resubmit the Deliverables to TAK for
acceptance. If after the sixty (60) day remedy period, TAK rejects the
Deliverables because they still fail to meet the Specifications, then
TAK may grant WINK (i) a further period to deliver conforming
Deliverables, or (ii) terminate this Agreement pursuant to Section 17.2
and in addition to any other remedies which it may have, require a
refund from WINK of all moneys received for the concerned Deliverables.
6.11 In the event that the development or delivery of a Deliverable, or the
initiation or satisfactory completion of an acceptance test is delayed,
the party or parties responsible for such delay will assign a first
priority (including the dedication of additional staff and resources as
appropriate) and keep the other party timely informed in writing of such
efforts and resulting progress.
6.12 WINK shall authorize TAK to dispatch TAK's engineers into WINK's Alameda
office to support WINK in developing the Deliverables and to coordinate
the TAK and WINK efforts, provided that such support efforts shall in no
way relieve WINK of any of its obligations or responsibilities under
this Agreement.
6.13 Should WINK decide to cease developing new Version Releases or Product
Releases, WINK shall notify TAK in writing of such intention no later
than one year following such decision.
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7. WINK ENGINE ROYALTY FEES
7.1 In consideration for the rights and licenses granted to it in this
Agreement, TAK will pay WINK a royalty of US [ * ] for each Enabled
Device when first connected to the Interactive Television System. TAK
payments to WINK will be made within thirty (30) days of the end of each
calendar quarter. Such payments shall be accompanied by a written report
which indicates the number of Enabled Devices first connected to the
Interactive Television System each month.
7.2 TAK guarantees a minimum cumulative royalty payment to WINK of U.S.[ * ]
by the end of calendar year 1999, a minimum cumulative payment of U.S.
[ * ] by the end of calendar year 2000, and a minimum of U.S.[ * ] by
the end of calendar year 2001. Minimum cumulative royalty payments are
based on the first Enabled Device being shipped in September, 1998; if
product launch is delayed by either party, the minimum cumulative
payment schedule shall be delayed by the same period of time, The
failure to reach the number of Enabled Devices connected representing
these cumulative amounts is not a material breach of the Agreement as
set forth in Article 2.2 hereabove. TAK shall pay the guaranteed minimum
royalty payments to WINK within thirty (30) days following WINK's notice
to TAK of failure to meet the minimum cumulative royalty payment.
7.3 In addition to paying WINK the royalty of US [ * ] for each Enabled
Device when first connected to the Interactive Television System, TAK
will pay WINK a fee of [ * ] during the term of this Agreement and any
extension thereof. TAK payments to WINK will be made within thirty (30)
days of the end of each calendar quarter, and are to be accompanied by a
quarterly financial report calculating TAK's Net Revenues.
7.4 TAK agrees to allow WINK through use of a mutually agreed ("Big Six")
auditor, and bound to a confidentiality agreement to audit and examine
using reasonable professional diligence, TAK's books, records and
accounts no more than twice during each calendar year, upon reasonable
notice during TAK's normal business hours, in order to verify the
accuracy of the reports and payments made to WINK under this Section 7.
In the event such audit determines that TAK has not paid WINK the entire
amount of royalty payments or [ * ], WINK shall provide TAK with the
audit report and notify TAK of the requested shortfall. If TAK and WINK
fail to find an agreement on the requested underpayment within thirty
(30) days after WINK's notification, a new audit will be done by an
independent third party auditor agreed upon by both WINK and TAK. In the
event this second audit confirms underpayment, TAK agrees to pay, in
addition to any damages to which WINK might be entitled, the amount of
such shortfall. The cost of such audit shall be borne by WINK, provided
that if any such audit reveals an underpayment to WINK of at least five
percent (5%), TAK shall reimburse to WINK its costs of such audit.
8. LICENSED PRODUCT PRICING (OTHER THAN WINK ENGINE).
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8.1 WINK Studio 2.0 license including Updates, Version Releases and Product
Releases, shall be purchased by TAK at a cost of U.S.[ * ] per
workstation. TAK shall pay [ * ] of the cost of WINK Studio for
unlimited Support, up to 100 WINK Studio packages. (Support-related
travel expenses are additional and billed to TAK at cost). After the
purchase of 100 WINK Studios , WINK and TAK agree to renegotiate the
costs for unlimited Support.
8.2 WINK Server Module Studio 1.1 license including Updates, Version
Releases and Product Releases, shall be purchased by TAK at a cost of
U.S.[ * ] per workstation. TAK shall pay [ * ] of the cost of each WINK
Server Module Studio copy for unlimited Support, up to 100 WINK Server
Module Studio packages. (Support-related travel expenses are additional
and billed to TAK at cost). After the purchase of 100 WINK Server Module
Studios, WINK and TAK agree to renegotiate the costs for unlimited
Support.
8.3 WINK Broadcast Server 2.0 license including Updates, Version Releases
and Product Releases, shall be purchased by TAK at a cost of U.S.[ * ]
per year per country, including unlimited Support. (Support-related
travel expenses are additional and billed to TAK at cost). Through the
purchase of the license, TAK shall be granted the right to copy and
install the WINK Broadcast Server software onto (i) an unlimited number
of broadcaster hardware servers having business agreements with TAK, and
(ii) a limited number of servers used by TAK and Enabled Device
manufacturers solely for the purpose of demonstrating or testing their
Enabled Devices. The WINK Broadcast Server license fee shall be paid
upfront in the fourth quarter of each year for the next year's use of
the license. The license fee for the WINK Broadcast Server shall
increase (but not decrease) by the U.S. Consumer Price Index (CPI)
annually.
8.4 WINK Ad Insertion Server Module 1.0 license including Updates, Version
Releases and Product Releases, shall be purchased by TAK at a cost of
U.S.[ * ] per year per country, including unlimited Support.
(Support-related travel expenses are additional and billed to TAK at
cost). Through the purchase of the license, TAK shall be granted the
right to copy and install the WINK Ad Insertion Server Module software
onto (i) an unlimited number of broadcaster hardware servers having
business agreements with TAK, and (ii) a limited number of servers used
by TAK and Enabled Device manufacturers solely for the purpose of
demonstrating or testing their Enabled Devices. The WINK Ad Insertion
Server Module license fee shall be paid upfront in the fourth quarter of
each year for the next year's use of the license. The license fee for
the WINK Ad Insertion Server Module shall increase (but not decrease) by
the U.S. Consumer Price Index (CPI) annually.
8.5 WINK Response Server/Online Server 1.0 license including Updates,
Version Releases and Product Releases, can be purchased by TAK at a cost
of U.S.[ * ] per year per country, including unlimited Support.
(Support-related travel expenses are additional and billed to TAK at
cost). Through the purchase of the license, TAK shall be granted the
right to copy and install the WINK Response Server/Online Server
software onto (i) an unlimited number of broadcaster hardware servers
having business agreements with TAK, and (ii) a limited
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number of servers used by TAK and Enabled Device manufacturers solely
for the purpose of demonstrating or testing the WINK Response
Server/Online Server software. The WINK Response Server/Online Server
license fee shall be paid upfront in the fourth quarter of each year for
the next year's use of the license. The license fee for the WINK
Response Server/Online Server shall increase (but not decrease) by the
U.S. Consumer Price Index (CPI) annually. TAK reserves the right to
develop its own online server based on the WINK data, application format
and WINK protocol (ICAP) with no WINK annual license fees. Should WINK
and TAK co-develop the online server, then the annual WINK license fees
will be determined at that time. Should TAK develop its own online
server, WINK shall have no service, integration or maintenance
responsibilities.
8.6 All payments due under this Section 8 shall made within thirty (30) days
following the date of WINK's invoice.
9. PROMOTION AND RESEARCH
9.1 WINK and TAK shall participate in public relations programs, starting
with an initial press release of the relationship between the two
companies at a mutually agreed upon date after the execution of this
Agreement. WINK shall provide TAK with an initial draft of the press
release. Content of that announcement shall be mutually agreed upon in
writing by the parties. No public announcement will be made without the
prior written approval of the parties.
9.2 WINK may desire to, from time to time, undertake marketing tests and
surveys, rating polls and other research in connection with TAK's
Interactive Television System. To the extent that such research is not
governed by confidential agreements with third parties, TAK agrees to
communicate at no cost to WINK any research regarding the deployment,
launch, and usage of TAK's Interactive Television System by customers
and provide WINK with reasonable assistance in conducting research with
respect to Interactive Television System customers. If WINK decides to
initiate any market research, then WINK shall pay for the cost of that
research, and communicate the research results to TAK at no cost.
10. NOTICES
10.1 All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express delivery, addressed, if to WINK COMMUNICATIONS, INC. at 1001
Marina Village Parkway, Alameda, CA 94501 and if to TAK INTERACTIVE S.A.
at 46 quai A. Le Gallo, 92648 Boulogne, Cedex France, attention
President Directeur General. The date of such facsimile transmission,
telegraphing or personal delivery or the next day if by express
delivery, or the date three (3) days after mailing, shall be deemed the
date on which such notice is given and effective.
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11. TRADEMARKS
11.1 TAK acknowledges and agrees that all names, logos, marks, copyright
notices or designations utilized by WINK are the sole and exclusive
property of WINK, and no rights or ownership are intended to be or shall
be transferred to TAK.
11.2 WINK acknowledges and agrees that all names, logos, marks, copyright
notices or designations utilized by TAK are the sole and exclusive
property of TAK, and no rights or ownership are intended to be or shall
be transferred to WINK.
11.3 TAK shall not be obligated to use any WINK names, logos, marks, or
designations (provided all copies of the Licensed Products shall include
all WINK copyright notices contained in the original masters of the
Licensed Products provided by WINK to TAK).
11.4 WINK shall provide the Licensed Products with no WINK names, logos,
marks, or designations included in or on the Licensed Products unless
expressly instructed by TAK in writing (provided that WINK shall not be
required to modify any preexisting code of the Licensed Products and
Wink hereby grants TAK a royalty-free license to use such "embedded
marks" pursuant to the provisions of Section 3.1 of this Agreement).
12. REPRESENTATIONS
12.1 WINK represents to TAK that (i) WINK is a corporation duly organized and
validly existing under the laws of the State of California; (ii) WINK
has the corporate power and authority to enter into this Agreement and
to fully perform its obligations hereunder (iii) WINK is under no
contractual or other legal obligation which in any way interferes with
its ability to fully, promptly and completely perform hereunder.
12.2 TAK represents to WINK that (i) TAK is a corporation duly organized and
validly existing under the laws of France; (ii) TAK has the requisite
power and authority to enter in this Agreement and to fully perform its
obligations hereunder; (iii) TAK is under no contractual or other legal
obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
13. CONFIDENTIALITY
13.1 During the term of this Agreement, and for a period of ten (10) years
thereafter, each party will maintain in confidence all information which
it receives from the other party marked as "confidential" ("Confidential
Information"). Neither party will use, disclose or grant use of such
Confidential Information disclosed to it by the other party except for
TAK's sublicensees and subcontractors as expressly authorized by this
Agreement. TAK shall require its sublicensees and subcontractors to keep
confidential all WINK information that is marked "confidential". Each
party will use at least the same standard of care as it uses to
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protect its own Confidential Information to ensure that its employees,
agents or consultants do not disclose or make any unauthorized use of
such Confidential Information. Each party will promptly notify the other
upon discovery of any unauthorized use or disclosure of the Confidential
Information.
13.2 The obligations of confidentiality contained in Section 13.1 will not
apply to the extent that it can be established by a party by competent
proof that such Confidential Information:
(a) was already known to such party, other than under an obligation
of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to such party
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through
any act or omission of such party in breach of this Agreement;
(d) was disclosed to such party, other than under an obligation of
confidentiality, by a third party who had no obligation to the
other party not to disclose such information to others;
(e) is authorized for release in writing by the disclosing party;
(f) is developed by such party completely independently of any such
received Confidential Information; or
(g) is furnished pursuant to judicial order, a lawful requirement of
governmental agency, or by operation of law, but then only to
the extent so ordered. In such case, the receiving party shall
use its best efforts to timely advise the disclosing party prior
to disclosure.
14. WARRANTY AND INDEMNITY
INTELLECTUAL PROPERTY WARRANTY
14.1 WINK represents and warrants that to the best of its knowledge (a) as of
the Effective Date, no action or proceeding alleging intellectual
property infringement by the Licensed Products has been threatened or is
proceeding against WINK, (b) it has the right to license the
Intellectual Property Rights in and to the Licensed Products to TAK and
(c) except to the extent that an infringement or violation is caused by
TAK-provided information or the Licensed Product's interaction with TAK
hardware or software, the Licensed Products to the best of WINK's
knowledge do not infringe upon or violate any third party patent,
copyright, trade secret, trademark or any other proprietary rights.
TAK's exclusive remedy, and WINK's sole liability, for a breach by WINK
of the warranties of subsections (a), (b) and (c) above shall be WINK's
indemnity set forth in this Section 14.
14.2 WINK agrees to defend, or at its option to settle, any claim, suit,
action or proceeding brought against TAK by a third party as a result of
WINK's breach of its warranties under 14.1 (a), (b) and (c) above (an
"Action"), and to pay any settlement or final judgment,
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attorney fees, damages, and related costs entered thereon against TAK,
subject to the limitations set forth hereafter. WINK shall be relieved
of its obligations hereunder unless TAK gives WINK (i) prompt written
notice upon becoming aware of the existence of an Action, (ii) sole
control over the defense or settlement of the Action and (iii)
reasonable assistance in the defense or settlement thereof.
Notwithstanding the hereabove payments by WINK to TAK, if it is
determined by competent authority that the Licensed Products or any part
thereof, or the sale, distribution or use thereof as permitted hereunder
infringes any patent, copyright, trade secret or trademark of a third
party or is enjoined, then WINK at its sole option and expense may (a)
procure for TAK the right under such patent, copyright, trade secret or
trademark to use, reproduce and distribute the Licensed Products or such
part thereof or such trademark; (b) replace the Licensed Products or
such part thereof or such trademark with other suitable software or
trademark without material degradation in performance or functionality;
(c) suitably modify the Licensed Products or such part thereof or such
trademark to avoid infringement without material degradation in
performance or functionality; or (d) if none of the foregoing are
commercially reasonably feasible, terminate this Agreement.
14.3 The foregoing indemnity shall not apply to an infringement to the extent
it arises out of (i) any modification of the Licensed Products by a
party other than WINK or on WINK's behalf, (ii) any combination of the
Licensed Products with hardware and/or software not supplied by WINK
(except the hardware of the TAK), which infringement does not cover the
Licensed Products standing alone, or (iii) failure to implement an
Update where use of such Update would have avoided infringement of third
party intellectual property rights, provided that WINK has explicitly
mentioned to TAK when releasing such Update that it avoids said
infringement or (iv) any trademarks, trade names or other brandings not
supplied by WINK. As used in Subsection 14.3(i), "on WINK's behalf"
shall mean that WINK has given its written authorization for TAK or a
third party to perform such modifications.
14.4 THE FOREGOING PROVISIONS OF THIS SECTION 14 STATE THE ENTIRE LIABILITY
AND OBLIGATION (EXPRESS, IMPLIED, STATUTORY, IN ANY COMMUNICATION WITH
WINK OR OTHERWISE) OF WINK AND THE EXCLUSIVE REMEDY OF TAK AND ITS
SUBMANUFACTURERS AND SUBDISTRIBUTORS WITH RESPECT TO ANY ALLEGED
INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADE SECRET, TRADEMARK OR OTHER
INTELLECTUAL PROPERTY RIGHT BY THE WINK ENGINE OR ANY PART THEREOF.
DELIVERABLE(S) WARRANTY
14.5 During the term of this Agreement and in accordance with Section 6.6
hereabove, WINK warrants that following the signature by both TAK and
WINK of the acceptance report set forth in Section 6.10, Deliverable(s)
will perform in accordance with the Specifications and WINK warrants
that Deliverables are free from defects and/or internal defects. During
the term of this Agreement, WINK shall promptly correct any errors in
the Deliverable(s) so that
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Deliverable(s) will perform in accordance with the Specifications. At
TAK's request, WINK shall repair or replace at its discretion and
without charges to TAK, all defective Deliverable(s).
15. [THIS SECTION INTENTIONALLY LEFT BLANK]
16. SOURCE CODE ESCROW
16.1 Within six (6) months following the completion and acceptance of
the Deliverables, WINK shall enter into a standard form of
source code escrow agreement ("Escrow Agreement") with Data
Securities International, Inc. ("Escrow Agent"). Such Escrow
Agreement shall provide for WINK's delivery and deposit from
time to time (including Product Releases, Version Releases and
Updates) with the Escrow Agent of source code and proprietary
materials in both electronic (e.g., CD-ROM or diskette) and
documented paper format for each piece of software ("Escrow
Materials") related to the Licensed Products and WINK shall make
such deposits. Until a condition of release ("Release
Condition") occurs as defined herein and the notice conditions
of the Escrow Agreement have been met, the Escrow Agent shall
not deliver the Escrow Materials to TAK. The fees and costs
charged by the Escrow Agent to establish and maintain the Escrow
Agreement shall be paid by WINK (provided that 50% of such
amount shall be reimbursed to WINK by TAK) Any of the following
events shall be deemed to be Release Conditions:
(i) WINK defaults on its obligation to cure a major bug,
such bug being of a nature to significantly affect TAK's
business and such default is not cured within forty-five
(45) days after written notice by TAK; or
(ii) WINK fails to deliver a major enhancement to the WINK
Engine in any four (4) year period following the date of
the last Product Release and such failure to provide
such enhancement is not cured within sixty (60) days
after written notice by TAK; or
(iii) Having notified TAK of its decision pursuant to the
provisions of Section 6.13, WINK fails to commit to
promptly develop (at WINK's normal consulting rates) any
new Version Release or Product Release requested by TAK
and such failure to provide such enhancement is not
cured within sixty (60) days after written notice by
TAK; or
(iv) WINK fails to provide Support as set forth in this
Agreement and such default is not cured within sixty
(60) days after written notice by TAK, or
(v) WINK files or there is filed against it any petition in
bankruptcy which petition has not been dismissed within
60 days of its filing, provided however, that no Release
Condition shall occur in the event the WINK is a
"debtor-in-possession" under a Chapter 11 proceeding
[and no Release Condition has otherwise occurred under
Section 16(i), (ii), (iii) or (iv) above].
17. TERMINATION AND EXPIRATION
Page 16
<PAGE> 17
17.1 Termination For Cause.
17.1.1 Notwithstanding any other provision herein, WINK will have the
right to terminate this Agreement or all or any licenses granted
herein if TAK fails to comply with any of its material
obligations under this Agreement. Should WINK elect to exercise
this right to terminate for such nonperformance, it must be done
in writing specifically setting forth those items of such
nonperformance. TAK will then have sixty (60) days from receipt
of notification to remedy the items of such nonperformance.
WINK's termination of this Agreement shall be without prejudice
to any other remedies WINK may have, including, without
limitation, all remedies with respect to the unperformed balance
of this Agreement; provided, however, that if TAK has not made
payment of the fees or charges due hereunder and such nonpayment
continues after sixty (60) days prior written notice by WINK,
then WINK may terminate this Agreement or any license granted
herein.
17.1.2 Notwithstanding any other provision herein, TAK will have the
right to terminate this Agreement or all or any licenses granted
herein if WINK fails to comply with any of its material
obligations under this Agreement. Should TAK elect to exercise
this right to terminate for such nonperformance, it must be done
in writing specifically setting forth those items of such
nonperformance. WINK will then have sixty (60) days from receipt
of notification to remedy the items of such nonperformance.
TAK's termination of this Agreement or such taking of possession
shall be without prejudice to any other remedies TAK may have,
including, without limitation, all remedies with respect to the
unperformed balance of this Agreement; provided, however, that
if WINK has not made payment of the fees or charges due
hereunder and such nonpayment continues after sixty (60) days
prior written notice by TAK, then TAK may terminate this
Agreement.
17.1.3 Upon the termination of this Agreement for any uncured material
breach as set forth in Section 17. 1, all rights of TAK to use
the Licensed Products will cease and TAK will immediately (i)
cease licensing of WINK Licensed Products to Submanufacturers of
Enabled Device and agree to use best efforts to have
Submanufacturers sell remaining inventory of Enabled Device
within twelve (12) months from the date of termination of this
contract (ii) purge all copies of Licensed Products from all
computer processors or storage media on which TAK has installed
and use its best efforts to cause others which have installed
such Licensed Products to purge such copies, and (iii) when
requested by WINK, certify to WINK in writing, signed by an
officer of TAK, that all copies of the Licensed Products have
been returned to WINK or destroyed and that no copy of any
Licensed Products remains in TAK's possession or under its
control.
17.2 Termination Without Cause/Expiration
Page 17
<PAGE> 18
Upon termination or expiration of this Agreement (or any extension
thereof) for any reason other than a termination for uncured material
breach pursuant to Section 17.1, TAK shall be entitled to continue
exercising the license grants set forth in Sections 3.1 and 3.2, except
as follows:(i) such licenses shall not be exclusive, (ii) shall not
include the right to integrate the WINK Engine or to sublicense
additional copies of the Licensed Products, (iii) with respect to the
use of installed applications of the Licensed Products (other than the
WINK Engine) such license grant shall terminate seven (7) years
following the date of such termination or expiration, and (iv) in lieu
of the royalty fees set forth in Section 7.3, TAK shall pay WINK 1.5 %
of all TAK net revenues derived solely from the exploitation of
previously installed copies of the WINK Engine for a period of seven (7)
years following such termination or expiration date. In addition, TAK
will continue to provide Support as follows: (a) no fee shall be charged
by WINK provided that the royalty fees paid to WINK under this Section
17.2 equal at least $100,000 per calendar quarter, or (b) otherwise,
WINK shall provide ten (10) hours per month on a no fee basis provided
that any additional Support over and above the ten (10) hour quota shall
be charged at WINK's standard per diem or hourly rate as applicable.
18. GENERAL
18.1 In the event any dispute arises between the parties concerning the
making, negotiating, interpretation or enforcement of this Agreement,
either party as its exclusive dispute resolution remedy shall initiate
arbitration (the "Arbitration") of the dispute by the filing of an
application for resolution by a mutually agreed single arbitrator
appointed by and in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce (the "ICC") in
force at the time the arbitration proceeding is initiated. The exclusive
venue for the conduct of the Arbitration shall be Geneva, Switzerland
and the language of the Arbitration shall be English. The arbitrator
shall apply the law of the State of New York, U.S.A. as the law
governing the interpretation and enforcement of this Agreement. The
award of the arbitrator shall be entered as a final, binding judgment in
any Court having jurisdiction thereof. The arbitrator shall have the
right to award injunctive or other equitable relief, including specific
performance but may not award punitive damages. All costs and expenses
of the arbitrator and the ICC shall be borne equally by the parties.
Each party shall be responsible for its own attorney fees and related
costs in the Arbitration.
18.2 TAK understands that WINK is subject to regulation by agencies of the
U.S. government which prohibit export or diversion of certain products
and technology to certain countries. Any and all obligations of WINK
including without limitation obligations to provide products,
technology, documentation, or technical assistance, will be subject in
all respects to such United States laws and regulations that will from
time to time govern the license and delivery of technology and products
abroad or to foreign nationals by persons subject to the jurisdiction of
the United States. WINK agrees to provide TAK with timely notification
in reasonable detail of the significant provisions of such export and
reexport restrictions. TAK
Page 18
<PAGE> 19
warrants that it will comply in all respects with the export and
reexport restrictions set forth in any export licenses obtained by the
WINK or TAK (if necessary).
18.3 This Agreement and any rights or obligations of TAK or WINK hereunder
shall not be assigned by either party without the prior written consent
of the other party, which consent shall not be unreasonably withheld,
except that either party may assign its rights and obligations hereunder
to any entity (i) which controls, is controlled by or is under common
control with such party or (ii) which acquires all or substantially all
of the assets or business of such party to which this Agreement
pertains, provided in both cases that such entity shall assume in
writing or by operation of law such party's obligations under this
Agreement. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors
and assigns.
18.4 The relationship of the parties established by this Agreement is that of
independent contractors, and nothing contained in this Agreement shall
be construed to (i) give either party the power to direct and control
the day-to-day activities of the other, (ii) constitute the parties as
partners, joint venturers, co-owners or otherwise as participants in a
joint or common undertaking, or (iii) allow either party to create or
assume any obligation on behalf of the other party for any purpose
whatsoever.
18.5 In exercising its rights under this Agreement, each party shall fully
comply with the requirements of any and all applicable laws,
regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this Agreement.
18.6 This Agreement represents the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior or
contemporaneous agreements, understandings, proposals and
representations by the parties.
18.7 LIMITATION OF LIABILITY: (i) EXCEPT WITH RESPECT TO A BREACH OF SECTION
13, IN NO EVENT SHALL WINK'S LIABILITY TO TAK EXCEED THE TOTAL AGGREGATE
AMOUNT (EXCLUDING NRE FEES) PAID BY TAK UNDER THIS AGREEMENT AND (ii)
EXCEPT WITH RESPECT TO A BREACH OF SECTIONS 3,4.2 OR 13, IN NO EVENT
SHALL TAK BE LIABLE TO WINK IN THE AGGREGATE FOR ANY AMOUNT IN EXCESS OF
THE ROYALTIES PAID BY TAK HEREUNDER AND (iii) EXCEPT FOR A BREACH OF
SECTIONS 3,4.2 OR 13, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR LOST PROFITS, LOSS OF DATA OR FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN ANY WAY OUT OF THIS
AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY. THIS
LIMITATION SHALL APPLY EVEN IF SUCH PARTY KNOWS OR HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED FOR HEREIN.
Page 19
<PAGE> 20
18.8 The provisions of this Agreement shall be severable, and if any
provision of this Agreement shall be held or declared to be illegal,
invalid, or unenforceable, such illegal, invalid or unenforceable
provision shall be severed from this Agreement and the remainder of the
Agreement shall remain in full force and effect, and the parties shall
negotiate a substitute, legal, valid and enforceable provision that most
nearly reflects the parties' intent in entering into this Agreement.
18.9 WINK and TAK acknowledge and agree that WINK's entering into this
Agreement and the amount of TAK's royalty hereunder have been done or
set in reliance upon the limitations of liabilities and disclaimers of
warranty set forth in this Agreement, and that the same form an
essential basis of the parties' bargain.
18.10 Any waiver of any kind by either party of a breach of this Agreement
must be in writing, shall be effective only to the extent set forth in
such writing, and shall not operate or be construed as a waiver of any
subsequent breach. Either party's delay or omission, if any, in
exercising any right, power, or remedy pursuant to a breach or default
by the other, shall not impair any other right, power, or remedy which
the non-defaulting party may have.
18.11 In the event that a party is prevented from performing its obligations
hereunder due to any force majeure, including but not limited to,
disasters, fire, civil commotion, strikes, governmental regulations or
other occurrences beyond its reasonable control and without its fault or
negligence, the provisions of this Agreement relative thereto shall be
suspended, but only as long as and so far as the impediment is existing.
In the case of any such suspension, such party shall endeavor and use
all reasonable efforts to overcome the cause and effect of such
suspension.
18.12 This Agreement may be executed in any number of counterparts and when so
executed and delivered shall have the same force and effect as though
all signatures appeared on one document.
18.13 The undersigned hereby warrant and represent that they are authorized to
sign on behalf of and commit the parties.
18.14 The provisions of Sections 13, 14,17.2, 18.1 and 18.7, shall expressly
survive the termination or expiration of this Agreement.
18.15 In the event of a conflict between a provision in a Section in the body
of this Agreement and an Exhibit attached hereto, the provision in the
Section of the body of the Agreement shall control.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
Page 20
<PAGE> 21
WINK COMMUNICATIONS, INC. TAK INTERACTIVE S.A.
By: /s/ Paritosh K. Choksi By: /s/ Jacques Thibon
------------------------------- -------------------------------
Name: Parish K. Choksi Name: Jacques Thibon
----------------------------- -----------------------------
Title: CFO Title: CEO
---------------------------- ----------------------------
Date: April 4, 1998 Date: April 6, 1998
----------------------------- -----------------------------
Page 21
<PAGE> 22
EXHIBIT D
TERRITORY OF CONTINENTAL EUROPE
For the purposes of this Agreement, the countries listed below comprise the
territory of Continental Europe:
France
Spain
Portugal
Belgium
Luxembourg
Holland
Republic of Ireland
Germany
Italy
Denmark
Sweden
Finland
Norway
Iceland
Switzerland
Austria
Gibraltar
San Marino
Monaco
Liechtenstein
Andorra
Poland
Hungary
Czech Republic
Slovakia
Romania
Bulgaria
Yugoslavia
Slovenia
Croatia
Bosnia Herzegovina
Albania
Belarus
Esthonia
Latvia
Lithuania
Ukraine
Moldavia
Russian Federation
Greece
Turkey
Malta
Cyprus
<PAGE> 23
EXHIBIT A
STATEMENT OF WORK
1. INTRODUCTION
The following sets forth the services that TAK and WINK agree to perform,
respectively, and in accordance with the Agreement, and its associated Exhibits.
This Statement of Work (SOW) shall remain effective until the Expiration Date of
the Agreement and may be modified from time-to-time as mutually agreed in
writing by TAK and WINK.
All functional and performance requirements for the TAK project are listed in
this SOW, and are further described in the following documents :
- - - "TAK MODULE - Hardware Requirement Specification," DO.02, 19-Mar-98, Ph.
Baudry
- - - "WINK Extensions Requirements Specification, TAK," A0.01, 16-Mar-98, L.
Lesenne
- - - "Interactive (Analog) TV, System Specification Requirements," 18-Apr-97,
A Maillard.
- - - "TAK Module System Software Architecture," 12-Mar-98, N. Patry
- - - "TAK Project HW & SW Needs," 11-Mar-98, Ph. Baudry
The functionality of WINK's products are described in the following documents:
- - - "WINK Core Engine 1.5 Functional Specification, 2/27/98"
- - - "WINK Studio User's Guide, WINK Studio 2.0, 2/6/98"
- - - "Server Module Authoring with WINK SMStudio & SMEngine, V1.1, 1/5/98"
- - - "WINK Automation Server Module Marketing Requirements Document V 1.0,
2/24/98"
- - - "WINK Broadcast Server User's Guide, 2/23/98"
Exhibit A-1
<PAGE> 24
2. TAK MODULE
2.1 DEVELOPMENTS
2.1.1 TAK'S RESPONSIBILITIES
2.1.1.1 TAK shall specify, with the support of WINK, the software architecture
of the TAK module and the API between TAK software and version 1.5 of the WINK
Engine which includes the extensions as specified in Section 2.1.2.2.
2.1.1.2 For development, TAK shall provide 5 copies of the initial prototype of
the TAK MODULE (Hardware), TAKHW1 (a.k.a. Lab1), that conforms to the
specification "TAK MODULE Hardware requirement specification," as indicated in
module development timeline as specified in Section 2.2 . The TAKHW1 boards will
be updated with any newer cut of the Gen4 IC when possible and as appropriate,
but no later than milestone MT6. Each TAKHWI will be delivered with a "Mezzanine
board" and an "adapter" for development/integration that conforms to the
document named "TAK project HW & SW needs".
2.1.1.3 For Quality Assurance, TAK shall provide 5 additional copies of the TAK
MODULE (Hardware), version TAKHW1 equipped with the latest version of the Gen4
IC that conforms to the "TAK MODULE Hardware requirement specification," as
indicated in module development timeline as specified in Section 2.2.
2.1.1.4 For final testing, TAK shall provide 5 additional copies of the final
prototype of the TAK Module (Hardware), TAKHW2 (a.k.a. Lab2), that conforms to
the "TAK Module Hardware requirement specification," as indicated in module
development timeline as specified in Section 2.2.
2.1.1.5 "TAKHWI" and "TAKHW2" refer to the two versions that are currently
planed for printed circuit board assembly for the TAK Module. "Gen4" refers to
the integrated circuit which is being developed for the TAK Module. If there are
additional versions of the TAK Module Hardware or the Gen4 chip that are needed
by WINK to complete its development, integration or testing, TAK will either
update WINK's hardware or provide additional hardware.
2.1.1.6 TAK will provide WINK with the equipment required for 4 Engineering
development stations. This will include:
- - - 4 ISI PRISM development seats (PC/NT) with 2 floating ARM C compiler
licenses
- - - 4 "Black Ice" In-circuit emulators with their power supply
- - - 4 50Hz TV sets
- - - 2 Norpak TES3 DIUs (1 DIU that supports 3 datapipes and I DIU that
supports 2 datapipes)
- - - 1 50Hz Laser Disk Player
- - - 1 50Hz RF Modulator (Assuming that the TV Sets can receive baseband
video. If not, additional modulators will be required)
- - - 4 power converters
Exhibit A-2
<PAGE> 25
- - - 4 Lab power supplies (e.g. METRIX AX323)
2.1.1.7 TAK will provide WINK with the equipment required for 4 QA (Quality
Assurance) test stations. This will include:
- - - 4 50Hz TV sets
- - - 1 Norpak TES3 DIUs that supports l datapipe
- - - 1 50Hz Laser Disk Player
All of the above equipment shall be provided by TAK in accordance with the
provisions of Section 6.7 of the Agreement, and shall remain the property of
TAK.
2.1.1.8 TAK shall provide a hardware independent software layer, according to
the milestones defined in Section 2.2, based on the following components:
- - - an Operating System and its associated drivers (UART, Timers,...)
- - - an OSD driver and a graphics API
- - - a modem driver and a TCP/IP/PPP socket API
- - - a VBI data slicer driver
- - - an I2C driver and interface to the TV chassis
- - - a non volatile memory driver and file system
2.1.1.9 TAK shall develop the resident applications on the TAK Module, as well
as the resident icons and fonts, following WINK's guidelines. These applications
include:
- - - TAK Module installation in the TV chassis
- - - Current & Next Electronic Program Guide
- - - TAK "On-Line" menu
- - - System popups
2.1.1.10 TAK shall specify and implement a system code down load mechanism in
order to update the Flash memory of the TAK Module.
2.1.1.11 TAK shall be responsible for the test and integration of the hardware
and software provided by TAK
2.1.1.12 TAK will support WINK in the integration and validation of the porting
of WINK software on the TAK Module, at WINK premises.
2.1.1.13 If requested by WINK, TAK shall recommend, as appropriate, additional
environments, and software tools for software development and for the set up of
a debug environment.
2.1.2 WINK'S RESPONSIBILITIES
Exhibit A-3
<PAGE> 26
2.1.2.1 WINK shall port version 1.5 of the WINK Engine onto the TAK Module on
top of the TAK hardware independent software layer, according to the milestones
defined in Section 2.2.
2.1.2.2 WINK shall extend the functionality of version 1.5 of the WINK Engine
according to the following TAK business requirements. These requirements are
presented in the document entitled "WINK Extensions Requirements Specification."
- - - Adapted to comply to the European Teletext standard transport (Page
Format or IDL Format A, as described in ETS300708). This software
implements communication stacks compatible with the European Teletext
Transport, error correcting code offering security for the broadcast of
interactive applications, data compression algorithm and application
authentication control.
- - - Allow applications to write data to and read data from non-volatile
memory.
- - - Allow the installation and upgrade from both the VBI and the PSTN of
resident applications, resident text resources, resident icons, and
resident fonts, independent of each other and the WINK Engine.
- - - Allow the installation and upgrade of user profile data over the PSTN.
- - - Prevent the execution of applications which have not been authenticated.
- - - Provide the ability to query an on-line server for real-time data,
real-time application and updates.
- - - Support applications that are configured with a profile criteria such
that the applications are not available to the viewer if the profile
criteria is not met.
- - - Support applications that can appear differently for different viewers,
based on the user profile data.
- - - Provide the ability to pass data to external devices (e.g. through TV
Control Task or modem).
- - - Allow responses for an application to be sent over the PSTN at a random
time within a window of time specified by the application.
- - - Support the use of translucent colors.
- - - Provide access to the TAK device's unique ID number.
2.1.2.3 WINK shall provide simple but relevant descriptions of the behavioral
aspects of how the WINK Engine uses each interface to the TAK Module hardware
and software no later than 6 weeks before TAK is scheduled to deliver the
respective interface. These descriptions are provided so that TAK can develop
test software to ensure that TAK's software meets WINK's acceptance criteria.
2.1.2.4 WINK shall be responsible for the test, integration and validation of
version 1.5 of the WINK Engine and the extensions implemented to meet TAK's
requirements on the TAK Module and software. WINK may be supported by a person
appointed by TAK at WINK's premise, during the integration and validation of
this software.
2.1.2.5 WINK shall provide a protocol stack that provides an API that allows
TAK's software to receive WST data that has been encoded with Norpak's FEC
algorithm for use for code download. TAK's use of this software is subject to
agreement and/or licensing by Norpak.
Exhibit A-4
<PAGE> 27
2.1.2.6 WINK shall support TAK in the development of resident fonts, icons,
system popups and resident applications.
2.1.2.7 WINK shall appoint a person to support TAK, at TAK's premises, in
developing specifications for the TAK module software architecture and the APIs
between TAK's and WINK's respective software.
2.1.2.8 If requested by TAK, WINK shall recommend, as appropriate, additional
environments, and software tools for the set up of a debug environment.
2.2 MILESTONES
MT0: Contract Signed, Timeline frozen, Overall project requirements
defined.
<TABLE>
<S> <C> <C>
MT1: MT0 + 2 Weeks
MTl.D1 Common Agreement on process for reviewing, updating and
tracking versions of project related specifications
MT1.D2 Common Agreement on the initial list of specifications
MT1.D3 WINK to TAK Specification of Escalation Process
MTl.D4 TAK to WINK Specification of Escalation Process
MT2: MT1 + 4 Weeks
MT2.D1 Common Agreement on the definition & implementation of
Change Control Process
MT2.D2 Common Specifications and API finalized
MT2.D3 TAK to WINK ARM Development Tools
MT3: MT2 + 6 Weeks
MT3.D1 Common Agreement on a common procedure to track bugs
MT3.D2 Common Agreement on electronic format for End User
documentation deliverables
MT3.D3 TAK to WINK Working Development modules (TAKHW1) and
associated development environments (see "TAK
project HW & SW needs")
MT3.D4 TAK to WINK TAK's software (TAKSW1) running on the
TAKHW1 module which includes: pSOS ported to
TAKHW1 module, a Serial driver, a driver for the
OSD, and a Graphics API
MT4: MT3 + 6 Weeks
</TABLE>
Exhibit A-5
<PAGE> 28
<TABLE>
<S> <C> <C>
MT4.D1 WINK to TAK WINK Delivers to TAK a version of the WINK
Engine (PROT01) which supports the 1.5 feature set,
runs ICAP applications which are either resident or
received via the serial port, accepts user input via the
serial port, and supports an API for delivering data
for code downloads to the TAK software. This
prototype will not support VBI data nor a return path
MT4.D2 TAK to WINK TAK will deliver a updated version of the module
software (TAKSW2) which adds an I2C driver, a VBI
driver, a functional TV Control task, a Flash driver and
a file system
MT5: MT4 + 6 Weeks
MT5.D1 WINK to TAK A version of the WINK Engine (PROT02) which
supports real VBI data and user input from the TV
control task. Will support a mechanism for
delivering data packets for code download to TAK
module software after they have been received
processed via WINK's WST/FEC code. This
prototype will not support a return path
MT5.D2 TAK to WINK QA Test Environments (see Section 2.1.1.7)
MT5.D3 TAK to WINK An updated version module software (TAKSW3)
which adds support for the modem, and a
TCP/IP/PPP stack
MT6: MT5 + 4 Weeks
QA Begins
MT6.D1 WINK to TAK WINK delivers a 3rd version of the WINK Engine (PROT03)
which supports a return path via TCP/IP over the modem,
and includes the TAK extensions
MT7: MT6 + 4 Weeks
MT7.D1 WINK to TAK WINK Software on TAKHW1 modules ready for TV
manufacture testing (PROT04). (Required for ST4)
MT7.D2 TAK to WINK Final TAK Hardware (TAKHW2) and related software changes
(TAKSW4) for testing, TAKSW4 will have identical
functionality and interfaces as TAKSW3
MT8: MT7 + 2 weeks
MT8.D1 WINK to TAK WINK Software validated on TAKHW2 modules
(FINAL)
</TABLE>
3. AUTHORING TOOLS
Exhibit A-6
<PAGE> 29
3.1 DEVELOPMENT
3.1.1 COMMON RESPONSIBILITIES
3.1.1.1 Refer to common responsibilities regarding extensions to WINK's products
(See Section 11.1.1.2)
3.1.2 WINK'S RESPONSIBILITIES
3.1.2.1 WINK Studio shall be based on version 2.0
3.1.2.2 WINK shall extend the functionality of the WINK Studio 2.0 according to
the following TAK business requirements. These requirements are presented in the
document entitled "WINK Extensions Requirements Specification."
- - - Include a GUI that has been Localized for France (refer to Section 12).
- - - Include a simulator for one TAK device that includes one remote control.
- - - Allow an author to specify a window of time to deliver responses.
- - - Allow colors to be semi-transparent.
- - - The ability to configure an application with a profile criteria such
that the application is not available to the viewer if the profile
criteria is not met.
- - - The ability to configure an application such that the application
displays differently based on profile criteria.
- - - Allow applications to be downloaded to the TAK device through a serial
connection.
- - - Support new script commands which allow applications:
- To write and read data from non-volatile memory
- To pass data to external devices (e.g. through TV Control Task
or modem)
- To access the unique ID of each TAK device.
3.1.2.3 WINK Server Module Studio shall be based on version 1.1 and localized
for France (refer to Section 12).
3.2 MILESTONES
Refer to Section 2.2 for milestones related to the Module Development Timeline
(e.g. MT6) Refer to common responsibilities for specification request (See
Section 11.1.1.2)
ST0: Contract Signed, Timeline frozen, Overall project requirements
defined.
<TABLE>
<S> <C> <C> <C>
ST1: ST0 + 6 Weeks
STl.D1 WINK to TAK Initial Proposal for Extensions to WINK Studio
ST2: ST1 + 2 Weeks
ST2.D1 TAK to WINK Final Approval for Extensions to WINK Studio
ST3: ST2 + 20 Weeks
</TABLE>
Exhibit A-7
<PAGE> 30
<TABLE>
<S> <C> <C> <C>
ST3.D1 WINK to TAK First release (beta) of WINK Studio that includes the
extensions (Required for Milestone MT6)
ST4: ST3 + 6 Weeks (Requires that
MT7 has been
completed)
ST4.D1 WINK to TAK Final release WINK Studio that includes the
extensions (Required for Milestone MT8)
</TABLE>
4. BROADCAST PRODUCTS
4.1 DEVELOPMENT
4.1.1 COMMON RESPONSIBILITIES
4.1.1.1 Refer to common responsibilities for extensions to WINK products (See
Section 11.1.1.2).
4.1.2 WINK'S RESPONSIBILITIES
4.1.2.1 WINK will provide an Ad Insertion Server Module, based on version 1.0
that includes an interface to Louth Ad insertion system and supports the
Automation Server Module API (ASMAPI) to allow the integration with additional
ad insertion systems.
4.1.2.2 WINK will provide a WINK Broadcast Server (WBS) which is based on
version 2.0, that includes remote administration with multiple system
administration GUIs on a wide area network (WAN), supports broadcast
applications and data via the European Teletext standard by interfacing to an
appropriate NORPAK Data Insertion Unit that supports an Error correcting code
and includes an external interface for triggering events (SMAPI 2.0).
4.1.2.3 WINK shall extend the functionality of the WINK Broadcast Server
according to the following TAK business requirements. These requirements are
presented in the document entitled "WINK Extensions Requirements Specification."
- - - Include a User Interface and Log Messages that have been localized to
France (refer to Section 12). TAK shall evaluate if and when error
messages need to be translated.
- - - Provide a method, per application or resource update, to control the
maximum latency between the time when an application or resource update
is available, either because the viewer changed the channel or that new
data is ready for broadcast, and the time when viewer is able to see the
result of the broadcast.
- - - Provide the ability to prevent the broadcast of applications which have
not been authenticated.
- - - Provide the ability to transmit data that can be used to upgrade
software in the TAK module.
4.1.2.4 WINK shall provide a mechanism to TAK in order to mark applications as
authenticated.
Exhibit A-8
<PAGE> 31
4.1.2.5 WINK shall extend the functionality of the WINK Broadcast Server to
support the transmission of data and applications via European Teletext standard
by interfacing to a second DIU, which is manufactured by a company other than
Norpak. TAK, with WINK's support, shall evaluate which DIU should be supported,
and determine when this support is required. At such a time when the DIU has
been selected, TAK and WINK will commonly agree on an implementation schedule
for this extension.
4.2 MILESTONES
Refer to Section 2.2 for milestone in the Module Development Timeline (e.g.
MT6).
BT0: Contract Signed, Timeline frozen, Overall project requirements
defined.
<TABLE>
<S> <C> <C> <C>
BT1: BT0 + 6 weeks
BTl.D1 WINK to TAK Initial Proposal for the Extensions to WINK
Broadcast Server
BT2: BT1 + 2 weeks
BT2.D1 WINK to TAK Final Approval for Extensions to WINK Broadcast
Server
BT3: BT2 + 16 weeks
BT3.D1 WINK to TAK Preliminary Release of WBS which includes support
for an interface to a Norpak DIU which support the
transmission of WST. (Required for MT5)
BT4: BT3 + 4 weeks
BT4.D1 WINK to TAK First release (beta) of WBS that includes the
extensions (Required for Milestone MT6)
BT5: BT4 + 4 weeks
BT5.D1 WINK to TAK Final release of WBS that includes the extensions
(Required for Milestone MT7)
</TABLE>
5. ON-LINE SERVER
Refer to Section 2.2 for milestone in the Module Development Timeline (e.g.
MT6).
5.1.1 TAK'S RESPONSIBILITIES
5.1.1.1 TAK shall build its own on-line server. This on-line server will be used
to provide real-time data and application updates to the WINK Engine, based on a
protocol to be jointly agreed upon by WINK and TAK. TAK owns exclusively all
intellectual property rights, title and interest in and to its on-line server.
5.1.1.2 TAK shall be responsible for the development of the TAK on-line server.
Exhibit A-9
<PAGE> 32
5.1.1.3 TAK shall drive the specification of the protocol between TAK on-line
server and the WINK Engine.
5.1.1.4 TAK shall propose a plan that allows WINK to test the WINK Engine return
path, no later than the MT4 milestone. After WINK's approval of the plan, TAK
will provide WINK with a method to test the WINK Engine return path on or before
the MT5 milestone.
5.1.1.5 TAK shall propose a plan that provides a means for WINK to perform QA
testing, at WINK's premises, of the online services and responses, no later than
the six weeks before the OT5 milestone. After WINK's approval of the plan, TAK
will provide WINK this means on or before the OT5 milestone.
5.1.2 WINK'S RESPONSIBILITIES
5.1.2.1 WINK shall support TAK in specifying the protocol of the TAK on-line
server. This protocol shall be supported by the WINK Engine.
5.1.2.2 WINK shall review the plans for testing the WINK Engine's Return Path
and for a means to provide QA testing, at WINK's premises, of the on-line
services and responses. WINK has the responsibility to reach a common agreement
with TAK on these items, no later than 4 weeks prior their respective delivery
dates.
5.2 MILESTONES
OT0: Contract Signed, Timeline frozen, Overall project requirements
defined
<TABLE>
<S> <C> <C> <C>
OT1: OT0 + 8 weeks
OTl.D1 TAK to WINK Final Specification for Interface between TAK On-
Line Server and WINK Engine
OT2: OT1 + 10 weeks
OT2.D1 TAK to WINK TAK provides a means to test the On-Line
Server I/F over a TCP/IP connection
other than the modem (Required for MT4)
OT3: OT2 + 6 weeks
OT3.D1 TAK to WINK TAK provides a means to test the On-Line Server I/F
over a TCP/IP/PPP over the modem (Required for
MT5)
OT4: OT3 + 4 weeks
OT4.D1 TAK to WINK TAK provides a means to test the On-Line Server I/F
for QA testing. (Required for MT6)
OT5: Q1, 1999
</TABLE>
Exhibit A-10
<PAGE> 33
<TABLE>
<S> <C> <C> <C>
OT5.D1 TAK to WINK TAK provides a means to perform QA testing at
WINK's premises for on-line services and responses
</TABLE>
6. ACCEPTANCE PROCEDURES
6.1 INTRODUCTION
6.1.1.1 The following acceptance procedures shall be applied as the core for all
acceptance tests, including partial acceptances and acceptances of final
releases.
6.1.1.2 "Partial acceptance" concerns intermediate deliverables and includes, as
necessary, TAK's deliverables to WINK (TAKHW1, TAKSW1, TAKSW2, TAKSW3, TAKHW2
and TAKSW4), intermediate WINK's deliverables to TAK (PROTO1, PROT02, PROT03 and
PROT04) and first release of WINK's deliverables (ST3.D1 and BT4.D1).
6.1.1.3 "Acceptance of final release" covers every final release of WINK's
deliverables, i.e. the 'FINAL' WINK Engine ported on the TAK module (MT8.D1),
the WINK Studio that incorporates all TAK's extensions (ST4.D1), the Ad
Insertion module and the WINK Broadcast Server that incorporates all TAK's
extensions (BT5.D1). For "Acceptance of final release," the core acceptance
procedure described below (see section 6.2: Partial Acceptance) will be wrapped
in a more formal framework as described in Section 6.3.
6.1.1.4 Following the acceptance of the final releases of WINK's deliverables
(see Section 6.1.1.3), a system integration test shall be carried out as
specified in Section 7 and will conclude with "system final acceptance".
6.1.1.5 As part of the general project management process, WINK and TAK may
agree to modify the Acceptance Procedure Process, as necessary.
6.2 PARTIAL ACCEPTANCE
6.2.1 TAK'S DELIVERABLES
6.2.1.1 TAK shall perform development, integration and test of the software and
hardware (TAKSWxx and TAKHWxx) under its responsibility at its development
facilities.
6.2.1.2 TAK shall provide WINK with an acceptance plan which includes an
acceptance criteria for its software and hardware deliverables and defines the
necessary test environments and test procedures.
6.2.1.3 WINK shall review the TAK acceptance criteria, test procedures and test
environments submitted by TAK for TAK deliverables and has the responsibility to
reach a common agreement
Exhibit A-11
<PAGE> 34
with TAK on these items, no later than 4 weeks prior to the beginning of the
related acceptance procedure.
6.2.1.4 After common written approval of the acceptance plan, acceptance tests
of TAK deliverables shall be executed by TAK at TAK premises under the direction
of WINK. If commonly agreed to in writing by both parties, the site of testing
can be moved, in order to make the development process more convenient.
6.2.1.5 The results of the acceptance tests will be jointly reviewed by TAK and
WINK, and a commonly agreed written plan shall be set up to specify any
corrective actions that need to be undertaken and to track their implementation.
6.2.2 WINK'S DELIVERABLES
6.2.2.1 WINK shall perform development, integration and test of the software
under its responsibility at its development facilities.
6.2.2.2 WINK shall provide TAK with an acceptance plan which includes an
acceptance criteria for its software deliverables and defines the necessary test
environment and test procedures.
6.2.2.3 TAK shall review the acceptance criteria, test procedures and test
environments submitted by WINK for WINK deliverables, and has the responsibility
to reach a common agreement with WINK on these items, no later than 4 weeks
prior to the beginning of the related acceptance procedure.
6.2.2.4 After common written approval of the acceptance plan, acceptance tests
of WINK deliverables shall be executed by WINK at WINK premises under the
direction of TAK. If commonly agreed to in writing by both parties, the site of
testing can be moved, in order to make the development process more convenient.
6.2.2.5 The results of the testing will be jointly reviewed by TAK and WINK, and
a commonly agreed written plan shall be set up to specify any corrective actions
that need to be undertaken and to track their implementation.
6.3 ACCEPTANCE OF FINAL RELEASES
6.3.1.1 WINK shall provide and execute acceptance procedures of the final
release of each of the WINK software deliverable, as described in Section 6.2.2.
6.3.1.2 Within one week following the successful execution of the acceptance of
final release test procedures, WINK shall deliver to TAK the final release of
the related deliverable and a corresponding certificate of completion letter.
Exhibit A-12
<PAGE> 35
6.3.1.3 Within two (2) weeks following the receipt of the certificate of
completion of each final release test procedure, TAK shall deliver either 1) a
certificate of acceptance to WINK or 2) a list of issues resulting from any
verification testing by TAK. Should there be any issues, TAK and WINK shall
commonly define a corrective action plan to resolve each issue. TAK will track
the progress of each corrective action plan. As necessary, WINK shall update its
deliverables and/or documentation as agreed upon in the corrective action plan.
7. SYSTEM INTEGRATION AND SYSTEM FINAL ACCEPTANCE
7.1 INTRODUCTION
7.1.1.1 "System Integration" is the process of integrating and testing the final
versions of the Module, Studio, Broadcast Server and On-Line Server as a
complete system, and should involve, as necessary to simulate the environment in
which the system will be deployed, hundred(s) of TAK's modules. System
Integration will conclude with the completion of the System final acceptance
procedure.
7.1.1.2 TAK anticipates that System Integration may be completed in Q1, 1999.
7.1.1.3 The final acceptance procedure applies to System Integration and is
described in Section 6.10 of the Agreement.
7.1.2 TAK'S RESPONSIBILITIES
7.1.2.1 TAK shall be responsible, with WINK's support, for the overall system
integration. The overall system integration will take place at TAK premises.
7.1.2.2 TAK shall define a system integration procedure with WINK's support, no
later than 6 weeks prior to the beginning of system integration.
7.1.3 WINK'S RESPONSIBILITIES
7.1.3.1 WINK shall support TAK for the overall system test and integration, and
for final resolution concerning WINK deliverables, as commonly agreed upon.
7.1.3.2 Upon TAK's request, WINK shall have one person available at TAK's
premises to support TAK in preparation for, and execution of the system
integration.
8. THIRD PARTY VENDORS
8.1 TAK'S RESPONSIBILITIES
Exhibit A-13
<PAGE> 36
8.1.1.1 TAK shall be responsible for all issues regarding any third party
suppliers (e.g. ISI) related to the development of TAK deliverables.
8.2 WINK'S RESPONSIBILITIES
8.2.1.1 WINK shall be responsible for all issues regarding any third party
suppliers related to the development of WINK deliverables.
8.2.1.2 WINK shall be responsible for the relationship with Norpak to develop
any enhancements required for TAK's deployment of Norpak products.
9. ENGINEERING CHANGE CONTROL
9.1 COMMON RESPONSIBILITIES
9.1.1.1 A "Change Control" common procedure is needed to minimize risk of
endangering project deadlines during the development phase. This procedure will
rely on a "Change Control Board" gathering relevant representatives of TAK and
WINK (Technical, Project or Management). Its principle will be as follows:
9.1.1.2 Specifications will be developed, assigned a version number and approved
as indicated in Section 11.1.1.2. Documents approved in this process will become
the "Change Control Reference."
9.1.1.3 If changes to a specification are required after its has been approved,
a "Change Request" will be required. A Change Request is defined as a written
description of changes that the requester proposes to make to the Change Control
Reference.
9.1.1.4 The Change Request shall be documented by requester.
9.1.1.5 The Change Request shall be communicated to the Change Control Board.
The Change Control Board shall agree on a plan of action to evaluate the request
and track the evaluation process.
9.1.1.6 At the end of the evaluation process, the Change Control Board decides
either to accept, accept partially, delay or cancel the Change Request. If the
Change Request is accepted or partially accepted, the Change Control Reference
will be updated accordingly.
9.1.1.7 If a Change Request is accepted or partially accepted, an implementation
plan is drafted and approved by the Project Representatives. The progress of
this implementation will be tracked as part of the general project management
process.
9.1.1.8 TAK and WINK shall agree on any additional details regarding to the
implementation of this common procedure no later than the MT2 milestone.
Exhibit A-14
<PAGE> 37
9.1.1.9 As part of the general project management process, WINK and TAK may
agree to modify the Change Control Process, as necessary.
9.2 TAK'S RESPONSIBILITIES
9.2.1.1 TAK shall appoint a person, who is authorized to handle Change Requests
for TAK, to represent TAK as a member of the Change Control Board.
9.2.1.2 TAK shall present to the Change Control Board at least once per month
reports of the status of the current Change Requests concerning the TAK
deliverables.
9.3 WINK'S RESPONSIBILITIES
9.3.1.1 WINK shall appoint a person, who is authorized to handle Change Requests
for WINK, to represent WINK as a member of the Change Control Board.
9.3.1.2 WINK shall present to the Change Control Board at least once per month
reports of the status of the current Change Requests concerning the WINK
deliverables.
10. PROJECT MANAGEMENT
10.1 COMMON RESPONSIBILITIES
10.1.1.1 TAK and WINK shall work together to develop an effective project
management infrastructure, shall designate points of contact for project
management and technical issues, and shall hold meetings on a basis as needed to
ensure successful completion of the project.
10.1.1.2 The project team shall consist of all persons assigned as points of
contact for either project management or technical issues. The project team is
responsible for ensuring that all of the items related to the project are
executed.
10.1.1.3 TAK and WINK shall agree on weekly project status reporting, to review
the schedule, to address issues and to recognize major achievements.
10.1.1.4 TAK and WINK shall agree on regular (typically weekly) phone conference
meetings to address technical and project management issues.
10.1.1.5 TAK and WINK shall agree on monthly project status reporting. These
reports shall summarize and consolidate the corresponding weekly reports and
include actions, change, bug, etc.
tracking.
10.1.1.6 TAK and WINK shall agree to meet face-to-face, as necessary, to
complete technical and project management activities that are not efficiently
handled by other means of communication.
Exhibit A-15
<PAGE> 38
It is anticipated that this will occur approximately once per month, but will be
scheduled based on the project's needs.
10.1.1.7 TAK and WINK shall agree on a common procedure to track bugs. This
procedure shall rely on a "Bug Review Committee," in charge of maintaining the
list of open bugs (including description and priority), of reviewing the
priority of bug correction, of setting up action plans, of tracking corrective
actions, of updating the bug list, and shall be established before the MT3
milestone.
10.2 TAK'S RESPONSIBILITIES
10.2.1.1 TAK shall be responsible for the consolidation of project status
reports (TAK and WINK, monthly and weekly).
10.2.1.2 TAK shall prepare weekly and monthly status reports concerning its
deliverables.
10.2.1.3 TAK shall define an escalation process to handle issues which cannot be
resolved by the project team. This process will be created and communicated to
WINK before the MT2 milestone.
10.2.1.4 TAK shall appoint a representative to the Bug Review Committee.
10.3 WINK'S RESPONSIBILITIES
10.3.1.1 WINK shall prepare weekly and monthly status reports concerning its
deliverables.
10.3.1.2 WINK shall define an escalation process to handle issues which cannot
be resolved by the project team. This process will be created and communicated
to TAK before the MT2 milestone.
10.3.1.3 WINK shall appoint a representative to the Bug Review Committee.
11. DOCUMENTATION
11.1.1.1 As required by TAK for the completion of this development, WINK shall
provide documentation about its standard products including:
- Product Descriptions
- Functional Specifications
- End User Documentation
- Protocol Specifications
11.1.1.2 Extensions to WINK products required by TAK will be processed as
follow:
Exhibit A-16
<PAGE> 39
- TAK shall specify requirements for extensions of the WINK
products according to TAK business requirements.
- WINK shall propose extensions to TAK to meet TAK requirements.
- TAK shall review, comment and/or approve WINK extensions.
- As necessary, WINK shall incorporate TAK's comments, and
re-submit the extensions for review, comment and approval. If
the extensions are approved, WINK shall implement the approved
extensions.
11.1.1.3 During the Agreement, TAK and WINK will jointly develop, review and
approve specifications required by one or both parties to complete their
respective developments. These specification include:
- Requirement Specifications
- Architecture Specifications
- Functional Specifications
- API Specifications for interfaces between TAK's and WINK's
respective software
- Test Plan Specification (including Test Cases)
- Acceptance Criteria Specifications
11.1.1.4 As part of the general project management process, TAK and WINK will
jointly identify which specifications, along with their required content, need
to be created and maintained.
11.1.1.5 TAK and WINK shall agree on a process for creating, maintaining,
reviewing and approving documents by MTI.
11.1.1.6 WINK and TAK will agree, by Milestone MT1, on an initial list of
specifications and corresponding dates by which each specification will be
completed. As part of the general project management process, this list will be
updated as required.
12. LOCALIZATION
12.1 TAK'S RESPONSIBILITIES
12.1.1.1 TAK will support WINK by translating user interface text into French,
and by verifying that the interfaces of the localized products are correct.
12.1.1.2 TAK shall define the list of end user documentation to be translated
into French. TAK shall determine, with WINK's support, how to translate any end
user documentation, if any.
12.2 WINK'S RESPONSIBILITIES
12.2.1.1 WINK will localize its products' user interfaces for France by
incorporating translated text and adjusting the user interfaces to accommodate
the translation under the direction of TAK.
Exhibit A-17
<PAGE> 40
12.2.1.2 WINK shall provide an electronic version of all end user documentation,
in English. WINK will define, with TAK's support, the format of this
documentation no later than Milestone MT3.
Exhibit A-18
<PAGE> 41
EXHIBIT B
NON RECURRING ENGINEERING FEE SCHEDULE
The integration fee payment shall be made in five installments:
- - - A first installment of 20% of the total estimated maximum NRE fees shall be
due and payable upon the delivery by WINK to TAK of WINK's system documentation
for current products as they exist today.
- - - An installment of 20% of the total estimated maximum NRE fees due and payable
upon Wink delivering to TAK a master diskette or other digital media ("the
Master Media") containing the Wink Engine and associated documentation for use
by TAK and which has successfully completed the acceptance criteria at the end
of MT8 milestone (Exhibit A).
- - - An installment of 20% of the total estimated maximum NRE fees due and payable
upon Wink delivering to TAK a master diskette or other digital media ("the
Master Media") containing the Wink Studio and associated documentation for use
by TAK and which has successfully completed the acceptance criteria at the end
of ST4 milestone (Exhibit A).
- - - An installment of 20% of the total estimated maximum NRE fees due and payable
upon Wink delivering to TAK a master diskette or other digital media ("the
Master Media") containing the Wink Broadcast Server and associated documentation
for use by TAK and which has successfully completed the acceptance criteria at
the end of BT5 milestone (Exhibit A).
- - - A final installment of 20% of the total estimated maximum NRE fees due and
payable by TAK to Wink upon acceptance by TAK of the System Integration as
defined in Exhibit A.
Exhibit B-1
<PAGE> 42
PROJECT COSTS
WINK ENGINE SOFTWARE DEVELOPMENT
DELIVERABLE: Refer to Paragraph E-1 of Letter of Intent
<TABLE>
<CAPTION>
ENGINE WORK ITEMS TEAM # WEEKS TOTAL
- - ----------------- ---- ------- -----
<S> <C> <C> <C>
Tools Preparation, Troubleshooting Development 2
Learn New Operating System Development 2
Detailed Plan Preparation Development 2
Engine Port Coding Development 24
Engine/WBS Driver Coding Development 3
Engine/Test Online Server Driver Coding Development 3
Test Plan Testing 1
Test Cases Testing 2
Unit Testing Testing 4
Integration Testing Testing 5
-- WINK Engine
-- WINK Broadcast Server (WBS)
-- WINK Test Online Server
TOTAL: [ * ]
(arrow) [ * ]
</TABLE>
WINK SERVER SOFTWARE DEVELOPMENT
DELIVERABLE: Refer to Paragraph E-5 of the Letter of Intent
<TABLE>
<CAPTION>
SERVER WORK ITEMS TEAM # WEEKS TOTAL
- - ----------------- ---- ------- -----
<S> <C> <C> <C>
Modify WBS/Create new DIU interface Development 6
Test Plan Testing 1
Test Cases Testing 2
WBS Unit Testing 4
Data Inserter Unit Testing 2
System Integration (see Engine Testing) Testing 0
TOTAL: [ * ]
(arrow) [ * ]
</TABLE>
Exhibit B-2
<PAGE> 43
Project Costs
(continued)
WINK STUDIO SOFTWARE DEVELOPMENT
DELIVERABLE: Refer to Paragraph E-2 of the Letter of Intent
<TABLE>
<CAPTION>
STUDIO WORK ITEMS TEAM # WEEKS TOTAL
- - ----------------- ---- ------- -----
<S> <C> <C> <C>
New Simulator Development 2
New Hints/Scripts Development 2
256k Color Capability Development 3
Test Plan Testing 1
Test Cases Testing 1
Studio Testing 2
System Integration (See Engine Testing) Testing 0
TOTAL: [ * ]
(arrow) [ * ]
GRAND TOTAL
PROJECT COST: [ * ]
</TABLE>
ITEMS NOT COVERED
Travel -- Travel expenses to France to be paid by TAK. Advance written
approval required.
Equipment -- Hardware to be provided by TAK for WINK and TAK development labs
Tools -- pSOS and development tools licenses to be paid for by TAK
Exhibit B-3
<PAGE> 44
EXHIBIT C
DOCUMENTATION AND ACCEPTANCE
(Included in Exhibit A)
Exhibit C
<PAGE> 1
EXHIBIT 10.25
WINK ONLINE SERVER FOR INTERTEXT
LICENSE AGREEMENT
THIS AGREEMENT (the "Agreement") is executed as of this 30th day of September
1997 ("Execution Date") to memorialize the parties relationship and its terms
are intended to be effective as of October 31, 1994, (the "Effective Date"),
between Wink communications, Inc., a California corporation with offices at 1001
Marina Village Parkway, Alameda, CA 94501 ("Wink") and Toshiba Corporation, with
offices at 1-1, Shibaura 1-Chome, Minato-ku, Tokyo 105-01, Japan ("Toshiba").
BACKGROUND
A. Wink is a software developer and has developed its interactive
television system of technology and related products, services, processes and
materials (the "Wink ITV System"), which includes a software protocol for
delivering interactive applications synchronized with or independent of
television programs and advertisements. Also included without limitation in the
Wink ITV System are an authoring tool, server software and the Wink Engine TM
that decodes the protocol and displays the interactive applications overlaid on
a television screen.
B. Wink and Toshiba desire that Wink develop and grant to Toshiba the right
to use and embed certain Wink products in Toshiba products identified by the
parties from time to time. Wink and Toshiba are therefore executing a series of
agreements to accomplish this desired goal:
(i) this Agreement,
(ii) Wink Engine License Agreement, and
(iii) Wink Application Server License Agreement
(together, the "Wink/Toshiba Agreements").
C. The Wink Online Server software is among the Wink Products that Toshiba
desires that Wink modify and grant to Toshiba the right to use and distribute in
Toshiba's products, as Toshiba wishes to include it in Toshiba's online server
product.
1 DEFINITIONS
1.1 "WOS/IT" shall mean the Wink online server software in machine
executable format, as modified to meet the Specifications.
1.2 "Licensed WOS Technology" shall mean the WOS/IT version 1.0 for
InterText and any related documentation, know-how and technical
information which Wink may provide to Toshiba under this Agreement, and
any Updates that may be provided by Wink to Toshiba from time to time.
<PAGE> 2
1.3 "Toshiba Online Server Product" shall mean a Toshiba online server
hardware and software product which has the functionality described on
Exhibit B.
-2-
<PAGE> 3
1.4 "Combined Online Server Product" shall mean a Toshiba Online Server
Product which incorporates the Licensed WOS Technology as permitted
under this Agreement.
1.5 "Deliverables" shall mean each deliverable identified in the Development
Plan.
1.6 "Development Plan" shall mean the plan for completion of the development
activities including the Specifications, each party's respective
development obligations, milestones, a schedule, Deliverables, and other
relevant items all as mutually agreed upon and as set forth in Exhibit A
attached hereto for the delivery of the Licensed WOS Technology and, if
specified by the Parties in a mutually agreed amendment to Exhibit B, to
Updates.
1.7 "Specifications" shall mean the technical and other specifications for
the Licensed WOS Technology as set forth in the Development Plan.
1.8 "Updates" shall mean updates containing error corrections or minor
enhancements to the Licensed WOS Technology created by or for Wink after
the Effective Date and designated by a change in version number to the
right of the decimal point. Updates do not include major enhancements to
the Licensed WOS Technology designated by changes in the version number
to the left of the decimal point. Because the functionality of the
Licensed WOS Technology can be modified by either changing the WOS
itself or by creating or revising an external application that
communicates with and controls the WOS through a defined API (such an
external applications to be known as a "Server Module"), either minor or
major enhancements may be provided in the form of a revision to WOS code
or in the form of a new or revised Server Module.
1.9 "Intellectual Property Rights" shall mean all current and future
worldwide patents and other patent rights, copyrights, mask work rights,
trade secrets, know-how, technical information, and all other
intellectual property rights, including without limitation all
applications and registrations with respect thereto.
2 DEVELOPMENT
2.1 Development Efforts. Each party will use reasonable commercial efforts
to perform its development activities in accordance with the Development
Plan. In connection therewith, each party shall (i) cooperate with the
other party to produce the Specifications, and (ii) cooperate in
providing the other party with additional materials and information, as
mutually agreed. Toshiba shall provide the equipment and other materials
identified on Exhibit C "Equipment") for use by Wink to execute the
Development Plan, to create Updates and new versions and to perform
Wink's support obligations. Toshiba shall remain the owner of such
Equipment. Wink may, upon written approval by Toshiba in each instance,
which approval shall not be unreasonably withheld, alter the
Specifications commensurate with good faith efforts to finalize and
refine the Deliverables in accordance with Toshiba's needs and
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objectives for the Licensed WOS Technology. The parties may agree on
additional development activities by amending Exhibit A. All development
shall be at each party's sole expense, except as set forth in Section 4
(entitled "Royalties") or Section 10 (entitled "Training, Support and
Maintenance") or Exhibit H (entitled "Support") below. Except as
provided in this Section 2, Toshiba shall be solely responsible for
development of the Toshiba Online Server Product and the Combined Online
Server Product.
2.2 Delivery and Acceptance. In the event either party is late in the
performance of its obligations with respect to the Development Plan, the
other party's obligations as to those items shall be delayed by a period
necessary as a result of the delay. The parties shall mutually agree on
testing criteria and evaluation procedures for the Deliverables which
shall be set forth in the Development Plan. Upon delivery to Toshiba of
each Deliverable, Toshiba shall have thirty (30) days to test such
Deliverable, unless a longer period is specifically agreed to by the
parties in writing, in accordance with the mutually agreed criteria and
procedures, for conformance to the applicable Specifications and to
accept such Deliverable or deliver to Wink a written Statement of
Defects to be corrected. Failure to provide a Statement of Defects shall
be deemed acceptance. If Toshiba provides a written Statement of
Defects, Wink shall use reasonable commercial efforts to correct such
defects as soon as practicable and resubmit the Deliverable to Toshiba.
These procedures shall be repeated until Toshiba accepts the Deliverable
or the parties mutually agree to terminate this Schedule.
2.3 Transfer. Upon Toshiba's acceptance of the final Deliverable ("Final
Acceptance"), Wink shall deliver to Toshiba a master diskette or other
digital storage media containing the Licensed WOS Technology for use by
Toshiba in accordance with the terms of this Agreement.
2.4 Other Projects. Toshiba acknowledges that Wink is in the business of
customizing its software products for other third parties and nothing in
this Agreement restricts Wink's rights to provide the Licensed WOS
Technology or other versions of the WOS/IT or other components of the
Licensed WOS Technology to any other party.
2.5 Further Development. Any additional development or testing of the
Licensed WOS Technology after acceptance under Section 2.2, including
the development of enhancements with particular functionality, or new
versions, will be subject to mutual agreement. If the parties agree upon
terms and conditions for such development the parties will attach an
addendum to this Agreement setting forth all such terms and conditions
or will amend this Agreement as necessary to account for such additional
development.
3 LICENSE
3.1 Grant. Subject to the terms and conditions of this Agreement, Wink
hereby grants to Toshiba a non-exclusive, non-transferable, right and
license under Wink's Intellectual property Rights in
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and to the Licensed WOS Technology, to (a) reproduce and have reproduced
the Licensed WOS Technology solely for incorporation into a Toshiba
Online Server Product, (b) to use internally the Licensed WOS Technology
for the purposes of 3.1 (a), and (c) to distribute the Combined Online
Server Products only in Japan and any other countries which both parties
may agree to in a mutually signed writing. Toshiba shall have no right
to distribute the Licensed WOS Technology on a standalone basis except
that Toshiba may distribute Updates provided by Wink to existing
customers of Combined Online Server Products for incorporation into such
Combined Online Server Products provided that such distribution shall be
subject to procedures reasonably acceptable to Wink to monitor such
distribution, including encryption procedures where distributed
electronically. The parties shall mutually agree on such procedures
prior to any such distribution and Toshiba shall ensure that its
subdistributors comply with all such procedures. Toshiba shall have no
right to sublicense the foregoing rights except to the extent a
sublicense may be deemed to have been granted in connection with the
exercise by Toshiba of its rights to engage submanufacturers and
subdistributors as described herein. Except as expressly provided in
this Agreement, Wink reserves all rights and ownership to the Licensed
WOS Technology.
3.1.1 Toshiba Subsidiaries. The grant in Section 3.1 (entitled
"Grant") shall also apply to any direct or indirect subsidiary
of Toshiba that is majority-owned and controlled by Toshiba and
only for so long as it remains majority owned and controlled by
Toshiba and that is listed in Exhibit D (entitled "Toshiba
Subsidiaries") provided that Toshiba, prior to the exercise of
any such rights by a subsidiary, obtains in writing such
subsidiary's agreement to be bound by all the applicable
restrictions and obligations under this Agreement. Upon request
of Wink, Toshiba promptly shall provide Wink a copy of each such
written agreement. Toshiba hereby guarantees the performance of
such obligations and restrictions by each subsidiary exercising
any rights under Section 3.1 as primary obligor and not merely
as surety. Toshiba shall provide Wink with the name and contact
information for an appropriate manager at each subsidiary in
Exhibit D. Failure to list a subsidiary in Exhibit D shall have
no effect on the obligations of Toshiba as set forth in this
Section 3.1.1.
3.1.2 Translations. Wink grants Toshiba the right to localize into the
Japanese language the user documentation provided by Wink for
WOS/IT ("Wink Manuals") and text resources in WOS/IT ("Wink Text
Resources", which together with Wink Manuals shall comprise
"Wink Documentation"). Wink grants Toshiba the non-exclusive,
non-transferable right to use, copy and distribute the Wink
Manuals, the translated Wink Manuals ("Translated Wink
Manuals"), and the translated Wink Text Resources in Japan. The
Translated Wink Manuals shall be a "derivative" work of the Wink
Manuals, and Translated Wink Manuals contain content which is
copyrighted material of Wink. Therefore, Toshiba's rights in the
Translated Wink Manuals are subordinate to Wink's rights in the
Wink Manuals, and the Translated Wink Manuals may only be used,
copied, or distributed in accordance with specific written
permission by Wink. The translated Wink Text Resources shall be
owned by Wink and are copyrighted property of Wink, and Toshiba
hereby assigns to Wink all rights Toshiba might otherwise have
in the translated Wink
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Text Resources. Before distributing any translated Wink
Documentation or changes to translated Wink Documentation,
Toshiba shall submit copies (in "soft copy" form if available)
to Wink for review and written approval, such approval not to be
unreasonably denied or delayed. Wink also grants to Toshiba the
right to use and copy the Wink Manuals and other
non-confidential and copyrighted materials provided by Wink to
create its own user-oriented documentation in the Japanese
language ("Toshiba Manuals"). Toshiba shall own the Toshiba
Manuals as a derivative of Wink copyrighted material. Toshiba
hereby grants to Wink an irrevocable, royalty-free non-exclusive
right to (i) use, copy and distribute the Translated Wink
Manuals and Toshiba manuals worldwide and (ii) translate for
use, copying, and distribution worldwide. Toshiba may distribute
Toshiba Manuals in lieu of Wink Manuals or Translated Wink
Manuals in Japan upon specific written approval by Wink, such
approval not to be unreasonably withheld or delayed. The
Translated Wink Manuals and Toshiba Manuals shall be marked as
follows: "Copyright (c) Toshiba Corporation, [year]. Based on
Copyrighted material of Wink Communications, Inc.."
3.2 Have Reproduced. Toshiba shall have the right to provide the Licensed
WOS Technology to its third party manufacturers of Combined Online
Server Products (each a "Submanufacturer"), provided that each
Submanufacturer shall agree in a signed writing to be bound by the
applicable instructions on Toshiba set forth in this Agreement with
respect to the Licensed WOS Technology, which include but is not limited
to the agreement to use and copy the Licensed WOS Technology solely to
create Combined Online Server Products and only for Toshiba and to keep
the Licensed WOS Technology confidential according to the applicable
terms of this Agreement. Toshiba shall provide the name of such
Submanufacturer to Wink promptly upon contracting with such
Submanufacturer regarding services concerning the Licensed Engine
Product. Upon request of Wink, Toshiba promptly shall provide to Wink a
copy of such signed writing with each Submanufacturer, and Toshiba shall
ensure that its Submanufacturer abides by such restrictions. Toshiba
agrees to indemnify, defend and hold Wink harmless from and against any
loss, cost, liability or expense (including Wink's reasonable attorneys'
fees) arising out of or related to a breach of the foregoing provisions
by Submanufacturers. Toshiba shall promptly notify Wink if Toshiba knows
or believes that a Submanufacturer has breached the provisions of this
Section 3.2.
3.35 Subdistributors. Toshiba may exercise its distribution rights hereunder
through the use of subdistributors; provided, that each subdistributor
agrees in writing, prior to obtaining the Combined Online Server Product
from Toshiba, to be bound by all applicable restrictions on Toshiba set
forth in this Agreement with respect to the Licensed WOS Technology.
Toshiba shall provide the name of such subdistributor to Wink promptly
upon contracting with such subdistributor regarding services concerning
the Licensed Engine Product. Upon request of Wink, Toshiba promptly
shall provide to Wink a copy of such signed writing with each
subdistributor, and Toshiba shall ensure that each subdistributor abides
by such restrictions. Toshiba agrees to indemnify, defend and hold Wink
harmless from and against any loss, cost, liability or expense
(including Wink's reasonable attorneys' fees) arising out of or related
to a
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breach of the foregoing provisions by subdistributors. Toshiba shall
promptly notify Wink if Toshiba knows or believes that a subdistributor
has breached the provisions of this section.
3.4 Obligation. Toshiba shall include the Licensed WOS Technology in every
Toshiba server product with the functionality of maintaining a two-way
communications session with an InterText client device (television,
settop box, VCR, etc.) that contains a Wink Engine.
4 ROYALTIES
4.1 Per-Unit Royalty. In consideration for the rights and licenses granted
to it under Section 3 above, for each copy of the Licensed WOS
Technology distributed by Toshiba, Toshiba shall pay Wink the royalty
set forth in Exhibit E. In addition, Toshiba shall pay Wink the
royalties set forth in Exhibit E for distribution of manuals. All such
royalties shall accrue upon shipment or other transfer by Toshiba.
4.2 Distribution of Updates. No royalty will be payable for Toshiba's
distribution of Updates alone.
4.3 Promotional Units. Toshiba may distribute a reasonable number of
Combined Online Server Products as promotional units, without incurring
a royalty payable to Wink under the provisions of Section 4.1 provided
that such units are distributed by Toshiba and its subdistributor, if
any, free of charge. Toshiba shall pay Wink the royalty pursuant to
Section 4.1 above whenever Toshiba or its subdistributor imposes any
charge on or related to a Combined Online Server Product.
4.4 Development & Testing Units. Toshiba may distribute internally
(i.e., within Toshiba Corporation) a reasonable number of Combined
Online Server Products, not to exceed three (3) total, as development
units ("Development Units"), without incurring a royalty to Wink under
the provisions of Section 4.1 provided that no part of Toshiba or any
subdistributor imposes any charge or recognizes any revenue from the
distribution of such units of Combined Online Server Products, and
provided that the Development Units are not used in any commercial
activity, including but not limited to the provision of services to any
customers of Toshiba (for example, but not limited to, MediaServe).
4.5 Payments. Toshiba shall make royalty payments to Wink due under this
Agreement within forty-five (45) days after the end of each calendar
quarter during the term of this Agreement, with the first payment to
occur within sixty (60) days after the Execution Date. Such payments
shall be accompanied by a written report in a form reasonably acceptable
to Wink which details with respect to the applicable period: (i) the
number of Combined Online Server Products distributed by Toshiba under
this Agreement including the identity of each customer unless such
customer has specifically required Toshiba in writing to keep their name
confidential, in which case such name shall be revealed to Wink or Wink
Japan as soon as this requirement expires or terminates, (ii) the
royalty due Wink with respect to such Combined Online Server Products
accrued during such period showing the calculation of such amounts, and
(iii) if applicable, the
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number of Combined Online Server Products distributed by Toshiba or its
subdistributors for which no royalty is due. Any amount not paid when
due under this Section will be subject to a late charge of 1.5% per
month, or the maximum permitted by law, whichever is greater.
4.6 Currency; Taxes. All payments hereunder shall be in United States
dollars. All payments by Toshiba shall be made free and clear of, and
without reduction for, any and all taxes, including, without limitation,
sales, use, value added, withholding, or similar taxes, other than taxes
which are imposed by the United States or any political subdivision
thereof based on the net income of Wink. Notwithstanding the foregoing,
Wink agrees that, if any income taxes are imposed by the Japanese
government on the payment to be made under this Agreement, Toshiba shall
withhold such amount of taxes ("Japan Royalty Income Withholding Tax"),
up to a maximum of 10% of such payments and pay the withheld amount to
the Japanese tax authorities to the extent that Toshiba is legally
required to do so. Excluding the Japan Royalty Income Withholding Tax,
any such taxes which are otherwise imposed on payments to Wink shall be
the sole responsibility of Toshiba. Toshiba shall provide Wink with
official receipts issued by the appropriate taxing authority or such
other evidence as is reasonably requested by Wink to establish that such
taxes have been paid.
4.7 Books and Records; Audit. Toshiba agrees to maintain, and to require
that each Submanufacturer and subdistributor who reproduces or
distributes the Licensed WOS Technology maintain and provide to Toshiba,
until three (3) years after the termination or expiration of this
Agreement, complete and current books, records and accounts regarding
all copying and distribution activities pursuant to this Agreement and
to document compliance with the licenses granted. Toshiba agrees to
allow an independent certified public accountant hired by Wink to audit
and examine such books, records and accounts no more than once each
calendar year, during Toshiba's normal business hours, to verify the
accuracy of the reports and payments made to Wink under this Agreement
and this Section and compliance with the restrictions of this Agreement.
In the event such audit determines that Toshiba has not paid Wink all of
the royalties due Wink, Toshiba agrees to pay, in addition to any
damages to which Wink might be entitled, the amount of such shortfall
plus interest at a rate of one and one-half percent (1.5%) per month or
the highest rate allowed by law, whichever is lower. The cost of such
audit shall be borne by Wink, provided that if any such audit reveals an
underpayment to Wink of at least five percent (5%), Toshiba shall
reimburse to Wink its costs of such audit.
5 PROPERTY RIGHTS
5.1 Toshiba Property Rights. Toshiba owns all right, title and interest in
those items relating to the Toshiba Online Server Product (the "Toshiba
Property"), as set forth in Exhibit F. All modifications and derivatives
of Toshiba Property shall belong to Toshiba. Toshiba shall own all
files, code, or technology not listed in Exhibit F as being owned by
Toshiba that is related to the Toshiba Property, provided that such
files, code, or technology are not listed in Exhibit G.
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5.2 Wink Property Rights. Except for the Toshiba Property, Wink owns and
shall own all right, title and interest in and to (a) Licensed WOS
Technology and all modifications and derivatives thereof, (b) all
Intellectual Property Rights relating to the design, manufacture,
marketing, operation or service of the Licensed WOS Technology and the
Wink ITV System, (c) all files, code, or technology not listed in
Exhibit G as being owned by Wink that is related to the Licensed WOS
Technology (collectively, the "Wink Property"), provided that such
files, code, or technology are not listed in Exhibit F. Notwithstanding
anything to the contrary in this Agreement, those items listed as owned
by Wink, as set forth in Exhibit G attached hereto, are included in Wink
Property.
5.3 Assignment. Toshiba hereby assigns to Wink all right, title and
interest, including all Intellectual Property Rights, in and to all Wink
Property developed in whole or part by Toshiba. Wink hereby assigns to
Toshiba all right, title and interest, including all Intellectual
Property Rights, in and to all Toshiba Property developed in whole or
part by Wink. Each party shall sign any further documentation requested
by the other party to effect such assignment of rights. In the event a
party fails to take such action within a reasonable period, such party
hereby appoints the other party its attorney-in-fact for the purpose of
executing such documents, which appointment shall be deemed a power
coupled with an interest and shall be irrevocable.
5.4 Correction of Errors in Property Lists. If Toshiba has omitted any item
from Exhibit F (entitled "Toshiba Property") or if Wink has omitted any
item from Exhibit G (entitled "Wink Property"), the omitting party shall
notify the other party of its claim to ownership of the omitted item.
The parties shall agree upon ownership of such omitted item within
thirty (30) days.
5.5 Rights. The parties acknowledge that each party has at times been
provided and may in the future be provided with access to source code
developed by the other for the purpose of speeding the development or
support activities related to this Agreement. Irrespective of such
access and development, all Intellectual Property Rights shall be as set
forth in this Agreement.
5.6 Notice. Toshiba shall not modify, alter or obscure any proprietary
notices contained on or within any Licensed WOS Technology, and all
copies of the Licensed WOS Technology reproduced or distributed by or
for Toshiba shall contain copyright and other proprietary notices in the
same manner in which Wink incorporates such notices in the Licensed WOS
Technology and the documentation.
5.7 Limitations. Toshiba shall not modify, prepare derivative works of,
reverse engineer, disassemble, decompile, or otherwise attempt to obtain
access to the source code of any Licensed WOS Technology or any Wink
product. To the extent that access to source code is provided by Wink to
Toshiba under Section 5.5, such access shall not be a violation of this
Section 5.7.
6 PRODUCT QUALITY WARRANTY, WARRANTY
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6.1 Product Quality Warranty. Wink warrants to Toshiba that for a period of
three (3) months after Final Acceptance the Licensed WOS Technology and
Toshiba-Requested Updates and after delivery of any other Updates, such
Licensed WOS Technology or Updates of any kind will operate under
ordinary use in substantial conformance with the Specifications. Wink
does not warrant that the Licensed WOS Technology will be error free or
meet all of Toshiba's requirements. (This Section 6.1 lists separately
Licensed WOS Technology and the different kinds of Updates for
clarification for purposes only. Unless otherwise noted, in other
sections of this Agreement, the definition of Licensed WOS Technology
includes Updates, pursuant to Section 1.2.)
6.2 Items not Covered by Warranty. Wink's warranty shall not extend to
problems in the Licensed WOS Technology that result from: (i) Toshiba's
failure to implement any Updates provided by Wink; (ii) changes to the
operating system or environment or Toshiba Online Server Product or
other non-Wink products which adversely affect the Licensed WOS
Technology; (iii) any alterations of or additions to the Licensed WOS
Technology or other Wink products performed by parties other than Wink;
(iv) use of the Licensed WOS Technology in a manner inconsistent with
the Specifications or in a manner for which it was not intended; (v)
combination of the Licensed WOS Technology with other products not
supplied by Wink (unless such products are specifically identified in
the Specifications as compatible with the Licensed WOS Technology and
are tested and confirmed in writing as compatible by Wink in the
configuration and conditions deployed by Toshiba) which problems do not
affect the Licensed WOS Technology standing alone; or (vi) operation of
the Licensed WOS Technology outside of environmental specifications;
unless, with respect to items (ii), (iii), (v) and (vi), Wink was given
the opportunity and time to test such products or changes for
compatibility, and Wink provided Toshiba written confirmation of
compatibility.
6.3 Exclusive Remedy. Wink's sole obligation and Toshiba's exclusive remedy
under the above warranty shall be for Wink to use commercially
reasonable efforts to bring the Licensed WOS Technology into conformity
with Wink's warranty set forth in Section 6.1 (entitled "Product Quality
Warranty") above, at no cost to Toshiba (other than as provided for in
Section 10.1-10.2 entitled "Updates" and "Support", respectively);
provided, that Wink shall have no obligation to correct all errors.
6.4 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY, WINK MAKES
AND TOSHIBA RECEIVES NO WARRANTIES WITH RESPECT TO THE LICENSED WOS
TECHNOLOGY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND WINK
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY,
NONINFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.
7 LIMITATION OF LIABILITY.
WINK'S LIABILITY ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED THE
AMOUNTS RECEIVED FROM TOSHIBA HEREUNDER. IN NO EVENT SHALL EITHER
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PARTY BE LIABLE FOR COST OF PROCUREMENT OF SUBSTITUTE GOODS, SERVICES OR
TECHNOLOGY NOR SHALL EITHER PARTY BE LIABLE FOR LOST PROFITS OR ANY
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES HOWEVER CAUSED
AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT THAT, WITH RESPECT TO CLAIMS BY
WINK AGAINST TOSHIBA FOR BREACH OF THE SCOPE OF LICENSES GRANTED IN THIS
AGREEMENT, WINK SHALL BE ENTITLE TO RECOVER LOST PROFITS. THE FOREGOING
LIMITATIONS SHALL APPLY EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.
8 INDEMNITY
8.1 Obligation. Wink shall defend, or at its option, settle any claims
brought against Toshiba and shall hold Toshiba harmless from any
judgments, damages, costs or expenses incurred by Toshiba, including
reasonable attorney's fees, resulting from any claim that the Licensed
WOS Technology infringes the copyright, trade secret or trademark rights
of a third party or the U.S. patent rights or the corresponding Japanese
patent rights that are identical in scope, where such U.S. or Japanese
patents have been granted prior to the first shipment of a Combined
Online Server Product by Toshiba, provided that Toshiba notifies Wink of
such claim promptly in writing of and gives Wink the exclusive authority
to defend or settle such claim and provided that such patents owned by,
controlled by, or licensed to only parties other than Toshiba or its
subsidiaries. Toshiba shall provide proper and full information and
assistance to settle or defend any such claim. If the Licensed WOS
Technology becomes, or if Wink reasonably believes it may become, the
subject of any claim for infringement or is adjudicatively determined to
infringe then Wink may, at its option and expense, either (i) procure
for Toshiba the right to sell or use, as appropriate, the Licensed WOS
Technology or (ii) replace or modify the Licensed WOS Technology with
other suitable and reasonably equivalent software so that the Licensed
WOS Technology becomes noninfringing or (iii) if (i) and (ii) are not
commercially practicable, Wink may terminate this Agreement.
8.2 Limitations. The foregoing obligations shall not apply to (i) the
Licensed WOS Technology used in conjunction with other products if the
Licensed WOS Technology used alone would not infringe, (ii)
modifications to the Licensed WOS Technology made by any party other
than Wink or made according to another party's specifications if the
Licensed WOS Technology would not infringe but for such modifications,
(iii) use of any version of the Licensed WOS Technology other than the
then-current version if the claim could have been avoided by use of such
version or (iv) any trademark claims regarding any marking or branding
not applied or approved by Wink.
8.3 Entire Liability and Obligation. THE FOREGOING PROVISIONS OF THIS
SECTION 8 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF WINK TO TOSHIBA
WITH
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RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS
BY THE LICENSED WOS TECHNOLOGY LICENSED TO TOSHIBA BY WINK PURSUANT TO
THIS AGREEMENT.
8.4 Toshiba Indemnification. Except with respect to those matters for which
Wink has agreed to indemnify Toshiba under Sections 8.1-8.3 above,
Toshiba agrees to indemnify and hold Wink harmless from and against any
and all claims, actions, liabilities, and costs, including reasonable
attorney's fees, arising with respect to its use and distribution of the
Licensed WOS Technology.
9 MARKETING
9.1 Wink Markings. From time to time, Wink shall provide Toshiba for its use
and its subdistributors use a list of permitted uses of Wink's
trademarks and logos that Wink may adopt, from time to time and include
in an amendment to Exhibit I (the "Wink Marks"), which shall be amended
by Wink subject to agreement by Toshiba, such agreement not to be
unreasonably withheld.
9.2 No Registration of Wink Marks. Except as expressly set forth in this
Agreement, nothing shall grant to Toshiba or its subdistributors any
right, title or interest in the Wink Marks. At no time during the term
of this Agreement shall Toshiba register, attempt to register or cause
the registration of any of the Wink Marks other than in Wink's name and
at Wink's specific written request, except in the event Toshiba adopts,
uses or acquires a trademark, mark or trade name substantially similar
to a Wink Mark prior to Wink's adoption, use or acquisition of such Wink
Mark. Except to the extent such acts may not be prohibited by applicable
law, at no time during the term of this Agreement shall Toshiba or its
subdistributors challenge or assist others to challenge the Wink Marks
or the registration thereof.
9.3 Press Releases. The parties intend to cooperate and participate in
public relations programs to promote the Licensed WOS Technology and the
relationship between the parties. Appropriate personnel from each party
shall participate in such public relations program. The parties shall
cooperate with respect to and mutually approve (not to be unreasonably
withheld or delayed) all press releases issued by either party with
respect to this Agreement or the parties' relationship. Such approval is
intended to protect the timing of disclosure of the availability of the
Licensed WOS Technology and of the existence of the parties'
relationship, as well as to ensure proper references, accurate
information and correct proprietary notices and information. The
contents of each press release shall be agreed upon between the parties
from time to time.
9.4 Disclosures of Terms and Relationship. Each party agrees not to disclose
the terms of this Agreement to any third party without the other's
written consent in its sole discretion, except to such party's
accountants, attorneys and other professional advisors, or as required
by securities or other applicable laws.
10 TRAINING, SUPPORT AND MAINTENANCE
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10.1 Updates. Wink, in its sole discretion, shall make Updates available to
Toshiba from time to time for use and distribution consistent with this
Agreement. The Toshiba-Requested Updates, as defined in Exhibit H, shall
be accepted by Toshiba in accordance with the acceptance procedure
provided in Section 2.2 (entitled "Delivery and Acceptance"). Wink is
not responsible for the distribution of Updates to Toshiba's
subdistributors, Submanufacturers, or end-users. Unless an end-user
specifically refuses to accept a given Update, Toshiba promptly shall
make Updates available to all subdistributors and end-users. Toshiba
shall implement each Update to new production in its own facilities or
at Submanufacturers' facilities promptly after receipt of such Update
from Wink, but no later than forty-five (45) days after receipt.
10.2 Support. Toshiba shall be responsible for providing all support to its
subdistributors, subsidiaries, and end-user customers of the Combined
Online Server Products. Toshiba shall also be responsible for all
testing of the Combined Online Server Products containing accepted
Licensed WOS Technology with new versions of hardware and software
provided by parties other than Wink. Wink shall make available to
Toshiba support services as set forth in Exhibit H (entitled "Support"),
10.3 Equipment. The parties intend that Wink have an environment in which to
recreate field situations, to allow Wink to replicate problems which may
occur in the field and to test solutions for such problems. In order to
facilitate Wink's performance of the support activities contemplated
herein, Wink shall retain the Equipment provided pursuant to Section 2.1
which is reasonably necessary to functionally replicate a Combined
Online Server Product. Upon expiration or termination of this Agreement,
Wink shall return all of the Equipment to Toshiba. Wink shall return all
such Equipment to Toshiba promptly upon request by Toshiba; provided
that Wink's development and support obligations under this Agreement
shall terminate to the extent Equipment returned to Toshiba is required
by Wink to fulfill its obligations.
10.4 Training. Wink shall provide training for Toshiba employees as mutually
agreed from time to time at current Wink training rates at the time
training is provided.
10.5 Travel Expenses. In the event that, in the performance of its services
under this Section 10 (entitled "Training, Support and Maintenance") it
is mutually agreed by the parties that employees or contractors of Wink
will travel from Wink's facility, Toshiba shall pay and/or promptly
reimburse Wink for, all reasonable travel, room and board, car rental
and other similar expenses associated with such travel. Notwithstanding
the above, if both parties agree that travel by Wink employees or
contractors is necessary to fix bugs that are Wink's fault, the expenses
for such travel shall be borne by Wink, unless otherwise agreed.
10.6 Source Code Escrow. At Toshiba's written request, Wink agrees to enter
into a Source Code Escrow Agreement in a form mutually agreeable
governing the release of the source code of the Licensed WOS Technology.
Expenses associated with such agreement and escrow shall be the sole
responsibility of Toshiba.
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<PAGE> 14
11 TERM AND TERMINATION
11.1 Term. This Agreement shall commence on the Effective Date and shall
continue in full force and effect for a term of five (5) years from the
Execution Date. The term of this Agreement may be extended by written
mutual agreement of the parties.
11.2 Termination for Cause. If either party materially breaches its
obligations under Section 11 (entitled "Confidentiality) of this
Agreement, the non-breaching party may immediately terminate this
Agreement and the remaining other Wink/Toshiba Agreements upon written
notice to the breaching party. If Toshiba breaches the scope of any
license grant under any of the Wink/Toshiba Agreements, Wink may give
written notice to Toshiba that if such breach is not cured within thirty
(30) days, this Agreement and the other Wink/Toshiba Agreements shall
terminate immediately at the end of such thirty (30) day period. If
either party breaches its material obligations under this Agreement and
fails to cure such breach within thirty (30) days from written notice to
cure, the non-breaching party may terminate this Agreement.
11.3 Termination For Insolvency. This Agreement shall terminate upon written
notice given by a party, at such party's option and without further
notice, upon the earlier of: (i) the institution by or against the other
party of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of the other party's debts, (ii) the
other party's making an assignment for the benefit of its creditors,
(iii) the other party's declaration in writing of its inability to pay
debts as they become due, or (iv) the other party's dissolution or
ceasing to conduct business as a going concern.
11.4 Effect of Termination. Upon the expiration or termination of this
Agreement, the following provisions shall take effect:
11.4.1 Any and all end user licenses granted by Toshiba or its
subdistributors shall continue in effect according to their
terms and conditions;
11.4.2 Within thirty (30) days after such expiration or termination,
both parties shall return and certify to the other party the
return of all Confidential Information of the other party in its
or its Submanufacturers' possession at the time of expiration or
termination, or destroy all such Confidential Information and
certify such destruction to the other party.
11.4.3 Toshiba shall pay all outstanding amounts owed to Wink within
forty-five (45) days of the end of the quarter during which such
expiration or termination occurs. In the event Wink is
performing development tasks for Toshiba at the time of any
termination, Toshiba shall also pay to Wink the next payment due
under the development schedule for such work; and
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<PAGE> 15
11.4.4 The provisions of Sections 1 ("Definitions"), 2.4 ("Other
Projects"), the grant to Wink in Section 3.1.2 ("Translations"),
4.5 ("Currency; Taxes"), 4.6 ("Books and Records; Audit"), 5
("Property Rights"), 6.4 ("Disclaimer"), 7 ("Limitation of
Liability"), 8 ("Indemnity"), 11 ("Term and Termination"), 12
("Confidentiality"), 13 ("General"), and all payment obligations
accrued at the time of expiration or termination shall survive
the expiration or termination of this Agreement for any reason.
11.5 Destruction of Inventory. Within thirty (30) days after the effective
date of termination of this Agreement, Toshiba shall destroy, and shall
certify to Wink the destruction of, all copies of the Licensed WOS
Technology in its or its subdistributors' possession. Notwithstanding
the foregoing sentence, during such thirty (30) day period, Toshiba and
its subdistributors shall have a right to sell off existing inventory of
Combined Online Server Products.
11.6 Termination of Wink Toshiba Agreements. Except as expressly provided in
Section 11.2 (entitled "Termination for Cause") above, termination of
one of the other Wink/Toshiba Agreements shall not result in termination
of or in any way affect this Agreement nor shall the termination of this
Agreement result in termination of or in any way affect the other
Wink/Toshiba Agreements.
12 CONFIDENTIALITY
12.1 Obligation of Confidentiality. The parties acknowledge that by reason of
their relationship to each other hereunder, each may have access to
certain information and materials concerning the other's business,
plans, customers, technology and products that is confidential and of
substantial value to that other party, which value would be impaired if
such information were disclosed to third parties ("Confidential
Information"). Information provided in writing shall be deemed
Confidential Information if it has been clearly identified by the
disclosing party as confidential; for Confidential Information which is
orally disclosed, the disclosing party shall indicate to the receiving
party at the time of disclosure the confidential nature of the
information and designate it as confidential in a written memorandum
sent to the receiving party within thirty (30) days of disclosure,
summarizing the confidential information sufficiently for
identification. Without limiting the foregoing, Confidential Information
shall include the source code of the Licensed WOS Technology. Each party
agrees that it shall not use in any way, for its own account or the
account of any third party, nor disclose to any third party, except as
may be expressly permitted under this Agreement, any such Confidential
Information revealed to it by the other party and shall take every
reasonable precaution to protect the confidentiality of such
information, for a period of seven (7) years after the receipt of such
Confidential Information ("Confidentiality Period"), unless another
Confidentiality Period is provided in written notice by the disclosing
party. The Confidentiality Period for source code shall be perpetual.
Upon request by either party, the other party shall advise whether or
not it considers any particular information or materials to be
confidential, provided that the Licensed WOS Technology (except for
documentation identified by Wink as public) shall at all times be deemed
Confidential
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<PAGE> 16
Information of Wink. Neither party shall develop or have developed any
software programs utilizing any of the other party's Confidential
Information.
12.2 Exceptions. Information shall not be deemed Confidential Information
hereunder if such information:
12.2.1 Is or becomes part of the public domain through no fault or
breach on the part of the receiving party;
12.2.2 Is known to the receiving party prior to the disclosure by the
disclosing party and such knowledge can be shown by written
records;
12.2.3 Is subsequently rightfully obtained by the receiving party from
a third party who has the legal right to disclose it;
12.2.4 Is independently developed by the receiving party without the
use of any Confidential Information or any breach of this
Agreement;
12.2.5 Is approved for public release by the disclosing party; or
12.2.6 Is required to be disclosed by judicial action provided that the
receiving party has first given the disclosing party reasonable
notice of such requirement and fully cooperates with the
disclosing party in seeking confidential treatment for any such
disclosure.
12.3 Injunctive Relief. The parties acknowledge that any breach of the
provisions of this Section 12 may cause irreparable harm and significant
injury to an extent that may be extremely difficult to ascertain.
Accordingly, each party agrees that each will have, in addition to any
other rights or remedies available to it at law or in equity, the right
to seek injunctive relief to enjoin any breach or violation of this
Section 12.
13 GENERAL
13.1 Force Majeure. Nonperformance of either party shall be excused to the
extent that performance is rendered impossible by strike, fire, flood,
earthquake, governmental acts or orders or restrictions, failure of
suppliers, or any other reason where failure to perform is beyond the
reasonable control of and is not caused by the negligence of the
nonperforming party.
13.2 No Waiver. Failure by either party to enforce any provision of this
Agreement will not be deemed a waiver of future enforcement of that or
any other provision.
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<PAGE> 17
13.3 No Oral Modification. No alteration, amendment, waiver, cancellation or
any other change in any term or condition of this Agreement shall be
valid or binding on either party unless mutually agreed in writing.
13.4 Governing Law; Dispute Resolution. This Agreement shall be governed by
and construed under the laws of the State of California, without
reference to conflict of laws principles. Any dispute or claim arising
out of or in relation to this Agreement, or the interpretation, making,
performance, breach or termination thereof, shall be finally settled by
binding arbitration under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce as presently in force ("Rules")
and by three (3) arbitrators appointed in accordance with said Rules.
Judgment on the award rendered may be entered in any court having
jurisdiction thereof. The place of arbitration shall be San Francisco,
California, U.S.A. Any monetary award shall be in U.S. dollars and the
arbitration shall be conducted in the English language. The parties may
apply to any court of competent jurisdiction for temporary or permanent
injunctive relief, without breach of this Section and without any
abridgment of the powers of the arbitrator.
13.5 Import & Export Controls. Toshiba understands that Wink is subject to
regulation by agencies of the U.S. government which prohibit export or
diversion of certain products and technology to certain countries. Any
and all obligations of Wink including without limitation obligations to
provide products, technology, documentation, or technical assistance,
will be subject in all respects to such United States laws and
regulations that will from time to time govern the license and delivery
of technology and products abroad or to foreign nationals by persons
subject to the jurisdiction of the United States. Toshiba warrants that
it will comply in all respects with the export and reexport restrictions
set forth in any export licenses obtained by the Wink or Toshiba (if
necessary). Toshiba warrants that it will not, and will take all actions
which may be reasonably necessary to assure that its end-user do not,
contravene such United States laws or regulations. Wink agrees that no
technical information furnished by Toshiba hereunder or any direct
products thereof is intended to or will be exported to any destination
restricted by export control regulation of the United States and/or
Japan, without prior written authorization from appropriate governmental
authorities.
13.6 No Assignment. Neither this Agreement nor any rights or obligations of
Toshiba or Wink hereunder shall be assigned by either party without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed, except that either party may assign
its rights and obligations hereunder to any entity (i) which controls,
is controlled by or is under common control with such Party, or (ii)
which acquires all or substantially all of the assets or business of
such party to which this Agreement pertains; provided, that in both
cases such entity shall assume in writing or by operation of law such
party's obligations under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns.
13.7 Independent Contractors. The relationship of the parties established by
this Agreement is that of independent contractors, and nothing contained
in this Agreement shall be construed to (i)
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<PAGE> 18
give either party the power to direct and control the day-to-day
activities of the other, (ii) constitute the parties as partners, joint
venturers, co-owners or otherwise as participants in a joint or common
undertaking, or (iii) allow either party to create or assume any
obligation on behalf of the other party for any purpose whatsoever.
13.8 Compliance with Laws. In exercising its rights under this license, each
party shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
13.9 Notices. All notices under this Agreement shall be in writing and sent
by (i) certified air mail, return receipt requested, postage prepaid,
(ii) commercial courier service, or (iii) via facsimile with a
confirming notice sent by one of the methods described in subsections
(i) or (ii) above. If properly addressed to or delivered at the address
for each party set forth above, a notice shall be deemed given upon
delivery or, where delivery cannot be effected due to the actions of the
addressee, upon tender.
13.10 Counterparts. This Agreement may be executed in any number of
counterparts and when so executed and delivered shall have the same
force and effect as though all signatures appeared on one document.
13.11 Severability. The provisions of this Agreement shall be severable, and
if any provision of this Agreement shall be held or declared to be
illegal, invalid, or unenforceable, such illegal, invalid or
unenforceable provision shall be severed from this Agreement and the
remainder of the Agreement shall remain in full force and effect, and
the parties shall negotiate a substitute, legal, valid and enforceable
provision that most nearly reflects the parties' intent in entering into
this Agreement.
13.12 Entire Agreement. This Agreement represents the entire agreement of the
parties with respect to the subject matter hereof and supersedes all
prior or contemporaneous agreements, understandings, proposals and
representations by the parties, including but not limited to the Project
Outline between the parties dated February 24, 1995.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC TOSHIBA CORPORATION
By:/s/ Gary L. Hammer By: /s/ T. Kobayashi
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<PAGE> 19
Name: Gary L. Hammer Name: T. Kobayashi
General Manager
Title: Vice President Title: Legal Affairs Division
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<PAGE> 20
EXHIBIT A
DEVELOPMENT PLAN
DEVELOPMENT PLAN of WOS
1. Specifications
Specifications for the Wink Online Server/IT version 1.0 shall be
attached to this Exhibit A.
The following documents comprise the Specifications ("WOS/J" refers to the
WOS/IT):
* Diagram of WOS/J, Dated 10/10/96.
* WOS/J Shared Memory Format, Dated 2/13/96.
* Server Module Library Functions, Dated 3/28/96.
* Using the WOS/J (from a Third Party Perspective), Dated 6/06/96.
* Application Manager API for WOS/J, Dated 5/13/96.
* Error & Return Codes for WOS/J, Dated 8/20/96.
2. Development Milestones: Deliverables, Deliverer, and Completion Dates
All development milestones by both Wink and Toshiba have been completed.
3. Schedule
Completed as of the Execution Date.
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EXHIBIT B
TOSHIBA ONLINE SERVER PRODUCT
The Toshiba Online Server product is designed to maintain a two-way
communications session with a Wink Engine resident in a client device
(television, settop box, VCR, etc.). To accomplish this task, the Toshiba Online
Server product consists of various software applications (which is capable of
including the Licensed WOS Technology) running on the Sun Solaris operating
system (version 2.4) on one or more Sparc-based computers in conjunction with
the Toshiba Communications Control Processor, modem banks and other hardware and
software.
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EXHIBIT C
TOSHIBA EQUIPMENT
This list covers the Equipment as defined in the Wink Engine License Agreement,
the Wink Online Server for InterText License Agreement and the Wink Application
Server License Agreement.
In addition to the two sample units of each Combined Engine Product listed
pursuant to Section 3.2 of the Wink Engine License Agreement, Toshiba shall
provide the items listed below. For each of the following items, Toshiba shall
provide (unless already provided) the number of units of each item specified
below, including licenses for use by Wink if such licenses are required as well,
and for items noted with a "*", any documentation in Japanese and English. If
documentation is not sufficient for use by engineers, then Toshiba shall provide
reasonable assistance to Wink engineers, including but not limited to providing
Wink reasonable training, installation assistance, responses to questions by
email, and specifications in Japanese and, if available, English.
The parties agree that they will amend this list to include any other items
reasonably necessary for Wink to develop, test, or maintain, on Wink's premises,
the Licensed Engine Product, the Licensed WAS Technology, and the Licensed WOS
Technology, excluding items that Wink should reasonably be expected to obtain on
its own as part of Wink's standard business assets (including standard PCs or
workstations, except to the extent that such PC or workstation is part of an
integrated piece of equipment distributed by Toshiba or a third-party for
development, testing, support, or use of the Combined Engine Products, Combined
Online Server Products, or Combined Broadcast Server Products).
Notwithstanding the above two paragraphs, the parties recognize that given this
contract is being executed after development and testing has concluded, some
items (in one or more units) may have been provided by Toshiba during
development or testing and may have been returned to Toshiba on the expectation
that these items are no longer needed by Wink for maintenance. The list below
excludes such items (or the returned units of items listed below). If such items
(or additional units of items listed below) become reasonably necessary for Wink
to provide maintenance under this Schedule, then the parties agree that such
items shall be added to the list.
The following excludes minor items such as cables, keyboards, mice/mousepads,
EPROMs and OTP ROMs, which may have been provided by Toshiba but are not of
material cost.
Already at Wink (excluding documentation):
PCs and workstations and related equipment:
(2) HP Vectra VL 5/75 PC w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(1) HP Vectra VL2 4/66 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(2) HP Vectra VE 4/66 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
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(1) Toshiba PV3000 Pentium-133 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(1) J-3100 (486) PC w/ Win 3.1J/DOS-J, PCNFS-J
(1) J-3100 (486) PC w/ RTM drivers
(1) Sony 17" PC monitor
(2) Toshiba PC monitors
(5) HP 15" Ergo Ultra VGA monitor
(1) Toshiba 15" color monitor
(1) Sun SPARCstation IPX w/ Sun OS 4.13
(1) Sun Monitor (approx 20")
(1) Smart5 system (Sparc4, 19" grayscale monitor, Solaris 2.4J)
(1) Smart4 system (Sparc4, 19" grayscale monitor, Solaris 2.4J)
(1) Toshiba AS-4085 workstation (equivalent to SPARC 20) w/ Solaris 2.4J
(1) Toshiba 19" monitor for AS-4085
(1) external Sun CD-ROM drive
(1) Omron 14.4k modem
(1) 10baseT hub
RTMs, RTPs and related equipment:
(5) RTM cards
*(1) RTP System -- includes: SND68, SVC-II Digital Serial Converter,
Teletext inserter, and FW2000 w/ 20" Toshiba color monitor, keyboard (Japanese,
Sun type 5).
(1) external Toshiba CD-ROM drive (came with RTP)
(1) external Toshiba QIC tape drive (came with RTP)
Other equipment:
(2) Toshiba VCRs (non-IT enabled)
(1) BS-CS Tuner CSR-110 modified for development work
(3) old Teletext decoders
(3) ASCII telephone line emulators
(5) Koden StepDown (12OV-100V) transformer (small)
(2) Nissyo DN-101 StepDown transformer
(2) Toyoden CD 117-15 StepDown transformer
(1) adapter socket for burning TV CPU
(2) 28" WideBazooka TV w/IT (prototype) and remote control (Note: one TV
is dead)
(3) 32" WideBazooka TV w/IT (prototype) and remote control (Note: one TV
is dead)
(5) development IT settop box (dead) and remote control (Note:
one settop box is dead)
(1) ShibaSoku VG22F1 teletext signal generator
Not yet at Wink:
*(1) complete installation of Toshiba broadcast equipment system,
including (but not limited to) the Licensed WAS Technology
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*(1) complete installation of Toshiba online server system, including
(but not limited to) the Licensed WOS Technology
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EXHIBIT D
TOSHIBA SUBSIDIARIES
Toshiba Information Systems (Japan) Corporation
* Marketing contact:
Mr. Susumu Uchida, Marketing Manager
Open Systems Division
Toshiba Information Systems (Japan) Corporation
System Development Center
2-1 Nissin-cho, Kawasaki-ku, Kawasaki-City 210
Japan
TEL: +81-44-246-8306
FAX: +81-44-246-8133
e-mail: [email protected]
* Technical contact:
Mr. Akihiro Taketoshi, Technical Manager
Open Systems Division
Toshiba Information Systems (Japan) Corporation
System Development Center
2-1 Nissin-cho, Kawasaki-ku, Kawasaki-City 210
Japan
TEL: +81-44-246-8306
FAX: +81-44-246-8133
e-mail: [email protected]
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EXHIBIT E
ROYALTIES
Running Royalties on the Licensed WOS Technology:
For shipments (or installations) by Toshiba, on or before 1 August 1997:
[ * ] per copy of the Licensed WOS Technology.
For shipments (or installations) by Toshiba, after 1 August 1997:[ * ]
of the list price of the Toshiba Online Server software incorporating
the Licensed WOS Technology, but no less than [ * ] or no greater than
[ * ] , per copy of the Licensed WOS Technology.
Running Royalties on the manuals:
* 5% of any fee (if any) charged by Toshiba Wink Manuals, Translated
Winlink Manuals, and Toshiba Manuals regarding WOS/IT, WOS/IT Server
Modules and APIs.
- - --------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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EXHIBIT F
TOSHIBA PROPERTY
The WOS/IT version 1.0 is provided to Toshiba as a set of Main Modules
(executables, shared libraries, header files, configuration & shell script) and
Debug/Test Modules (executables, libraries, and a source code module used to
allow testing of Wink Online Server software without use of the source code in
the GUI portion of the Toshiba Online Server product).
All files of the WOS/IT, including all source code that is compiled into
the WOS/IT modules and other files delivered to Toshiba, are owned by Wink (see
listing in Exhibit G).
Software components of Toshiba Online Server outside of WOS/IT.
[ * ]
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EXHIBIT G
WINK PROPERTY
1. FILES IN WOS/IT
A. MAIN MODULES: INCLUDED IN COMBINED ONLINE SERVER PRODUCTS
[ * ]
B. DEBUG AND TEST MODULES: DEVELOPED BY WINK FOR ITS TESTING/DEVELOPMENT
PURPOSES ONLY.
[ * ]
2. OTHER WINK PROPERTY
1. Test Plans, Test Lists, and Test Cases developed by Wink.
2. Server modules developed by Wink to test and/or demonstrate the capabilities
of the Wink technologies.
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EXHIBIT H
SUPPORT
The following provisions govern the support to be provided by Wink to Toshiba
under this Agreement.
A. General Support.
1. Contact People. Toshiba shall appoint two (2) individuals within its
organization for support under this Agreement ("Contact People"). The Contact
People will serve as primary contacts between it and Wink and to receive
support. All of Toshiba's support inquiries shall be initiated through the
Contact People.. Toshiba shall have the right to re-assign individuals to become
Contact People from time to time, but Contact People shall be adequately trained
by Toshiba or by Wink, pursuant to Section 10.4 (entitled "Training") of the
Agreement, to perform the responsibilities required of Toshiba in this Exhibit.
2. Support Obligations. Toshiba will be responsible for providing First
Level Support and Second Level Support (as defined below) to its Subsidiaries
and to customers with respect to the Products. Wink will provide Third Level
Support (as defined below) for Products in the manner specified in these support
terms.
3. Support Levels. Levels of customer support are defined as follows:
(a) "First Level Support" shall mean: (i) generating product
information; (ii) providing configuration support; (iii) providing front-line
telephone support for answering day-to-day questions and collecting of relevant
technical problem identification information; (iv) filtering user errors from
real technical problems; and (v) solving simple problems by reference to
existing documentation.
(b) "Second Level Support" shall mean First Level Support plus
providing the following areas of support: (i) isolating the problem to determine
that it is a problem with the Wink Product; (ii) recreating the problem in a lab
simulation and/or through interoperability testing; (iii) determining whether or
not the problem is a defect; (iv) collecting and analyzing diagnostic data;
and(v) defining an action plan with the customer to solve the problem.
(c) "Third Level Support" shall mean: (i) confirming duplication
of the problem and validating that it's a defect; (ii) fixing software bugs or
generating workarounds.
4. Third Level Support.
(a) Escalation. Toshiba can escalate a problem to Third Level
Support, once Toshiba exhausts the items enumerated above in First and Second
Level Support. When escalating, Toshiba shall provide enough information to
allow Wink to duplicate the problem. To the extent that
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Toshiba is unable to provide First and Second Level Support, the support which
Wink provides shall be charged at a rate of 50% higher than that provided for in
Section C. 1 below, and Wink may require that Toshiba arrange for training of
Toshiba's Contact People.
(b) Assignment of Severity Level. When a Third Level support call
comes into Wink from Toshiba, the parties will mutually assign a Severity Level
as specified below that describes the nature of the call and how critical it is
to Toshiba's customer base(s).
(c) Response. Wink agrees to use commercially reasonable efforts
to meet the response times for the respective problems commensurate with the
severity of the error as specified below.
<TABLE>
<CAPTION>
First Frequency
----- ---------
<S> <C> <C> <C>
of
Severity Level Definition Response Time Status
Update
Critical Bug causes a crash and/or 4 business hours Each
business day
data loss to a part or all of
the system
High Bug causes a feature to 4 business hours Each
business day
violate a performance
specification (i.e., feature
consistently does not work
as specified, or not at all)
Medium Bug causes an occasional 1 business day Weekly
failure of a feature (i.e.,
feature fails in specific cases)
Low Bug is characterized by a 1 business day Weekly
"glitch" that does not affect
a feature's performance (e.g.,
confusing messages, typo-
graphical errors, visual
abnormalities, etc.)
Doc Error Error in documentation 2 business days Weekly
</TABLE>
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<PAGE> 31
(d) Support. Wink agrees to provide Third Level Support from 9
a.m. to 6 p.m. (San Francisco time) on business days ("Support Hours"). Support
Hours reflect Wink's committed level of availability, but Wink staff members are
often available outside those hours. Support requests shall be submitted by
Toshiba via email to a group list at Wink of appropriate personnel. To provide
better assurance that Wink personnel promptly receive support requests, Wink
will establish a voicemail group number and provide use instructions to Toshiba
so that Contact People can easily inform Wink personnel that a support request
email has been sent.
Exclusions. Wink's support obligations for the fees provided for in
Section C shall not extend to problems in the Products that result from: (i)
Toshiba's failure to implement any Updates to tile Products which are provided
by Wink; (ii) changes to the operating system or environment or Toshiba
Components or Toshiba Server Products which adversely affect the Products; (iii)
any alterations of or additions to the Products performed by parties other than
Wink; (iv) use of the Products in a manner inconsistent with the applicable
Specifications or in a manner for which such Product was not intended; (v)
combination of the Products with other products not supplied by Wink, which
problems do not affect the Products standing alone; or (vi) operation of the
Products outside of environmental specifications. Errors arising from the
foregoing may be addressed by Wink at its then current hourly rates.
B. Comprehensive Support.
1. Toshiba-Requested Updates. In the case that Toshiba does not wish to
wait for Wink to choose on its own to create an Update pursuant to Section 10.1,
Toshiba may request, from time to time, an Update version of the Licensed WOS
Technology ("Toshiba-Requested Updates") in order to make minor feature
enhancements in a timeframe desired by Toshiba. Wink shall use commercially
reasonable efforts to schedule the Toshiba-Requested Update in a timeframe that
meets Toshiba's requested schedule.
2. Compensation. Toshiba-Requested Updates shall be treated in the same
manner as Updates, except that Wink's work shall be compensated by Toshiba.
Compensation shall be at the rate of US$120/hour, due net/30. The compensation
terms listed herein are subject to change annually, with thirty (30) days
written notice provided by Wink to Toshiba.
3. Ownership. Ownership of the property created for the
Toshiba-Requested Update will be agreed according to the same basis as was used
in the development of the Licensed WOS Technology, Version 1.0. Payment by
Toshiba to Wink for Toshiba-Requested Updates shall not affect ownership of the
Updates or of any other Wink Property.
C. Fees on General and Comprehensive Support.
1. Fees. In consideration for the support provided by Wink in this
Exhibit, Toshiba shall pay the following fees:[ * ].
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2. Changing. The terms listed herein are subject to change annually,
with 30 days written notice provided by Wink to Toshiba.
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EXHIBIT I
WINK MARK(s)
The following Wink Marks are relevant to the Wink Online Server for InterText
License Agreement.
Wink ITV(TM) For use when referring in text to the
Wink interactivity system or the interactive
functionality provided by Wink's technology.
Wink Online Toolkit(TM) For use when referring in text to the Licensed WOS
Technology version 1.X
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AMENDMENT No.1 TO
WINK ONLINE SERVER FOR INTERTEXT LICENSE AGREEMENT
THIS AMENDMENT (the "Amendment") hereby amends the terms and conditions
of the "Wink Online Server For Intertext License Agreement" executed as of the
30th day of September 1997 (the "Agreement") between Wink Communications, Inc.,
a California corporation with offices at 1001 Marina Village Parkway, Alameda,
CA 94501, U.S.A. "WINK" and Toshiba Corporation with offices at 1-1 Shibaura,
1-Chome,. Minato-ku, Tokyo 105-8001, Japan ("Toshiba"). The Amendment is
effective by the parties as of this 23 day of March 1998 ("Execution Date").
Unless specifically amended in this Amendment, all terms of the
Agreement remain in force.
Amendment
1. The product and development:
(1) An addendum to Exhibit B "Toshiba Online Server Product" The
following shall be inserted at the bottom: Toshiba shall have a
product called "Compact PC WOS". It is the same as what was
described in Exhibit B before this amendment except that it runs
on the Windows NT operating system (version 4.0) on one or more
Windows NT-based computers and that it supports' phone lines
concurrently less than 144 lines.
(2) An addendum to Exhibit A "Development Plan": The following shall
be inserted at the bottom: 4. A part of "Licensed WOS
Technology" which runs on Sun Solaris version 2.4, as described
in the Agreement, shall be ported on Windows NT version 4.0
("Porting"). Porting shall be completed in April 1998.
2. Compensation and cost borne:
No compensation shall be paid between the parties for Porting. Instead
Toshiba shall send a competent engineer to Wink during the period of
Porting, on Toshiba's expenses. This engineer shall do most of the work
of Porting, under Wink's management and under the Non-Disclosure
Agreement to be executed between Wink and Toshiba.
Wink shall assign a lead engineer for Porting, who shall prepare the
environment for Porting and advise the Toshiba engineer, on Wink's expenses.
3. Ownership and rights:
No change of ownership or rights as provided in the Agreement is
effected by Porting or by Amendment, and accordingly, Licensed WOS Technology as
modified after Porting remains Wink's property.
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4. Royalties
(1) An addendum to Exhibit E "Royalties"
The following shall be added at the bottom of "Running Royalties on the Licensed
WOS Technology:":
For shipments (or installations) by Toshiba of Compact PC WOS: [ * ] per copy
of the Licensed WOS Technology.
(2) An addendum to Article 4.1 "Per-Unit Royalty" The following shall be added
at the bottom:
Wink shall not license the Compact PC WOS software to a third party for the
business in Japan in equivalent or more favorable terms and conditions than
those to Toshiba.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Amendment as of the Execution Date.
WINK COMMUNICATIONS, INC. TOSHIBA CORPORATION
By: /s/ Patrick Ransil By: /s/ Hiroo Okuhara
Name: Patrick Ransil Name: Hiroo Okuhara
Title: VP Engineering, Title: Vice President & Group Executive
Wink Communications Information & Communication and
Control Systems Group
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EXHIBIT 10.26
WINK APPLICATION SERVER LICENSE AGREEMENT
THIS AGREEMENT (the "Agreement") is executed as of this 30th day of
September 1997 ("Execution Date") to memorialize the parties' relationship and
its terms are effective October 31, 1994, (the "Effective Date"), between Wink
Communications, Inc., a California corporation with offices at 1001 Marina
Village Parkway, Alameda, CA 94501 ("Wink") and Toshiba Corporation, with
offices at 11, Shibaura 1-Chome, Minato-ku, Tokyo 105-01, Japan ("Toshiba").
BACKGROUND
A. Wink is a software developer and has developed its interactive
Television system of technology and related products, services, processes and
materials (the "Wink ITV System"), which includes a software protocol for
delivering interactive applications synchronized with or independent of
television programs and advertisements. Also included without limitation in the
Wink ITV System are an authoring tool, server software and the Wink Engineer(TM)
that decodes the protocol and displays the interactive applications overlaid on
a television screen.
B. Wink and Toshiba desire that Wink develop and grant to Toshiba the
right to use and embed certain Wink products in Toshiba products identified by
the parties from time to time. Wink and Toshiba are executing a series of
agreements to accomplish this desired goal:
(i) this Agreement,
(ii) Wink Engine License Agreement, and
(iii) Wink Online Server for InterText License Agreement
(together, the "Wink/Toshiba Agreements").
C. The Wink Application Server software is among the Wink Products that
Toshiba desires that Wink modify and grant to Toshiba the right to use and
distribute in Toshiba's products.
1. DEFINITIONS
1.1 "WAS" shall mean the Wink application server software in machine
executable format, as modified to meet the Specifications.
1.2 "Licensed WAS Technology" shall mean the WAS version 1.0 for
InterText, and certain external applications that communicate with and control
the WAS through a defined API ("Server Modules), version 1.0 for InterText, and
any related documentation, know-how and technical information which Wink may
provide to Toshiba under this Agreement, and any Updates that may be provided by
Wink to Toshiba from time to time.
<PAGE> 2
1.3 "Toshiba Broadcast Server Product" shall mean a Toshiba broadcast
server hardware and software product which has the functionality described on
Exhibit B.
1.4 "Combined Broadcast Server Product" shall mean a Toshiba Broadcast
Server Product which incorporates the Licensed WAS Technology as permitted under
this Agreement.
1.5 "Deliverables" shall mean each deliverable identified in the
Development Plan.
1.6 "Development Plan" shall mean the plan for completion of the
development activities including the Specifications, each party's respective
development obligations, milestones, a schedule, Deliverables, and other
relevant items all as mutually agreed upon and as set forth in Exhibit A
attached hereto for the delivery of the Licensed WAS Technology and, if
specified by the Parties in a mutually agreed amendment to Exhibit B, to
Updates.
1.7 "Specifications" shall mean the technical and other specifications
for the Licensed WAS Technology as set forth in the Development Plan.
1.8 "Updates" shall mean updates containing error corrections or minor
enhancements to the Licensed WAS Technology created by or for Wink after the
Effective Date and designated by a change in version number to the right of the
decimal point. Updates do not include major enhancements to the Licensed WAS
Technology designated by changes in the version number to the left of the
decimal point. Because the functionality of the Licensed WAS Technology can be
modified by either changing the WAS itself or by creating or revising a Server
Module, either minor or major enhancements may be provided in the form of a
revision to WAS code or in the form of a new or revised Server Module.
1.9 "Intellectual Property Rights" shall mean all current and future
worldwide patents and other patent rights, copyrights, mask work rights, trade
secrets, know-how, technical information, and all other intellectual property
rights, including without limitation all applications and registrations with
respect thereto.
2. DEVELOPMENT
2.1 Development Efforts. Each party will use reasonable commercial
efforts to perform its development activities in accordance with the Development
Plan. In connection therewith, each party shall (i) cooperate with the other
party to produce the Specifications, and (ii) cooperate in providing the other
party with additional materials and information, as mutually agreed. Toshiba
shall provide the equipment and other materials identified on Exhibit C
("Equipment") for use by Wink to execute the Development Plan, to create Updates
and new versions and to perform Wink's support obligations. Toshiba shall remain
the owner of such Equipment. Wink may, upon written approval by Toshiba in each
instance, which approval shall not be unreasonably withheld, alter the
Specifications commensurate with good faith efforts to finalize and refine the
Deliverables in accordance with Toshiba's needs and objectives for the Licensed
WAS Technology. The parties may agree on additional development activities by
amending Exhibit A. All development shall be at each
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party's sole expense, except as set forth in Section 4 (entitled "Royalties") or
Section 10 (entitled "Training, Support and Maintenance") or Exhibit H (entitled
"Support") below. Except as provided in this Section 2 (entitled "Development"),
Toshiba shall be solely responsible for development of the Toshiba Broadcast
Server Product and the Combined Broadcast Server Product.
2.2 Delivery and Acceptance. In the event either party is late in the
performance of its obligations with respect to the Development Plan, the other
party's obligations as to those items shall be delayed by a period necessary as
a result of the delay. The parties shall mutually agree on testing criteria and
evaluation procedures for the Deliverables which shall be set forth in the
Development Plan. Upon delivery to Toshiba of each Deliverable, Toshiba shall
have thirty (30) days to test such Deliverable, unless a longer period is
specifically agreed to by the parties in writing, in accordance with the
mutually agreed criteria and procedures, for conformance to the applicable
Specifications and to accept such Deliverable or deliver to Wink a written
Statement of Defects to be corrected. Failure to provide a Statement of Defects
shall be deemed acceptance. If Toshiba provides a written Statement of Defects,
Wink shall use reasonable commercial efforts to correct such defects as soon as
practicable and resubmit the Deliverable to Toshiba. These procedures shall be
repeated until Toshiba accepts the Deliverable or the parties mutually agree to
terminate this Schedule.
2.3 Transfer. Upon Toshiba's acceptance of the final Deliverable ("Final
Acceptance"), Wink shall deliver to Toshiba a master diskette or other digital
storage media containing the Licensed WAS Technology for use by Toshiba in
accordance with the terms of this Agreement.
2.4 Other Projects. Toshiba acknowledges that Wink is in the business of
customizing its software products for other third parties and nothing in this
Agreement restricts Winks rights to provide the Licensed WAS Technology or other
versions of the WAS, Server Modules or other components of the Licensed WAS
Technology to any other party.
2.5 Further Development. Any additional development or testing of the
Licensed WAS Technology after acceptance Under Section 2.2, including the
development of enhancements with particular functionality, or new versions, will
be subject to mutual agreement. If the parties agree upon terms and conditions
for such development the parties will attach an addendum to this Agreement
setting forth all such terms and conditions or will amend this Agreement as
necessary to account for such additional development.
3. LICENSE
3.1 Grant. Subject to the terms and conditions of this Agreement, Wink
hereby grants to Toshiba a non-exclusive, non-transferable, right and license
under Wink's Intellectual Property Rights in and to the Licensed WAS Technology,
to (a) reproduce and have reproduced the Licensed WAS Technology solely for
incorporation into a Toshiba Broadcast Server Product, (b) to use internally the
Licensed WAS Technology for the purposes of 3.1 (a), and (c) to distribute the
Combined Broadcast Server Products only in Japan and any other countries which
both parties may agree to in a mutually signed writing. Toshiba shall have no
right to distribute the Licensed WAS Technology on a standalone basis except
that Toshiba may distribute Updates provided by Wink to
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existing customers of Combined Broadcast Server Products for incorporation into
such Combined Broadcast Server Products provided that such distribution shall be
subject to procedures reasonably acceptable to Wink to monitor such
distribution, including encryption procedures where distributed electronically.
The parties shall mutually agree on such procedures prior to any such
distribution and Toshiba shall ensure that its subdistributors comply with all
such procedures. Toshiba shall have no right to sublicense the foregoing rights
except to the extent a sublicense may be deemed to have been granted in
connection with the exercise by Toshiba of its rights to engage submanufacturers
and subdistributors as described herein. Except as expressly provided in this
Agreement, Wink reserves all rights and ownership to the Licensed WAS
Technology,
3.1.1 Toshiba Subsidiaries. The grant in Section 3.1 (entitled
"Grant") shall also apply to any direct or indirect subsidiary of Toshiba that
is majority-owned and controlled by Toshiba and only for so long as it remains
majority-owned and controlled by Toshiba and that is listed in Exhibit D
(entitled "Toshiba Subsidiaries") provided that Toshiba, prior to the exercise
of any such rights by a subsidiary, obtains in writing such subsidiary's
agreement to be bound by all the applicable restrictions and obligations under
this Agreement. Upon request of Wink, Toshiba promptly shall provide Wink a copy
of each such written agreement. Toshiba hereby guarantees the performance of
such obligations and restrictions by each subsidiary exercising any rights under
Section 3.1 as primary obligor and not merely as surety. Toshiba shall provide
Wink with the name and contact information for an appropriate manager at each
subsidiary in Exhibit D. Failure to list a subsidiary in Exhibit D shall have no
effect on the obligations of Toshiba as set forth in this Section 3.1.1.
3.1.2 Translations. Wink grants Toshiba the right to localize
into the Japanese language the user documentation provided by Wink for WAS and
Server Modules ("Wink Manuals") and text resources in WAS and Server Modules
("Wink Text Resources", which together with Wink Manuals shall comprise "Wink
Documentation"). Wink grants Toshiba the non-exclusive, non transferable right
to use, copy and distribute the Wink Manuals, the translated Wink Manuals
("Translated Wink Manuals"), and the translated Wink Text Resources in Japan.
The Translated Wink Manuals shall be a "derivative" work of the Wink Manuals,
and Translated Wink Manuals contain content which is copyrighted material of
Wink. Therefore, Toshiba's rights in the Translated Wink Manuals are subordinate
to Wink's rights in the Wink Manuals, and the Translated Wink Manuals may only
be used, copied, or distributed in accordance with specific written permission
by Wink. The translated Wink Text Resources shall be owned by Wink and are
copyrighted property of Wink, and Toshiba hereby assigns to Wink all rights
Toshiba might otherwise have in the translated Wink Text Resources. Before
distributing any translated Wink Documentation or changes to translated Wink
Documentation, Toshiba shall submit copies (in "soft copy" form if available) to
Wink for review and written approval, such approval not to be unreasonably
denied or delayed. Wink also grants to Toshiba the right to use and copy the
Wink Manuals and other non-confidential and copyrighted materials provided by
Wink to create its own user-oriented documentation in the Japanese language
("Toshiba Manuals"). Toshiba shall own the Toshiba Manuals as a derivative of
Wink copyrighted material. Toshiba hereby grants to Wink an irrevocable,
royalty-free nonexclusive right to (i) use, copy and distribute the Translated
Wink Manuals and Toshiba Manuals worldwide and (ii) translate for use, copying,
and distribution worldwide. Toshiba may distribute Toshiba
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Manuals in lieu of Wink Manuals or Translated Wink Manuals in Japan upon
specific written approval by Wink, such approval not to be unreasonably withheld
or delayed. The Translated Wink Manuals and Toshiba Manuals shall be marked as
follows: "Copyright (c) Toshiba Corporation, [year]. Based upon copyrighted
material of Wink Communications, Inc.."
3.2 Have Reproduced. Toshiba shall have the right to provide the
Licensed WAS Technology to its third party manufacturers of Combined Broadcast
Server Products (each a "Submanufacturer"), provided that each Submanufacturer
shall agree in a signed writing to be bound by the applicable instructions on
Toshiba set forth in this Agreement with respect to the Licensed WAS Technology,
which include but is not limited to the agreement to use and copy the Licensed
WAS Technology solely to create Combined Broadcast Server Products and only for
Toshiba and to keep the Licensed WAS Technology confidential according to the
applicable terms of this Agreement. Toshiba shall provide the name of such
Submanufacturer to Wink promptly upon contracting with such Submanufacturer
regarding services concerning the Licensed WAS Technology . Upon request of
Wink, Toshiba promptly shall provide to Wink a copy of such signed writing with
each Submanufacturer, and Toshiba shall ensure that each Submanufacturer abides
by such restrictions. Toshiba agrees to indemnify, defend and hold Wink harmless
from and against any loss, cost, liability or expense (including Wink's
reasonable attorneys' fees) arising out of or related to a breach of the
foregoing provisions by Submanufacturers. Toshiba shall promptly notify Wink if
Toshiba knows or believes that a Submanufacturer has breached the provisions of
this Section 3.2.
3.3 Subdistributors. Toshiba may exercise its distribution rights
hereunder through the use of subdistributors; provided, that each subdistributor
agrees in writing, prior to obtaining the Combined Broadcast Server Product from
Toshiba, to be bound by all applicable restrictions on Toshiba set forth in this
Agreement with respect to the Licensed WAS Technology. Toshiba shall provide the
name of such subdistributor to Wink promptly upon contracting with such
subdistributor regarding services concerning the Licensed WAS Technology. Upon
request of Wink, Toshiba promptly shall provide to Wink a copy of such signed
writing with each subdistributor, and Toshiba shall ensure that each
subdistributor abides by such restrictions. Toshiba agrees to indemnify, defend
and hold Wink harmless from and against any loss, cost, liability or expense
(including Wink's reasonable attorneys' fees) arising out of or related to a
breach of the foregoing provisions by subdistributors. Toshiba shall promptly
notify Wink if Toshiba knows or believes that a subdistributor has breached the
provisions of this Section 3.3.
3.4 Obligation. Toshiba shall include the Licensed WAS Technology in
every Toshiba server product with the functionality of delivering a broadcast
communications session with an InterText client device (television, settop box,
VCR, etc.) that contains a Wink Engine.
3.5 Toshiba Grant. Subject to the terms and conditions of this
Agreement, Toshiba hereby grants to Wink an irrevocable, non-exclusive,
non-transferable, worldwide, right and license, including the right to
sublicense, under Toshiba's Intellectual Property Rights in and to that portion
of the WAS described in Section A of Exhibit F (the "Toshiba Licensed Property")
to use, reproduce, have reproduced, modify and distribute the Toshiba Licensed
Property as part of WAS and to use,
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reproduce, have reproduced and distribute modified versions of the Toshiba
Licensed Property as part of WAS. The foregoing distribution rights may be
exercised by subdistributors.
4. ROYALTIES
4.1 Per-Unit Royalty. In consideration for the rights and licenses
granted to it under Section 3 above, for each copy of the Licensed WAS
Technology distributed by Toshiba, Toshiba shall pay Wink the royalty set forth
in Exhibit E. In addition, Toshiba shall pay Wink the royalties set forth in
Exhibit E for distribution of manuals. All such royalties shall accrue upon
shipment or other transfer by Toshiba.
4.2 Distribution of Updates. No royalty will be payable for Toshiba's.
distribution of Updates alone.
4.3 Promotional Units. Toshiba may distribute a reasonable number of
Combined Broadcast Server as promotional units, without incurring a royalty
payable to Wink under the provisions of Section 4.1 provided that such units are
distributed by Toshiba and its subdistributor, if any, free of charge. At any
time any charge is imposed on or related to such unit, Toshiba shall pay Wink
the royalty pursuant to Section 4.1 above.
4.4 Payments. Toshiba shall make royalty payments to Wink due under this
Agreement within forty-five (45) days after the end of each calendar quarter
during the term of this Agreement, with the first payment to occur within sixty
(60) days after the Execution Date. Such payments shall be accompanied by a
written report in a form reasonably acceptable to Wink which details all of the
following with respect to the applicable period: (i) the number of Combined
Broadcast Server Products distributed by Toshiba under this Agreement including
the identity of each customer, (ii) the royalty due Wink with respect to such
Combined Broadcast Server Products accrued during such period showing the
calculation of such amounts, and (iii) if applicable, the number of Combined
Broadcast Server Products distributed by Toshiba or its subdistributors for
which no royalty is due. Any amount not paid when due under this Section will be
subject to a late charge of 1.5% per month, or the maximum permitted by law,
whichever is greater.
4.5 Currency; Taxes. All payments hereunder shall be in United States
dollars. All payments by Toshiba shall be made free and clear of, and without
reduction for, any and all taxes, including, without limitation, sales, use,
value added, withholding, or similar taxes, other than taxes which are imposed
by the United States or any political subdivision thereof based on the net
income of Wink. Notwithstanding the foregoing, Wink agrees that, if any income
taxes are imposed by the Japanese Government on the payment to be made under
this Agreement, Toshiba shall withhold such amount of taxes ("Japan Royalty
Income Withholding Tax"), up to a maximum of 10% of such payments and pay the
withheld amount to the Japanese tax authorities to the extent that Toshiba is
legally required to do so. Excluding the Japan Royalty Income Withholding Tax,
any such taxes which are otherwise imposed on payments to Wink shall be the sole
responsibility of Toshiba. Toshiba shall provide Wink with official receipts
issued by the appropriate taxing authority or such other evidence as is
reasonably requested by Wink to establish that such taxes have been paid.
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4.6 Books and Records; Audit. Toshiba agrees to maintain, and to require
that each Submanufacturer and subdistributor who reproduces or distributes the
Licensed WAS Technology maintain and provide to Toshiba, until three (3) years
after the termination or expiration of this Agreement, complete and current
books, records and accounts regarding all copying and distribution activities
pursuant to this Agreement and to document compliance with the licenses granted.
Toshiba agrees to allow an independent certified public accountant hired by Wink
to audit and examine such books, records and accounts no more than once each
calendar year, during Toshiba's normal business hours, to verify the accuracy of
the reports and payments made to Wink under this Agreement and this Section and
compliance with the restrictions of this Agreement. In the event such audit
determines that Toshiba has not paid Wink all of the royalties due Wink, Toshiba
agrees to pay, in addition to any damages to which Wink might be entitled, the
amount of such shortfall plus interest at a rate of one and one-half percent
(1.5%) per month or the highest rate allowed by law, whichever is greater. The
cost of such audit shall be borne by Wink, provided that if any such audit
reveals an underpayment to Wink of at least five percent (5%), Toshiba shall
reimburse to Wink all its costs of such audit.
5. PROPERTY RIGHTS
5.1 Toshiba Property Rights. Toshiba owns all right, title and interest
in those items relating to the Toshiba Broadcast Server Product (the "Toshiba
Property"), as set forth in Exhibit F. All modifications and derivatives of
Toshiba Property shall belong to Toshiba. Toshiba shall own all files, code, or
technology not listed in Exhibit F as being owned by Toshiba that is related to
the Toshiba Property, provided that such files, code, or technology are not
listed in Exhibit G.
5.2 Wink Property Rights. Except for the Toshiba Property, Wink owns and
shall own all right, title and interest in and to (a) Licensed WAS Technology
and all modifications and derivatives thereof, (b) all Intellectual Property
Rights relating to the design, manufacture, marketing, operation or service of
the Licensed WAS Technology and the Wink ITV System, (c) all files, code, or
technology that is related to the Licensed WAS Technology (collectively, the
"Wink Property"), provided that such files, code, or technology are not listed
in Exhibit F. Notwithstanding anything to the contrary in this Agreement, those
items listed as owned by Wink, as set forth in Exhibit G attached hereto, are
included in Wink Property.
5.3 Assignment. Toshiba hereby assigns to Wink all right, title and
interest, including all Intellectual Property Rights, in and to all Wink
Property developed in whole or part by Toshiba. Wink hereby assigns to Toshiba
all right, title and interest, including all Intellectual Property Rights, in
and to all Toshiba Property developed in whole or part by Wink. Each party shall
sign any further documentation requested by the other party to effect such
assignment of rights. In the event a party fails to take such action within a
reasonable period, such party hereby appoints the other party its
attorney-in-fact for the purpose of executing such documents, which appointment
shall be deemed a power coupled with an interest and shall be irrevocable.
5.4 Correction of Errors in Property Lists. If Toshiba has omitted any
item from Exhibit F (entitled "Toshiba Property") or if Wink has omitted any
item from Exhibit G (entitled
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"Wink Property"), the omitting party shall notify the other party of its claim
to ownership of the omitted item. The parties shall agree upon ownership of such
omitted item within thirty (30) days.
5.5 Rights. The parties acknowledge that each party may be or have been
provided with access to source code developed by the other for the purpose of
speeding the development or support activities related to this Agreement.
Irrespective of such access and development, all Intellectual Property Rights
shall be as set forth in this Agreement.
5.6 Notices. Toshiba shall not modify, alter or obscure any proprietary
notices contained on or within any Licensed WAS Technology, and all copies of
the Licensed WAS Technology reproduced or distributed by or for Toshiba shall
contain copyright and other proprietary notices in the same manner in which Wink
incorporates such notices in the Licensed WAS Technology and the documentation.
5.7 Limitations. Toshiba shall not modify, prepare derivative works of,
reverse engineer, disassemble, decompile, or otherwise attempt to obtain access
to the source code of any Licensed WAS Technology or any Wink product. To the
extent that access to source code is provided by Wink to Toshiba under Section
5.5, such access shall not be a violation of this Section 5.7.
6. PRODUCT QUALITY WARRANTY AND WARRANTY DISCLAIMER
6.1 Product Quality Warranty. Wink warrants to Toshiba that for a period
of three (3) months after Final Acceptance the Licensed WAS Technology and
Toshiba-Requested Updates and after delivery of any other Updates, such Licensed
WAS Technology or Updates of any kind will operate under ordinary use in
substantial conformance with the Specifications. Wink does not warrant that the
Licensed WAS Technology will be error free or meet all of Toshiba's
requirements. (This Section 6.1 lists separately Licensed WAS Technology and the
different kinds of Updates for clarification for purposes only. Unless otherwise
noted, in other sections of this Agreement, the definition of Licensed WAS
Technology includes Updates, pursuant to Section 1.2.)
6.2 Items not Covered by Warranty. Wink's warranty shall not extend to
problems in the Licensed WAS Technology that result from: (i) Toshiba's failure
to implement any Updates provided by Wink; (ii) changes to the operating system
or environment or Toshiba Broadcast Server Product or other non-Wink products
which adversely affect the Licensed WAS Technology; (iii) any alterations of or
additions to the Licensed WAS Technology or other non-Wink products performed by
parties other than Wink; (iv) use of the Licensed WAS Technology in a manner
inconsistent with the Specifications or in a manner for which it was not
intended; (v) combination of the Licensed WAS Technology with other products not
supplied by Wink (unless such products are specifically identified in the
Specifications as compatible with the Licensed WAS Technology) and are tested
and confined in writing as compatible by Wink in the configuration and
conditions deployed by Toshiba which problems do not affect the Licensed WAS
Technology standing alone; or (vi) operation of the Licensed WAS Technology
outside of environmental specifications; unless, with respect to items (ii),
(iii), (v) and (vi), Wink was given the opportunity and time to test such
products or changes for compatibility and Wink provided Toshiba written
confirmation of compatibility.
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6.3 Exclusive Remedy. Wink's sole obligation and Toshiba's exclusive
remedy under the above warranty shall be for Wink to use commercially reasonable
efforts to bring the Licensed WAS Technology into conformity with Wink's
warranty set forth in Section 6.1 (entitled "Product Quality Warranty") above,
at no cost to Toshiba, other than as provided for in Section 10.1-10.2 (entitled
"Updates" and "Support", respectively); provided, that Wink shall have no
obligation to correct all errors.
6.4 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY, WINK
MAKES AND TOSHIBA RECEIVES NO WARRANTIES WITH RESPECT TO THE LICENSED WAS
TECHNOLOGY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND WINK SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY, NONINFRINGEMENT OR FITNESS
FOR A PARTICULAR PURPOSE.
7. LIMITATION OF LIABILITY.
WINK'S LIABILITY ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED THE
AMOUNTS RECEIVED FROM TOSHIBA HEREUNDER. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR COST OF PROCUREMENT OF SUBSTITUTE GOODS, SERVICES OR TECHNOLOGY NOR
SHALL EITHER PARTY BE LIABLE FOR LOST PROFITS OR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT OR SPECIAL DAMAGES HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT
THAT, WITH RESPECT TO CLANS BY WINK AGAINST TOSHIBA FOR BREACH OF THE SCOPE OF
LICENSES GRANTED IN THIS AGREEMENT, WINK SHALL BE ENTITLE TO RECOVER LOST
PROFITS. THE FOREGOING LIMITATIONS SHALL APPLY EVEN IF EITHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
8. INDEMNITY
8.1 Obligation. Wink shall defend, or at its option, settle any claims
brought against Toshiba and shall hold Toshiba harmless from any judgments,
damages, costs or expenses incurred by Toshiba, including reasonable attorney's
fees, resulting from any claim that the Licensed WAS Technology infringes the
copyright, trade secret or trademark rights of a third party or the U.S. patent
rights or the corresponding Japanese patent rights that are identical in scope,
where such U.S. or Japanese patents have been granted prior to the first
shipment of a Combined Broadcast Server Product by Toshiba, provided that
Toshiba notifies Wink of such claim promptly in writing of and gives Wink the
exclusive authority to defend or settle such claim and provided that such
patents owned by, controlled by, or licensed to only parties other than Toshiba
or its subsidiaries. Toshiba shall provide proper and full information and
assistance to settle or defend any such claim. If the Licensed WAS Technology
becomes, or if Wink reasonably believes it may become, the subject of any claim
for infringement or is adjudicatively determined to infringe then Wink may, at
its option and expense, either (i) procure for Toshiba the right to sell or use,
as appropriate, the Licensed WAS Technology or (ii) replace or modify the
Licensed WAS Technology with other suitable and
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<PAGE> 10
reasonably equivalent software so that the Licensed WAS Technology becomes
noninfringing or (iii) if (i) and (ii) are not commercially practicable, Wink
may terminate this Agreement.
8.2. Limitations. The foregoing obligations shall not apply to (i) the
Licensed WAS Technology used in conjunction with other products if the Licensed
WAS Technology used alone would not infringe, (ii) modifications to the Licensed
WAS Technology made by any party other than Wink or made according to another
party's specifications if the Licensed WAS Technology would not infringe but for
such modifications, (iii) use of any version of the Licensed WAS Technology
other than the then-current version if the claim could have been avoided by use
of such version or (iv) any trademark claims regarding any marking or branding
not applied or approved by Wink.
8.3 Entire Liability and Obligation. THE FOREGOING PROVISIONS OF THIS
SECTION 8 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF WINK TO TOSHIBA WITH
RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS BY THE
LICENSED WAS TECHNOLOGY LICENSED TO TOSHIBA BY WINK PURSUANT TO THIS AGREEMENT.
8.4 Toshiba Indemnification. Except with respect to those matters for
which Wink has agreed to indemnify Toshiba under Sections 8.1-8.3 above,
Toshiba. agrees to indemnify and hold Wink harmless from and against any and all
claims, actions, liabilities, and costs, including reasonable attorney's fees,
arising with respect to its use and distribution of the Licensed WAS Technology.
9. MARKETING
9.1 Wink Marks. From time to time, Wink shall provide Toshiba for its
use and its subdistributors' use a list of permitted uses of Wink's trademarks
and logos that Wink may adopt, from time to time and include in an amendment to
Exhibit I (the "Wink Marks"), which shall be amended by Wink subject to
agreement by Toshiba, such agreement not to be unreasonably withheld.
9.2 No Registration of Wink Marks. Except as expressly set forth in this
Agreement, nothing shall grant to Toshiba or its subdistributors any right,
title or interest in the Wink Marks. At no time during the term of this
Agreement shall Toshiba register, attempt to register or cause the registration
of any of the Wink Marks other than in Wink's name and at Wink's specific
written request, except in the event Toshiba adopts, uses or acquires a
trademark, mark or trade name substantially similar to a Wink Mark prior to
Wink's adoption, use or acquisition of such Wink Mark. Except to the extent such
acts may not be prohibited by applicable law, at no time during the term of this
Agreement shall Toshiba or its subdistributors challenge or assist others to
challenge, the Wink Marks or the registration thereof.
9.3 Press Releases. The parties intend to cooperate and participate in
public relations programs to promote the Licensed WAS Technology and the
relationship between the parties. Appropriate personnel from each party shall
participate in such public relations program. The parties
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<PAGE> 11
shall cooperate with respect to and mutual approve (not to be unreasonably
withheld or delayed) all press releases issued by either party with respect to
this Agreement or the parties' relationship. Such approval is intended to
protect the timing of disclosure of the availability of the Licensed WAS
Technology and of the existence of the parties' relationship, as well as to
ensure proper references, accurate information and correct proprietary notices
and information. The contents of each press release shall be agreed upon between
the parties from time to time.
9.4 Disclosures of Terms and Relationship. Each party agrees not to
disclose the written consent in its sole discretion, except to such party's
accountants, attorneys and other professional advisors, or as required by
securities or other applicable laws.
10. TRAINING, SUPPORT AND MAINTENANCE
10.1 Updates. Wink, in its sole discretion, shall make Updates available
to Toshiba from time to time for use and distribution consistent with this
Agreement. The Toshiba-Requested Updates, as defined in Exhibit H (entitled
"Support"), shall be accepted by Toshiba in accordance with the acceptance
procedure provided in Section 2.2 (entitled "Delivery and Acceptance"). Wink is
not responsible for the distribution of Updates to Toshiba's subdistributors,
Submanufacturers, or end-users. Toshiba promptly shall make Updates available to
all subdistributors and end-users. Unless an end-user specifically refuses to
accept a given Update, Toshiba shall implement each Update to new production in
its own facilities or at Submanufacturers' facilities promptly after receipt of
such Update from Wink, but no later than forty-five (45) days after receipt.
10.2 Support. Toshiba shall be responsible for providing all support to
its subdistributors, subsidiaries, and end-user customers of the Combined
Broadcast Server Products. Toshiba shall also be responsible for all testing of
the Combined Broadcast Server Products containing accepted Licensed WAS
Technology with new versions of hardware and software provided by parties other
than Wink. Wink shall make available to Toshiba support services as set forth in
Exhibit H (entitled "Support").
10.3 Equipment. The parties intend that Wink have an environment in
which to recreate field situations, to allow Wink to replicate problems which
may occur in the field and to test solutions for such problems. In order to
facilitate Winks performance of the support activities contemplated herein, Wink
shall retain the Equipment provided pursuant to Section 2.1 which is reasonably
necessary to functionally replicate a Combined Broadcast Server Product. Upon
expiration or termination of this Agreement, Wink shall return all of the
Equipment to Toshiba. Wink shall return all such Equipment to Toshiba promptly
upon request by Toshiba; provided that Wink's development and support
obligations under this Agreement shall terminate to the extent Equipment
returned to Toshiba is required by Wink to fulfill its obligations.
10.4 Training. Wink shall provide training for Toshiba employees as
mutually agreed from time to time at current Wink training rates at the time
training is provided.
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<PAGE> 12
10.5 Travel Expenses. In the event that, in the performance of its
services under this Section 10 (entitled "Training, Support and Maintenance") it
is mutually agreed by the parties that employees or contractors of Wink will
travel from Wink's facility, Toshiba shall pay and/or promptly reimburse Wink
for, all reasonable travel, room and board, car rental and other similar
expenses associated with such travel. Notwithstanding the above, if both parties
agree that travel by Wink employees or contractors is necessary to fix bugs that
are Wink's fault, the expenses for such travel shall be borne by Wink, unless
otherwise agreed.
10.6 Source Code Escrow. At Toshiba's written request, Wink agrees to
enter into a Source Code Escrow Agreement in a form mutually agreeable governing
the release of the source code of the Licensed WAS Technology. Expenses
associated with such agreement and escrow shall be the sole responsibility of
Toshiba.
11. TERM AND TERMINATION
11.1 Term. This Agreement shall commence on the Effective Date and shall
continue in full force and effect for a term of five (5) years from the
Execution Date. The term of this Agreement may be extended by written mutual
agreement of the parties.
11.2 Termination for Cause. If either party materially breaches its
obligations under Section 12 (entitled "Confidentiality") of this Agreement, the
non-breaching party may immediately terminate this Agreement and the remaining
other Wink/Toshiba Agreements upon written notice to the breaching party. If
Toshiba breaches the scope of any license grant under any of the Wink/Toshiba
Agreements, Wink may give written notice to Toshiba that if such breach is not
cured within thirty (30) days, this Agreement and the other Wink/Toshiba
Agreements shall terminate immediately at the end of such thirty (30) day
period. If either party breaches its material obligations under this Agreement
and fails to cure such breach within thirty (30) days from written notice to
cure, the non-breaching party may terminate this Agreement.
11.3 Termination for Insolvency. This Agreement shall terminate upon
written notice given by a party, at such party's option and without further
notice, upon the earlier of: (i) the institution by or against the other party
of insolvency, receivership or bankruptcy proceedings or any other proceedings
for the settlement of the other party's debts, (ii) the other party's making an
assignment for the benefit of its creditors, (iii) the other party's declaration
in writing of its inability to pay debts as they become due, or (iv) the other
party's dissolution or ceasing to conduct business as a going concern.
11.4 Effect of Termination. Upon the expiration or termination of this
Agreement, the following provisions shall take effect:
11.5 Any and all end user licenses granted by Toshiba or its
subdistributors shall continue in effect according to their terms and
conditions;
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<PAGE> 13
11.6 Within thirty (30) days after such expiration or termination, both
parties shall return and certify to the other party the return of all
Confidential Information of the other party in its or its submanufacturers'
possession at the time of expiration or termination, or destroy all such
Confidential Information and certify such destruction to the other party.
11.73 Toshiba shall pay all outstanding amounts owed to Wink within
forty-five (45) days of the end of the quarter during which such expiration or
termination occurs. In the event Wink is performing development tasks for
Toshiba at the time of any termination, Toshiba shall also pay to Wink the next
payment due under the development schedule for such work; and
11.8 The provisions of Sections 1 ("Definitions"), 2.4 ("Other
Projects"), the grant to Wink in Section 3.1.2 ("Translations"), 3.5 ("Toshiba
Grant"), 4.5 ("Currency; Taxes"), 4.6 ("Books and Records; Audit"), 5 ("Property
Rights"), 6.4 ("Disclaimer"), 7 ("Limitation of Liability"), 8 ("Indemnity"), 11
("Term and Termination"), 12 ("Confidentiality"), 13 ("General") and all payment
obligations accrued at the time of expiration or termination shall survive the
expiration or termination of this Agreement for any reason.
11.9 Destruction of Inventory. Within thirty (30) days after the
effective date of termination of this Agreement, Toshiba shall destroy, and
shall certify to Wink the destruction of, all copies of the Licensed WAS
Technology in its or its subdistributors' possession. Notwithstanding the
foregoing sentence, during such thirty (30) day period, Toshiba and its
subdistributors shall have a right to sell off existing inventory of Combined
Broadcast Server Products.
11.10 Termination of other Wink/Toshiba Agreements. Except as expressly
provided in Section 11.2 (entitled "Termination for Cause") above, termination
of one of the other Wink/Toshiba Agreements shall not result in termination of
or in any way affect this Agreement nor shall the termination of this Agreement
result in termination of or in any way affect the other Wink/Toshiba Agreements.
12. CONFIDENTIALITY
12.1 Obligation of Confidentiality. The parties acknowledge that by
reason of their relationship to each other hereunder, each may have access to
certain information and materials concerning the other's business, plans,
customers, technology and products that is confidential and of substantial value
to that other party, which value would be impaired if such information were
disclosed to third parties ("Confidential Information"). Information provided in
writing shall be deemed Confidential Information if it has been clearly
identified by the disclosing party as confidential; for Confidential Information
which is orally disclosed, the disclosing party shall indicate to the receiving
party at the time of disclosure the confidential nature of the information and
designate it as confidential in a written memorandum sent to the receiving party
within thirty (30) days of disclosure, summarizing the confidential information
sufficiently for identification. Without limiting the foregoing, Confidential
Information shall include the source code of the Licensed WAS Technology. Each
party agrees that it shall not use in any way, for its own account or the
account of any third party, nor disclose to any third party, except as may be
expressly permitted under this
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<PAGE> 14
Agreement, any such Confidential Information revealed to it by the other party
and shall take every reasonable precaution to protect the confidentiality of
such information , for a period of seven (7) years after the receipt of such
Confidential Information ("Confidentiality Period"), unless another
Confidentiality Period is provided in written notice by the disclosing party.
The Confidentiality Period for source code shall be perpetual. Upon request by
either party, the other party shall advise whether or not it considers any
particular information or materials to be confidential, provided that the
Licensed WAS Technology (except for documentation identified by Wink as public)
shall at all times be deemed Confidential Information of Wink. Neither party
shall develop or have developed any software programs utilizing any of the other
party's Confidential Information.
12.2 Exceptions. Information shall not be deemed Confidential
Information hereunder if such information:
12.2.1 Is or becomes part of the public domain through no fault
or breach on the part of the receiving party;
12.2.2 Is known to the receiving party prior to the disclosure by
the disclosing party and such knowledge can be shown by written records;
12.2.3 Is subsequently rightfully obtained by the receiving party
from a third party who has the legal right to disclose it;
12.2.4 Is independently developed by the receiving party without
the use of any Confidential Information or any breach of this Agreement;
12.2.5 Is approved for public release by the disclosing party; or
12.2.6 Is required to be disclosed by judicial action provided
that the receiving party has first given the disclosing party reasonable notice
of such requirement and fully cooperates with the disclosing party in seeking
confidential treatment for any such disclosure.
12.3 Injunctive Relief. The parties acknowledge that any breach of the
provisions of this Section 12 may cause irreparable harm and significant injury
to an extent that may be extremely difficult to ascertain. Accordingly, each
party agrees that each will have, in addition to any other rights or remedies
available to it at law or in equity, the right to seek injunctive relief to
enjoin any breach or violation of this Section 12.
13. GENERAL
13.1 Force Majeure. Nonperformance of either party shall be excused to
the extent that performance is rendered impossible by strike, fire, flood,
earthquake, governmental acts or orders or restrictions, failure of suppliers,
or any other reason where failure to perform is beyond the reasonable control of
and is not caused by the negligence of the nonperforming party.
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<PAGE> 15
13.2 No Waiver. Failure by either party to enforce any provision of this
Agreement will not be deemed a waiver of future enforcement of that or any other
provision.
13.3 No Oral Modification. No alteration, amendment, waiver,
cancellation or any other change in any term or condition of this Agreement
shall be valid or binding on either party unless mutually agreed in writing.
13.4 Governing Law; Dispute Resolution. This Agreement shall be governed
by and construed under the laws of the State of California, without reference to
conflict of laws principles. Any dispute or claim arising out of or in relation
to this Agreement, or the interpretation, making, performance, breach or
termination thereof, shall be finally settled by binding arbitration under the
Rules of Conciliation and Arbitration of the International Chamber of Commerce
as presently in force ("Rules") and by three (3) arbitrators appointed in
accordance with said Rules. Judgment on the award rendered may be entered in any
court having jurisdiction thereof. The place of arbitration shall be San
Francisco, California, U.S.A. Any monetary award shall be in U.S. dollars and
the arbitration shall be conducted in the English language. The parties may
apply to any court of competent jurisdiction for temporary or permanent
injunctive relief, without breach of this Section 13.4 (entitled "Governing Law;
Dispute Resolution") and without an abridgment of the powers of the arbitrator.
13.5 Import & Export Controls. Toshiba understands that Wink is subject
to regulation by agencies of the U.S. government which prohibit export or
diversion of certain products and technology to certain countries. Any and all
obligations of Wink including without limitation obligations to provide
products, technology, documentation, or technical assistance, will be subject in
all respects to such United States laws and regulations that will from time to
time govern the license and delivery of technology and products abroad or to
foreign nationals by persons subject to the jurisdiction of the United States.
Toshiba warrants that it will comply in all respects with the export and
reexport restrictions set forth in any export licenses obtained by the Wink or
Toshiba (if necessary). Toshiba warrants that it will not, and will take all
actions which may be reasonably necessary to assure that its end-user do not,
contravene such United States laws or regulations. Wink agrees that no technical
information furnished by Toshiba hereunder or any direct products thereof is
intended to or will be exported to any destination restricted by export control
regulation of the United States and/or Japan, without prior written
authorization from appropriate governmental authorities.
13.6 No Assignment. Neither this Agreement nor any rights or obligations
of Toshiba or Wink hereunder shall be assigned by either party without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed, except that either party may assign its rights and
obligations hereunder to any entity (i) which controls, is controlled by or is
under common control with such party, or (ii) which acquires all or
substantially all of the assets or business of such party to which this
Agreement pertains; provided, that in both cases such entity shall assume in
writing or by operation of law such party's obligations under this Agreement.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns.
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<PAGE> 16
13.7 Independent Contractors. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) allow either party to
create or assume any obligation on behalf of the other party for any purpose
whatsoever.
13.8 Compliance with Laws. In exercising its rights under this license,
each party shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
over the exercise of rights under this license.
13.9 Notices. All notices under this Agreement shall be in writing and
sent by (i) certified air mail, return receipt requested, postage prepaid, (ii)
commercial courier service, or (iii) via facsimile with a confirming notice sent
by one of the methods described in subsections (i) or (ii) above. If properly
addressed to or delivered at the address for each party set forth above (for
each party, to the attention of "Legal Department"), a notice shall be deemed
given upon delivery or, where delivery cannot be effected due to the actions of
the addressee, upon tender.
13.10 Counterparts. This Agreement may be executed in any number of
counterparts and when so executed and delivered shall have the same force and
effect as though all signatures appeared on one document.
13.11 SEVERABILITY. The provisions of this Agreement shall be severable,
and if any provision of this Agreement shall be held or declared to be illegal,
invalid, or unenforceable, such illegal, invalid or unenforceable provision
shall be severed from this Agreement and the remainder of the Agreement shall
remain in full force and effect, and the parties shall negotiate a substitute,
legal, valid and enforceable provision that most nearly reflects the parties'
intent in entering into this Agreement.
13.12 Entire Agreement. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior or contemporaneous agreements, understandings, proposals and
representations by the parties, including but not limited to the Project Outline
between the parties dated February 24, 1995.
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<PAGE> 17
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. TOSHIBA CORPORATION
By:/s/ Gary L. Hammer By: /s/ T. Kobayashi
Name: Gary L. Hammer Name: T. Kobayashi
Title: Vice President Title: General Manager
Legal Affairs Division
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<PAGE> 18
EXHIBIT A
DEVELOPMENT PLAN of WAS
1. Specifications
Specifications for the Wink Application Server shall be attached to this
Exhibit A. The following documents comprise the Specifications:
* Wink Application Server Handbook - Japan Version, Dated 9/09/96.
* Wink Application Server V 1.0 Functional Spec, Dated 11/01/96.
* Traffic Manager Functional Spec, Dated 11/01/96.
* Pipe Manager Functional Spec, Dated 11/01/96.
* Port Manager Functional Spec, Dated. 11/01/96.
* Wink Server Module API Reference, Dated 9/17/96.
* Port Manager Architecture, Dated 8/03/96.
* Port Manager Output Options, Dated 9/18/96.
* Port Manager RPC Communication Implementation, Dated 1/07/96.
2. Development Milestones: Deliverables, Deliverer, and Completion Dates
All development milestones by both Wink (including but not limited to
the development of the WAS software) and Toshiba (including but not limited to
the translation into Japanese of text resources of the WAS software and its user
documentation, and the other work required to interface the WAS with the Toshiba
Broadcast Server Product, including but not limited to the creation of the files
listed in Exhibit F) have been completed.
3. Schedule
Completed as of the Execution Date.
Exhibit A - page 1
<PAGE> 19
EXHIBIT B
TOSHIBA BROADCAST SERVER PRODUCT
The Toshiba Broadcast Server product is designed to manage, schedule and
deliver InterText (ICAP) applications and TeleText (Monta) applications into the
vertical blanking interval (VBI) of broadcast programming. To accomplish this
task, the Toshiba Broadcast Server product consists of various software
applications (which is capable of including the Licensed WAS Technology) running
on the Sun Solaris operating system (version 2.4) on one or more FW2000
workstation computers, in conjunction with the Toshiba RTP and data insertion
hardware and software.
Exhibit B - page 1
<PAGE> 20
EXHIBIT C
TOSHIBA EQUIPMENT
This list covers the Equipment as defined in the Wink Engine License Agreement,
the Wink Online Server for InterText License Agreement and the Wink Application
Server License Agreement.
In addition to the two sample units of each Combined Engine Product listed
pursuant to Section 3.2 of the Wink Engine License Agreement, Toshiba shall
provide the items listed below. For each of the following items, Toshiba shall
provide (unless already provided) the number of units of each item specified
below, including licenses for use by Wink if such licenses are required as well,
for items noted with a "*", any documentation in Japanese and English. If
documentation is not sufficient for use by engineers, then specifications in
Japanese and English shall be provided by Toshiba.
The parties agree that they will amend this list to include any other items
reasonably necessary for Wink to develop, test, or maintain, on Wink's premises,
the Licensed Engine Product, the Licensed WAS Technology, and the Licensed WOS
Technology, excluding items that Wink should reasonably be expected to obtain on
its own as part of Wink's standard business assets (including standard PCs or
workstations, except to the extent that such PC or workstation is part of an
integrated piece of equipment distributed by Toshiba or a third-party for
development, testing, support, or use of the Combined Engine Product, Combined
Broadcast Server Product, and Combined Online Server Product).
Notwithstanding the above two paragraphs, the parties recognize that given this
contract is being executed after development and testing has concluded, some
items (in one or more units) may have been provided by Toshiba during
development or testing and may have been returned to Toshiba on the expectation
that these items are no longer needed by Wink for maintenance. The list below
excludes such items (or the returned units of items listed below). If such items
(or additional units of items listed below) become reasonably necessary for Wink
to provide maintenance under this Schedule, then the parties agree that such
items shall be added to the list.
The following excludes minor items such as cables, keyboards, mice/mousepads,
EPROMs and OTP ROMs, which may have been provided by Toshiba but are not of
material cost.
Already at Wink (excluding documentation):
- - --------------------------------------------
PCs and workstations and related equipment:
(2) HP Vectra VL 5/75 PC w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(1) HP Vectra VL2 4/66 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(2) HP Vectra VE 4/66 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(1) Toshiba PV3000 Pentium-133 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(1) J-3100 (486) PC w/ Win 3.1J/DOS-J, PCNFS-J
Exhibit C - page 1
<PAGE> 21
(1) J-3100 (486) PC w/ RTM drivers
(1) Sony 17" PC monitor
(2) Toshiba PC monitors
(5) HP 15" Ergo Ultra VGA monitor
(1) Toshiba 15" color monitor
(1) Sun SPARCstation IPX w/ Sun OS 4.13
(1) Sun Monitor (approx 20")
(1) Smart5 system (Sparc4, 19" grayscale monitor, Solaris 2.4J)
(1) Smart4 system (Sparc4, 19" grayscale monitor, Solaris 2.4J)
(1) Toshiba AS-4085workstation (equivalent to SPARC 20)
w/Solaris 2.4J
(1) Toshiba 19" monitor for AS-4085
(1) external Sun CD-ROM drive
(1) Omron 14.4k modem
(1) l0baseT hub
RTMs, RTPs and related equipment:
(5) RTM cards
*(1) RTP System -- includes: SND68, SVC-II Digital Serial Converter,
Teletext inserter, and FW2000 w/ 20" Toshiba color monitor, keyboard (Japanese,
Sun type 5).
(1) external Toshiba CD-ROM drive (came with RTP)
(1) external Toshiba QIC tape drive (came with RTP)
Other equipment:
(2) Toshiba VCRs (non-IT enabled)
(1) BS-CS Tuner CSR-110 modified for development work
(3) old Teletext decoders
(3) ASCII telephone line emulators
(5) Koden StepDown (120V_100V) transformer (small)
(2) Nissyo DN-101 StepDown transformer
(2) Toyoden CD117-15 StepDown transformer
(1) adapter socket for burning TV CPU
(2) 28" WideBazooka TV w/IT (prototype) and remote control (Note:
one TV is dead)
(3) 32" WideBazooka TV w/IT (prototype) and remote control (Note: one
TV is dead)
(5) development IT settop box (dead) and remote control (Note: one
settop box is dead)
(1) ShibaSoku VG22F1 teletext signal generator
Not yet at Wink but still needed:
- - ---------------------------------
*(1) complete installation of Toshiba broadcast equipment system,
including (but not limited to) the Licensed WAS Technology
*(1) complete installation of Toshiba online/response server system,
including (but not limited to) the Licensed WOS Technology
Exhibit C - page 2
<PAGE> 22
EXHIBIT D
TOSHIBA SUBSIDIARIES
[Toshiba to fill in prior to contract execution -- for each, Toshiba to
provide name of company, full mailing address & street address (if different
from mailing address), and the name/title/phone/fax/email-address of the
appropriate contact person at that subsidiary.]
Exhibit D - page 1
<PAGE> 23
EXHIBIT E
ROYALTIES
Running royalties on the Licensed WAS Technology:
- - ---------------------------------------------------
For any shipments (or installations) by Toshiba on or before 1 August 1997 and
for no more than three shipments (or installations) that may be made subsequent
to 1 August 1997 to TV Aichi and WOWOW: [ * ] per copy of the Licensed WAS
Technology.
For shipments (or installations) by Toshiba after 1 August 1997, excluding three
total shipments (or installations) that may be made subsequent to 1 August 1997
to TV Aichi and WOWOW: royalties to be negotiated by Wink and Toshiba in advance
of any price quote being made by Toshiba to a prospective customer.
Running royalties on the manuals:
[ * ] of fees (if any) charged by Toshiba for Wink Manuals, Translated
Wink Manuals, and Toshiba Manuals regarding WAS or WAS Server Modules or APIs.
- - --------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
Exhibit E - page 1
<PAGE> 24
EXHIBIT F
TOSHIBA PROPERTY
A. Toshiba-owned files that are part of WAS
[ * ]
Exhibit F - page 1
<PAGE> 25
EXHIBIT G
WINK PROPERTY
A. WINK-OWNED FILES THAT COMPRISE WAS
[ * ]
B. WINK-OWNED FILES THAT ARE DISTRIBUTED ALONG WITH THE WAS SOFTWARE
[ * ]
C. SAMPLE SERVER MODULES CREATED BY WINK TO ASSIST SERVER MODULE
AUTHORS
[ * ]
[ * ]
D. OTHER WINK PROPERTY
1. Test Plans, Test Lists, and Test Cases developed by Wink.
2. Server modules and certain .acf files associated with ICAP applications
developed by Wink to test and/or demonstrate the capabilities of the Wink
technologies
Exhibit G - page 1
<PAGE> 26
EXHIBIT H
SUPPORT
The following provisions govern the support to be provided by Wink to Toshiba
under this Agreement.
A. General Support.
1. Contact People. Toshiba shall appoint two (2) individuals within its
organization for support under this Agreement ("Contact People"). The Contact
People will serve as primary contacts between it and Wink and to receive
support. All of Toshiba's support inquiries shall be initiated through the
Contact People. Toshiba shall have the right to re-assign individuals to become
Contact People from time to time, but Contact People shall be adequately trained
by Toshiba or by Wink, pursuant to Section 10.4 (entitled "Training") of the
Agreement, to perform the responsibilities required of Toshiba in this Exhibit.
2. Support Obligations. Toshiba will be responsible for providing First
Level Support and Second Level Support (as defined below) to its subsidiaries
and to customers with respect to the Products. Wink will provide Third Level
Support (as defined below) for Products in the manner specified in these support
terms.
3. Support Levels. Levels of customer support are defined as follows:
(a) "First Level Support" shall mean: (i) generating product
information; (ii) providing configuration support; (iii) providing front-line
telephone support for answering day-to-day questions and collecting of relevant
technical problem identification information; (iv) filtering user errors from
real technical problems; and (v) solving simple problems by reference to
existing documentation.
(b) "Second Level Support" shall mean First Level Support plus
providing the following areas of support: (i) isolating the problem to determine
that it is a problem with the Wink Product; (ii) recreating the problem in a lab
simulation and/or through interoperability testing; (iii) determining whether or
not the problem is a defect; (iv) collecting and analyzing diagnostic data; and
(v) defining an action plan with the customer to solve the problem.
(c) "Third Level Support" shall mean: (i) confirming duplication
of the problem and validating that it's a defect; (ii) fixing software bugs or
generating workarounds.
4. Third Level Support.
(a) Escalation. Toshiba can escalate a problem to Third Level
Support, once Toshiba exhausts the items enumerated above in First and Second
Level Support. When escalating, Toshiba shall provide enough information to
allow Wink to duplicate the problem. To
Exhibit H - page 1
<PAGE> 27
the extent that Toshiba is unable to provide First and Second Level Support, the
support which Wink provides shall be charged at a rate of 50% higher than that
provided for in Section C.1 below, and Wink may require that Toshiba arrange for
training of Toshiba's Contact People.
(b) Assignment of Severity Level. When a Third Level support call
comes into Wink from Toshiba, the parties will mutually assign a Severity Level
as specified below that describes the nature of the call and how critical it is
to Toshiba's customer base(s).
(c) Response. Wink agrees to use commercially reasonable efforts
to meet the response times for the respective problems commensurate with the
severity of the error as specified below.
<TABLE>
<CAPTION>
First Frequency of
Severity Level Definition Response Time Status Update
- - -------------- ---------- ------------- -------------
<S> <C> <C> <C>
Critical Bug causes a crash and/or 4 business hours Each business day
data loss to a part or all of
the system
High Bug causes a feature to 4 business hours Each business day
violate a performance
specification (i.e., feature
consistently does not work
as specified, or not at all)
Medium Bug causes an occasional 1 business day Weekly
failure of a feature (i.e.,
feature fails in specific cases)
Low Bug is characterized by a 1 business day Weekly
"glitch" that does not affect
a feature's performance (e.g.,
confusing messages, typo-
graphical errors, visual
abnormalities, etc.)
Doc Error Error in documentation 2 business days Weekly
</TABLE>
(d) Support. Wink agrees to provide Third Level Support from 9
a.m. to 6 p.m. (San Francisco time) on business days ("Support Hours"). Support
Hours reflect Winks committed level of availability, but Wink staff members are
often available outside those hours. Support requests shall be submitted by
Toshiba via email to a group list at Wink of appropriate personnel. To provide
better assurance that Wink personnel promptly receive support requests, Wink
will
Exhibit H - page 2
<PAGE> 28
establish a voicemail group number and provide use instructions to Toshiba so
that Contact People can easily inform Wink personnel that a support request
email has been sent.
Exclusions. Wink's support obligations for the fees provided for in
Section C shall not extend to problems in the Products that result from: (i)
Toshiba's failure to implement any Updates to the Products which are provided by
Wink; (ii) changes to the operating system or environment or Toshiba Components
or Toshiba Server Products which adversely affect the Products; (iii) any
alterations of or additions to the Products performed by parties other than
Wink; (iv) use of the Products in a manner inconsistent with the applicable
Specifications or in a manner for which such Product was not intended; (v)
combination of the Products with other products not supplied by Wink, which
problems do not affect the Products standing alone; or (vi) operation of the
Products outside of environmental specifications. Errors arising from the
foregoing may be addressed by Wink at its then current hourly rates.
B. Comprehensive Support.
1. Toshiba-Requested Updates. In the case that Toshiba does not wish to
wait for Wink to choose on its own to create an Update pursuant to Section 9.1,
Toshiba may request, from time to time, an Update version of the Licensed WAS
Technology ("Toshiba-Requested Updates") in order to make minor feature
enhancements in a timeframe desired by Toshiba. Wink shall use commercially
reasonable efforts to schedule the Toshiba-Requested Update in a timeframe: that
meets Toshiba's requested schedule.
2. Compensation. Toshiba-Requested Updates shall be treated in the same
manner as Updates, except that Wink's work shall be compensated by Toshiba.
Compensation shall be at the rate of US$120/hour, due net/30. The compensation
terms listed herein are subject to change annually, with thirty (30) days
written notice provided by Wink to Toshiba.
3. Ownership. Ownership of the property created for the
Toshiba-Requested Update will be agreed according to the same basis as was used
in the development of the Licensed WAS Technology, Version 1.0. Payment by
Toshiba to Wink for Toshiba-Requested Updates shall not affect ownership of the
Updates or of any other Wink Property.
C. Fees on General and Comprehensive Support.
1. Fees. In consideration for the support provided by Wink in this
Exhibit, Toshiba shall pay the following fees: US$1201hour, due net/30.
2. Change. The terms listed herein are subject to change annually, with
30 days written notice provided by Wink to Toshiba.
Exhibit H - page 3
<PAGE> 29
EXHIBIT I
WINK MARK(s)
The following Wink Marks are relevant to the Wink Application Server License
Agreement.
Wink ITV TM For use when referring in text to the Wink
interactivity system or the interactive
functionality provided by Wink's technology.
Wink Broadcast Server TM For use when referring in text to the Wink
application server software.
Exhibit I - page 1
<PAGE> 30
ADDENDUM TO WINK APPLICATION SERVER LICENSE AGREEMENT
THIS AMENDMENT (the "Amendment") hereby amends to the Wink Application
Server License Agreement executed as of 30 September, 1997 (the "Agreement")
between Wink Communications, Inc., a California corporation with offices at 1001
Marina Village Parkway, Alameda, CA 94501 ("Wink") and Toshiba Corporation, with
offices at 1-1 Shibaura, I-Chome, Minato-ku, Tokyo 105-01, Japan ("Toshiba").
The Amendment is executed by the parties as of this 30th day of September, 1997
("Execution Date") to memorialize changes to parties' relationship and its terms
are effective as of the Execution Date.
Unless specifically amended in this Amendment, all terms of the
Agreement remain in force.
AMENDMENT
1 TOSHIBA-REQUESTED UPDATE
1.1 Development Requested and Agreed To. Pursuant to Exhibit H
(entitled "Support") of the Agreement, Toshiba has requested that
Wink create a Toshiba-Requested Update. Such Toshiba-Requested
Update shall be server modules to create certain functionality in
the use of the Wink Application Server ("DUI Server Modules"), to
be developed in a timeframe to meet Toshiba's desired shipment
schedule of televisions and settop boxes. Wink agrees to develop
the DUI Server Modules, at a discounted charge to Toshiba of
[ * ], to be paid within 30 days of acceptance by Toshiba of the
object code to the DUI Server Module.
1.2 Development Plan for DUI Server Modules. An addendum to Exhibit A
("Addendum to Exhibit A - DUI Server Modules") shall be added to
the Agreement, to reflect relevant details concerning the
development plan for the DUI Server Modules.
Ownership of DUI Server Modules. Wink retains ownership of the
DUI Server Modules, the files of which are listed in an addendum
to Exhibit D ("Exhibit D - DUI Server Modules"). Toshiba's
license to the DUI Server Modules shall be as set forth in
Section 3.1 (entitled "Grant").
-1-
<PAGE> 31
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. TOSHIBA CORPORATION
By: /s/ Gary L. Hammer By: /s/ T. Kobayashi
Name: Gary L. Hammer Name: T. Kobayashi
Title: Vice President Title: General Manager
Legal Affairs Division
-2-
<PAGE> 32
ADDENDUM TO EXHIBIT A - DUI SERVER MODULES
DEVELOPMENT PLAN OF LICENSED ENGINE VERSION 1.1
1. Specifications
Specifications for the Licensed Engine Product are attached to
this Exhibit. The following documents comprise the Specifications:
* "Specification of Detached GUIs and Dual System Support Server
Modules to WAS/J Version 1.0.1 " dated 27 February 1997 (author: Andrew Lochart,
Wink).
2. Development Milestones & Schedule: Deliverables, Deliverer, and
Completion Dates
<TABLE>
<S> <C> <C>
Remaining Deliverables to the Other Party Deliverer Completion Date (Calif. Time)
- - ----------------------------------------- --------- ---------------
</TABLE>
None. All development milestones have been completed.
-3-
<PAGE> 33
EXHIBIT D - DUI SERVER MODULES
WINK PROPERTY
(TO BE PROVIDED UNDER SEPARATE COVER)
-4-
<PAGE> 34
SPECIFICATION OF DETACHED GUIS AND DUAL SYSTEM SUPPORT SERVER MODULES
TO WAS/J VERSION 1.0.1
INTRODUCTION
The Detached GUIs are Server Modules for the WAS-J that have the capability to
keep the event list and application list of two instances of the WAS-J in sync.
Their look and feel will be the same as the Applications and Event Views of the
existing WAS-J GUI. The new GUIs assume that an exact set of device and data
pipes have been loaded on the two WAS-J instances.
FEATURES
The Detached GUIs will support these features:
SYSTEM STATUS / ATTACH TO WAS
* Open Connection to WAS1
* Display number of events, apps, and pipes on WAS1.
* Open Connection to WAS2
* Display number of events, apps, and pipes on WAS2
EVENTS
* List events - events that are not in sync will be marked in a
different color. The operator will see the event listed twice and
will be able to distinguish differences.
* Refresh events - done automatically via notifications received
from the WAS/J instances or manually via "RefreshAll" button.
* Add event
* Modify event - limited to changing start and end time and/or
frequency
* Delete event
* Change event state
(Disable/Enable/TriggerUnscheduled/Suspend/Resume/Kill/Defer)
APPLICATIONS
* Refresh applications
* Register application
* Unregister application
SEND SPECIAL BLOCKS
* Kill Blocks
* Suspend Blocks
* IRT Alert Blocks
-5-
<PAGE> 35
NOTES:
1. All these functions are supported by the SM API.
2. Function calls will be sent to both instances of the WAS/J.
3. Notifications received from the WAS/J Will report which event(s) to
refresh.
4. Multiple instances of the detached GUI will remain up to date.
5. It is recommended that events only be added from one instance of the
detached GUI.
6. Same file system. The detached GUI and the WAS must be on the file
systems if new application are to be registered from the WAS. Or at
least, the WAS file system must be mounted/visible on the GUI machine.
7. Initial WAS/J start-up. The same ACF file must be loaded on both WAS/J
instances,
8. One WAS re-boot. Send all events from one WAS to the other.
Schedule
Wink estimates that it will take approximately 8 weeks for us to design, code,
and test the two new GUIs. Here is a breakdown of the schedule:
Finish design: Feb 24 - 28
Coding: March 3 - April 4
Testing: April 7 - April 18
Delivery to Toshiba: April 18
We will provide any new English language strings that may be needed in the new
GUIs to Toshiba as soon as possible for localization.
We will provide user documentation for the new GUIs in English on or before
April 18 for localization.
-6-
<PAGE> 36
ADDENDUM TO WINK ENGINE LICENSE AGREEMENT
THIS AMENDMENT (the "Amendment") hereby amends to the Wink Engine License
Agreement executed as of January 15, 1998 (The "Agreement") between Wink
Communications, Inc., a California corporation with offices at 1001 Marina
Village Parkway. Alameda. CA 94501 ("Wink") and Toshiba Corporation, with
offices at 1-1 Shibaura, 1-Chome, Minato-ku, Tokyo 105-01, Japan ("Toshiba").
The Amendment is executed by the parties as of this 15th day of January, 1998
("Execution Date") to memorialize changes to the parties' relationship and its
terms are effective as of the Execution Date.
Unless specifically amended in this Amendment, all terms of the
Agreement remain in force.
AMENDMENT
1. TOSHIBA-REQUESTED UPDATE
Development Requested and Agreed To. Pursuant to Exhibit E (entitled
"Support") of the Agreement, Toshiba had requested that Wink create a
Toshiba-Requested Update. Such Toshiba- Requested Update shall be an updated
version of the Licensed Engine Product ("Version 1.2"), to be developed in a
timeframe to meet Toshiba's desired shipment schedule of televisions and settop
boxes. Wink agrees to develop the Version 1.2 Toshiba-Requested Update, at a
charge of [ * ], to be paid within 30 days of Acceptance ("Acceptance") by
Toshiba of the object code to the Licensed Engine Product Version 1.2.
1.1 Development Plan for Version 1.2. An Addendum to Exhibit A
("Exhibit A - 1.2") shall be added to the Agreement, to
reflect relevant details concerning the development plan
for Version 1.2 Toshiba-Requested Update.
1.2 Schedule for Version 1.2. Wink shall deliver to Toshiba by
e-mail by January 31, 1998, the final version of the code
for Version 1.2.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. TOSHIBA CORPORATION
By: /s/ Pat Ransil By: /s/ Hideaka Yamamoto
Name: Pat Ransil Name: Hideaka Yamamoto
Title: VP Engineering Title: General Manager
ADI Business Group
-7-
<PAGE> 37
EXHIBIT A - 1.2
DEVELOPMENT PLAN OF LICENSED ENGINE VERSION 1.2
1. Specifications
Specifications for the Licensed Engine Product are the same as Licensed Engine
Product Version 1.1 with (the following 2 modifications:-
1.1 Auto Start Application: In Licensed Engine Product Version 1.1
(the HINT_APP_AUTO_START application is disabled in Wink Engine.
This application is to be enabled Version 1.2
1.2 Resident ROM App: Enable Toshiba to link resident ROM
applications. Separate resident APP.o from dataAPI.o so that
Toshiba can change ROM applications.
-8-
<PAGE> 1
EXHIBIT 10.27
WINK ENGINE LICENSE AGREEMENT
THIS AGREEMENT (the "Agreement") is executed as of this 30 day of
September 1997 ("Execution Date") to memorialize the parties' relationship and
its terms are effective Oct 31, 1994, (the "Effective Date"), between Wink
Communications, Inc., a California corporation with offices at 1001 Marina
Village Parkway, Alameda, CA 94501 ("Wink") and Toshiba Corporation, with
offices at 1-1, Shibaura 1-Chome, Minato-ku, Tokyo 105-01, Japan ("Toshiba").
BACKGROUND
A. Wink is a software developer and has developed its interactive
television system of technology and related products, services, processes and
materials (the "Wink ITV System"), which includes a software protocol for
delivering interactive applications synchronized with or independent of
television programs and advertisements. Also included without limitation in the
Wink ITV System are an authoring tool, server software and the Wink Engine TM
that decodes the protocol and displays the interactive applications overlaid on
a television screen.
B. Wink and Toshiba desire that Wink develop and grant to Toshiba the
right to use and embed certain Wink products in Toshiba products identified by
the parties from time to time. Wink and Toshiba are executing a series of
agreements to accomplish this desired goal: (i) this Agreement, (ii) Wink Online
Server for InterText License Agreement, and (iii) Wink Application Server
License Agreement (together, the "Wink/Toshiba Agreements").
C. The Wink Engine is among the Wink products that Toshiba desires that
Wink modify and grant to Toshiba the right to use and embed in Toshiba products.
The parties desire that Wink customize and grant Toshiba the right to use Wink's
software engine for inclusion in certain Toshiba components for distribution in
television and video products.
AGREEMENT
1. DEFINITIONS
1.1 "Wink Engine" shall mean Wink's software engine as it exists
without customization pursuant to this Agreement, in machine
executable, object code format.
1.2 "Licensed Engine Product" shall mean the Wink Engine and other
Wink-owned files that are provided with the Wink Engine, all as
customized by Wink for the TC90A01F decoder chip and other chips
that are similar enough to the TC90A01F that no change must be
made to the Wink Engine for it to run on the similar device
("TC9OA01 and Like Chips"), version 1.0, in object code format,
and any Updates that may be provided by Wink to Toshiba from
time to time.
1.3 "Toshiba Component" shall mean either (a) the InterText decoder
board containing the TC90A01F and like Chips, ROM, RAM and a
modem for insertion into a television, VCR, broadcast set-top
device or similar audio visual device, or (b) the ROM (read-only
memory) which is running on the TC90A01F and like Chips for
insertion into the InterText decoder board described in (a).
1.4 "Combined Engine Component" shall mean the Toshiba Component
with the Licensed Engine Product incorporated.
1.5 "Combined Engine Product" shall mean a television, VCR,
television set-top device or similar audio visual device that
incorporates the Combined Engine Component or other devices
which the parties shall mutually agree upon in writing.
<PAGE> 2
1.6 "Deliverables" shall mean each deliverable identified in the
Development Plan.
1.7 "Development Activities" shall mean the development work to be
performed by both parties pursuant to this Agreement and the
Development Plan
1.8 "Development Plan" shall mean the plan for completion of the
development activities including the Specifications, each
party's respective development obligations, milestones, a
schedule, Deliverables, and other relevant items all as mutually
agreed upon and as set forth in Exhibit A attached hereto for
the delivery of the Licensed Engine Product and, if specified by
the parties in a mutually agreed amendment or addendum to
Exhibit A, for Updates.
1.9 "Updates" shall mean updates containing error corrections or
minor enhancements to the Licensed Engine Product created by or
for Wink after the Effective Date and designated by a change in
version number to the right of the decimal point. Updates do not
include major enhancements to the Licensed Engine Product
designated by changes in the version number to the left of the
decimal point.
1.10 "Specifications" shall mean the technical and other
specifications for the Licensed Engine Product as set forth in
the Development Plan.
1.11 "Intellectual Property Rights" shall mean all current and future
worldwide patents and other patent rights, copyrights, mask work
rights, trade secrets, know-how, technical information, and all
other intellectual property rights, including without limitation
all applications and registrations with respect thereto.
2 DEVELOPMENT
2.1 Development Efforts. Each party will use reasonable commercial
efforts to perform its Development Activities in accordance with
the Development Plan. In connection therewith, each party shall
(i) cooperate with the other party to produce the
Specifications, and (ii) cooperate in providing the other party
with additional materials and information, as mutually agreed.
Toshiba shall provide the equipment and other materials
identified on Exhibit B ("Equipment") for use by Wink in the
development and to perform Wink's support obligations. Toshiba
shall remain the owner of such Equipment. Wink may, upon written
approval by Toshiba in each instance, which approval shall not
be unreasonably withheld, alter the Specifications commensurate
with good faith efforts to finalize and refine the Deliverables
in accordance with Toshiba's needs and objectives for the
Licensed Engine Product. The parties may agree on additional
Development Activities by amending Exhibit A. All development
shall be at each party's sole expense, except as set forth in
Section 4 (entitled "Royalties") or Section 10 (entitled
"Training, Support and Maintenance") or Exhibit E (entitled
"Support") below.
2.2 Delivery and Acceptance. In the event either party is late in
the performance of its obligations with respect to the
Development Plan, the other party's obligations as to those
items shall be delayed by a period necessary as a result of the
delay. The parties shall mutually agree on testing criteria and
evaluation procedures for the Deliverables which shall be set
forth in the Development Plan. Upon delivery to Toshiba of each
Deliverable, Toshiba shall have thirty (30) days to test such
Deliverable, unless a longer period is specifically agreed to by
the parties in writing, in accordance with the mutually agreed
criteria and procedures, for conformance to the applicable
Specifications and to accept such Deliverable or deliver to Wink
a written Statement of Defects to be corrected. Failure to
provide a Statement of Defects shall be deemed acceptance. If
Toshiba provides a written Statement of Defects, Wink shall use
reasonable commercial efforts to correct such defects as soon as
practicable and resubmit the Deliverable to Toshiba. These
procedures shall be repeated until Toshiba accepts the
Deliverable or the parties mutually agree to terminate this
Schedule.
-2-
<PAGE> 3
2.3 Transfer. Upon Toshiba's acceptance of the final Deliverable
("Final Acceptance"), Wink shall deliver to Toshiba a master
diskette or other digital storage media containing the Licensed
Engine Product for use by Toshiba in accordance with the terms
of this Agreement.
2.4 Other Projects. Toshiba acknowledges that Wink is in the
business of customizing the Wink Engine for other third parties
and nothing in this Agreement restricts Wink's rights to provide
the Licensed Engine Product or other versions of the Wink Engine
to any other party.
2.5 Further Development. Wink agrees to waive the Non-Recurring
Engineering expense ("NREs") fees associated with the
development of version 1.X of the Licensed Engine Product. Any
additional development, localization or testing of the Licensed
Engine Product after acceptance under Section 2.2 including
feature enhancements or creation of a new version will be
subject to mutual agreement. If the parties agree upon terms and
conditions for such development, the parties will attach an
addendum to this Agreement setting forth all such turns and
conditions or will amend this Agreement as necessary to account
for such development.
3 LICENSE
3.1 Licensed Engine Product. Subject to the terms and conditions of
this Agreement, Wink grants to Toshiba a worldwide,
non-exclusive, non-transferable, right and license, under all of
Wink's Intellectual Property Rights in and to the Licensed
Engine Product, to (a) use, reproduce and have reproduced the
Licensed Engine Product, solely (i) for the purpose of
incorporating the Licensed Engine Product into a Toshiba
Component to create a Combined Engine Component, and (ii) as
necessary in the course of distribution and support of a
Combined Engine Component as permitted hereunder; (b) distribute
the Combined Engine Component, directly or indirectly through
subdistributors in accordance with Section 3.4 below, to OEM's
for incorporation and use in a Combined Engine Product; and (c)
incorporate the Combined Engine Component into a Toshiba product
and distribute the Combined Engine Product. Toshiba may
distribute the Licensed Engine Product on a standalone basis
solely for incorporation into a previously transferred Toshiba
Component, provided that such distribution shall be subject to
procedures reasonably acceptable to Wink to monitor and account
for such distribution, including encryption procedures where
distributed electronically or by broadcast or other
transmission. The parties shall mutually agree in writing on
such procedures prior to any such distribution and Toshiba shall
ensure that its subdistributors comply with all such procedures.
Toshiba shall have no right to sublicense the foregoing rights
except to the extent a sublicense may be deemed to have been
granted in connection with the exercise by Toshiba of its rights
to engage submanufacturers and subdistributors as described
herein. Except as expressly provided in this Agreement, Wink
reserves all rights and ownership to the Licensed Engine
Product.
3.1.1 Toshiba Subsidiaries. The grant in Section 3.1 shall
also apply to any direct or indirect subsidiary of
Toshiba that is majority-owned and controlled by Toshiba
and only for so long as it remains majority-owned and
controlled by Toshiba and that is listed in Exhibit C
provided that Toshiba, prior to the exercise of any such
rights by a subsidiary, obtains in writing such
subsidiary's agreement to be bound by all the applicable
restrictions and obligations under this Agreement. Upon
request of Wink, Toshiba shall promptly provide Wink a
copy of each such written agreement. Toshiba hereby
guarantees the performance of such obligations and
restrictions by each subsidiary exercising any rights
under Section 3.1 as primary obligor and not merely as
surety. Toshiba shall provide Wink with the name and
contact information for an appropriate manager at each
subsidiary in Exhibit C. Failure to list a subsidiary in
Exhibit C shall have no effect on the obligations of
Toshiba as set forth in this Section 3.1.1.
-3-
<PAGE> 4
3.2 Combined Engine Product. Toshiba agrees, and will obtain the
written agreement of any OEMs to which it or its subdistributors
have distributed Combined Engine Components, to provide Wink
with a written notice describing the Combined Engine Product at
least thirty (30) days prior to the first shipment of such a
Combined Engine Product. The description of the Combined Engine
Product shall include the product type (e.g., color television),
distinguishing characteristics (e.g., 32" double-wide screen),
model # and expected Suggested Retail (List) Price. Toshiba
shall also provide two free sample units of such Combined Engine
Product, as soon as is practicable, but with a target of
providing such units at least thirty (30) days prior to the
first shipment of such a Combined Engine Product. With respect
to shipments made before the Execution Date, Toshiba will
provide such units within 30 days from the Execution Date. Wink
shall have no obligation to return such sample units.
3.3 Have Reproduced. Toshiba shall have the right to provide the
Licensed Engine Product to in third party manufactures of
Combined Engine Components or Combined Engine Products (each a
"Submanufacturer"), provided that each Submanufacturer shall
agree in a signed writing to be bound by the applicable
restrictions on Toshiba set forth in this Agreement with respect
to the Licensed Engine Product, which include but is not limited
to the agreement to use and copy the Licensed Engine Product
solely to create Combined Engine Components or Combined Engine
Products only for Toshiba and to keep the Licensed Engine
Product confidential according to the applicable terms of this
Agreement. Toshiba shall provide the name of such
Submanufacturer to Wink promptly upon contracting with such
Submanufacturer regarding services concerning the Licensed
Engine Product. Upon request of Wink, Toshiba shall promptly
provide to Wink a copy of such signed writing with each
Submanufacturer, and Toshiba shall ensure that each
Submanufacturer abides by such restrictions. Toshiba agrees to
indemnify, defend and hold Wink harmless from and against any
loss, cost, liability or expense (including Wink's reasonable
attorneys' fees) arising out of or related to a breach of the
foregoing provisions by Submanufacturers. Toshiba shall promptly
notify Wink if Toshiba knows or believes that a Submanufacturer
has breached the provisions of this Section.
3.4 Subdistributors. Toshiba may exercise its distribution rights
hereunder through the use of subdistributors; provided, that
each subdistributor must agree in a signed writing, prior to
obtaining the Licensed Engine Product or Combined Engine
Components or Combined Engine Products from Toshiba, to be bound
by all applicable restrictions on Toshiba set forth in this
Agreement with respect to the Licensed Engine Product. Toshiba
shall provide the name of such subdistributor to Wink promptly
upon contracting with such subdistributor regarding services
concerning the Licensed Engine Product. Upon request of Wink,
Toshiba shall promptly provide to Wink a copy of such signed
writing with each subdistributor, and Toshiba shall ensure that
each subdistributor abides by such restrictions. Toshiba agrees
to indemnify, defend and hold Wink harmless from and against any
loss, cost, liability or expense (including Wink's reasonable
attorneys' fees) arising out of or related to a breach of the
foregoing provisions by subdistributors. Toshiba shall promptly
notify Wink if Toshiba knows or believes that a subdistributor
has breached the provisions of this section.
4 PAYMENTS
4.1 Per-Unit Royalty. In consideration for the rights and licenses
granted to it under Section 3 above, for each unit of a Combined
Engine Component which Toshiba distributes either as a Combined
Engine Component or as part of a Combined Engine Product,
Toshiba shall pay Wink the following per-unit royalty: [ * ] .
Such royalty shall accrue upon shipment or other transfer by
Toshiba.
- - ----------
* Confidential treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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<PAGE> 5
4.2 Advance Royalties. Wink agrees to waive the royalty advances it
customarily requires of its licensees and no royalty advance
shall be due from Toshiba.
4.3 Distribution of Updates. No royalty will be payable for
Toshiba's distribution of Updates alone.
4.4 Promotional Units. Toshiba may distribute a reasonable number of
Combined Engine Products as promotional or demonstration units,
without incurring a royalty payable to Wink under the provisions
of Section 4.1, provided that such units are distributed by
Toshiba and its subdistributor, if any, free of charge. Toshiba
shall pay Wink the royalty pursuant to Section 4.1 above
whenever Toshiba or its subdistributor imposes any charge on or
related to a Combined Engine Product.
4.5 Payments. Toshiba shall make royalty payments to Wink due under
this Agreement within forty-five (45) days after the end of each
calendar quarter during the term of this Agreement, with the
first payment to occur within sixty (60) days after the
Execution Date. Such payments shall be accompanied by a written
report in a form reasonably acceptable to Wink which details all
of the following with respect to the applicable period: (i) the
number of each type of Combined Engine Product or Combined
Engine Component distributed by Toshiba under this Agreement
including, the identity of each customer for the Combined Engine
Components distributed on an OEM basis, (ii) the number of each
type of Combined Engine Product distributed by geographic
territory, (iii) the royalty due Wink with respect to such
Combined Engine Components or Combined Engine Products accrued
during such period showing the calculation of such amounts, and
(iv) if applicable, the number of Combined Engine Products or
Combined Engine Components distributed by Toshiba or its
subdistributors for which no royalty is due.
4.6 Late payments. Any amount not paid when due under Section 4.5
will be subject to a late charge of 1.5% per month, or the
maximum permitted by law, whichever is greater.
4.7 Currency; Taxes. All payments hereunder shall be in United
States dollars. All payments by Toshiba shall be made free and
clear of, and without reduction for, any and all taxes,
including, without limitation, sales, use, value added,
withholding, or similar taxes, other than taxes which are
imposed by the United States or any political subdivision
thereof based on the net income of Wink. Notwithstanding the
foregoing, Wink agrees that, if any income taxes are imposed by
the Japanese government on we payment to be made under this
Agreement, Toshiba shall withhold such amount of taxes ("Japan
Royalty Income Withholding Tax"), up to a maximum of 10% of such
payments and pay the withheld amount to the Japanese tax
authorities to the extent that Toshiba is legally required to do
so. Excluding the Japan Royalty Income Withholding Tax, any such
taxes which are otherwise imposed on payments to Wink shall be
the sole responsibility of Toshiba. Toshiba shall provide Wink
with official receipts issued by the appropriate taxing
authority or such other evidence as is reasonably requested by
Wink to establish that such taxes have been paid.
4.8 Books and Records; Audit. Toshiba agrees to maintain, and to
require that each Submanufacturer and subdistributor who
reproduces or distributes Licensed Engine Products, Combined
Engine Products or Combined Engine Components maintain and
provide to Toshiba, until three (3) years after the termination
or expiration of this Agreement, complete and current books,
records and accounts regarding all copying and distribution
activities pursuant to this Agreement and to document compliance
with the licenses granted. Toshiba agrees to allow an
independent certified public accountant hired by Wink to audit
and examine such books, records and accounts no more than once
each calendar year, during Toshiba's normal business hours, to
verify the accuracy of the reports and payments made to Wink
under this Agreement and this Section and compliance with the
restrictions of this Agreement. In the event such audit
determines that Toshiba has not paid Wink all of the royalties
due Wink, Toshiba agrees to pay, in addition to any damages to
which Wink might be entitled, the amount of such shortfall plus
interest at a rate of one and one-half percent (1.5%) per month
or the
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<PAGE> 6
highest rate allowed by law, whichever is higher. The cost of
such audit shall be borne by Wink, provided that if any such
audit reveals an underpayment to Wink of at least five percent
(5%), Toshiba shall reimburse to Wink all its costs of such
audit.
5 PROPERTY RIGHTS
5.1 Toshiba Property Rights.
5.1.1 Description. Toshiba owns all right, title and interest
in and to those items listed as owned by Toshiba, as set
forth in Section 2 of Exhibit D attached hereto (the
"Toshiba Property"). The list in Section 2 of Exhibit D
includes the national and local icon images ("National
and Local Icon Set") and identifies certain Toshiba
Property as openly licensed (the "Openly Licensed
Items") which Toshiba agrees to license to Wink and
third parties at no cost in an effort to make InterText
a standard. Toshiba permits Wink to provide each of the
Openly Licensed Items to third parties. Wink shall
inform Toshiba of each sublicensee of Openly Licensed
Items.
5.1.2 License Grant. Toshiba hereby grants Wink a
non-exclusive, irrevocable, worldwide, royalty-free
right and license, including the right to sublicense,
under All of Toshiba's Intellectual. Property Rights in
and to the Openly Licensed Items to use, copy, display,
and distribute such items. Toshiba hereby grants to Wink
a non-exclusive, irrevocable, royalty-free, worldwide
right to the National and Local Icon Set, including
future modifications thereto to use, copy, display and
distribute such icons, including but not limited to the
right to distribute such icons as part of the Wink
Studio or other authoring tool which shall include a
sublicense to the use, copying, display and distribution
of such icons. Toshiba shall make the National and Local
Icon Set available for licensing at a reasonable fee to
licensees of the Wink Engine, and Wink will direct
interested licensees to the attention of a person
selected by Toshiba and informed to Wink in writing.
Nothing in this Subsection 5.1.2 shall prevent any party
from creating icons that are similar or identical to the
icons that are included in the Openly Licensed Items and
in the National and Local Icon Set, so long as they are
created without use of the data files comprising those
icons. Except as expressly provided in this Subsection
5.1.2, Toshiba does not grant Wink any right, title or
interest in the Toshiba Property, whether by
implication, estoppel or otherwise. All property rights
with respect to the Toshiba Property not specifically
granted herein are reserved to Toshiba.
5.2 Wink Property Rights.
5.2.1 Description. Except for the Toshiba Property, Wink owns
and shall own all right, title and interest in and to
(a) the Licensed Engine Product and all modifications
and derivatives thereof, (b) all Intellectual Property
Rights relating to the design, manufacture, marketing,
operation or service of the Licensed Engine Product and
the Wink ITV System, (c) all files, code, or technology
that is related to the Wink Engine or the Licensed
Engine Product (collectively, the "Wink Property").
Notwithstanding anything to the contrary in this
Agreement, those items listed as owned by Wink, as set
forth in Section 3 of Exhibit D attached hereto, are
included in Wink Property.
5.2.2 License Grant. Wink hereby grants Toshiba a
non-exclusive, irrevocable, worldwide, royalty-free
right and license, under all of Wink's Intellectual
Property Rights in and to the Wink Property identified
as 103 International Icon Images, as set forth in
Section 3 of Exhibit D attached hereto (the "Wink
Images"), to use, copy, have copied, display,
distribute, and modify the Wink Images in connection
with use of the Licensed Engine
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<PAGE> 7
Product. Except as expressly provided in Section 3 of
this Agreement or this Subsection 5.2.2, Wink does not
grant Toshiba any right, title or interest in the Wink
Property, whether by implication, estoppel or otherwise.
All property rights with respect to the Wink Property
not specifically granted herein are reserved to Wink.
5.3 Assignment. Toshiba hereby assigns to Wink all right, title and
interest, including all Intellectual Property Rights, in and to
all Wink Property developed in whole or part by Toshiba. Wink
hereby assigns to Toshiba all right, title and interest,
including all Intellectual Property Rights, in and to all
Toshiba Property developed in whole or part by Wink. Each party
shall sign any further documentation requested by the other
party to effect such assignment of rights. In the event a party
fails to take such action within a reasonable period, such party
hereby appoints the other party its attorney-in-fact for the
purpose of executing such documents, which appointment shall be
deemed a power coupled with an interest and shall be
irrevocable.
5.4 Correction Of Errors in Property Lists. If Toshiba or Wink has
omitted any item from the appropriate sections of Exhibit D, the
omitting party shall notify the other party of its claim to
ownership of the omitted item. The parties shall agree upon
ownership of such omitted item within thirty (30) days.
5.5 Rights. The parties acknowledge that each party may be or have
been provided with access to source code developed by the other
party for the purpose of speeding the development or support
activities related to this Agreement. Respective of such access
and development, all Intellectual Property Rights shall be as
set forth in this Agreement.
5.6 Notices. Toshiba shall not modify, alter or obscure any
proprietary notices contained on or within the Licensed Engine
Product, and all copies of the Licensed Engine Products
reproduced or distributed by or for Toshiba shall contain
copyright and other proprietary notices in the same manner in
which Wink incorporates such notices in the Licensed Engine
Products and the documentation.
5.7 Limitations. Toshiba shall not modify, prepare derivative works
of, reverse engineer, disassemble, decompile, or otherwise
attempt to obtain access to the source code of the Licensed
Engine Product or any Wink product. To the extent that access to
source code is provided by Wink to Toshiba under Section 5.5,
such access shall not be a violation of this Section 5.7.
6 PRODUCT QUALITY WARRANTY AND WARRANTY DISCLAIMER
6.1 Product Quality Warranty. Wink warrants to Toshiba that for a
period of three (3) months after Final Acceptance of the
Licensed Engine Product and Toshiba-Requested Updates and after
delivery of any other Updates, such Licensed Engine Product or
Updates of any kind will operate under ordinary use in
substantial conformance with the Specifications. Wink does not
warrant that the Licensed Engine Product or Updates of any kind
will be error free or meet all of Toshiba's requirements. (This
Section 6.1 lists separately Licensed Engine Products and the
different kinds of Updates for clarification for purposes only.
Unless otherwise noted, in other sections of this Agreement, the
definition of Licensed Engine Product includes Updates pursuant
to Section 1.2.)
6.2 Items not Covered by Warranty. Wink's warranty shall not extend
to problems in the Licensed Engine Product that result from: (i)
Toshiba's failure to implement any Updates to any Wink product
which are provided by Wink; (ii) changes to the Toshiba
Components, the Toshiba-owned code that works with the Licensed
Engine Product (as listed in Section 2 of Exhibit D), or other
non-Wink products which adversely affect the Licensed Engine
Product; (iii) any alterations of or additions to the Licensed
Engine Product or other Wink products performed by parties other
than Wink; (iv) use
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<PAGE> 8
of the Licensed Engine Product in a manner inconsistent with the
Specifications or in a manner for which it was not intended; (v)
combination of the Licensed Engine Product with other products
not supplied by Wink (unless such products, including but not
limited to Toshiba server products, are specifically identified
in the Specifications as compatible with the Licensed Engine
Product and are tested and confirmed in writing as compatible by
Wink in the configuration and conditions deployed by Toshiba)
which problems do not affect the Licensed Engine Product
standing alone; or (vi) operation of the Licensed Engine Product
outside of environmental specifications; unless, with respect to
items (ii), (iii), (v) and (vi), Wink was given the opportunity
and time to test such products or changes for compatibility and
Wink provided Toshiba written confirmation of compatibility. For
the purposes of Subsection (v) above, the Toshiba servers which
shall be tested for compatibility are those described in Exhibit
B of the Wink Application Server License Agreement and Exhibit B
of the Wink Online Server for InterText License Agreement.
6.3 Exclusive Remedy. Wink's sole obligation and Toshiba's exclusive
remedy under the above warranty shall be for Wink to use
commercially reasonable efforts to bring the Licensed Engine
Product into conformity with Wink's warranty set forth in
Section 6.1 above, at no cost to Toshiba (other than as provided
for in Section 10.1 and 10.2 below); provided, that Wink shall
have no obligation to correct all errors in the Licensed Engine
Product.
6.4 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY, WINK
MAKES AND TOSHIBA RECEIVES NO WARRANTIES WITH RESPECT TO THE
LICENSED ENGINE PRODUCT, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, AND WINK SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY
OF MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR
PURPOSE.
7 LIMITATION OF LIABILITY
WINK'S LIABILITY ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED THE
AMOUNTS RECEIVED FROM TOSHIBA HEREUNDER. IN NO EVENT SHALL EITHER PARTY
BE LIABLE FOR COST OF PROCUREMENT OF SUBSTITUTE GOODS, SERVICES OR
TECHNOLOGY NOR SHALL EITHER PARTY BE LIABLE FOR LOST PROFITS OR ANY
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES HOWEVER CAUSED
AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT THAT, WITH RESPECT TO CLAIMS BY
WINK AGAINST TOSHIBA FOR BREACH OF THE SCOPE OF LICENSES GRANTED IN THIS
AGREEMENT, WINK SHALL BE ENTITLE TO RECOVER LOST PROFITS. THE FOREGOING
LIMITATIONS SHALL APPLY EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.
8 INDEMNITY
8.1 Obligation. Wink shall defend, or at its option, settle any
claims brought against Toshiba and shall hold Toshiba harmless
from any judgments, damages, costs or expenses incurred by
Toshiba, including reasonable attorney's fees, resulting from
any claim that the Licensed Engine Product infringes the
copyright, trade secret or trademark rights of a third party or
the U.S. patent rights or the corresponding Japanese patent
rights that are identical in scope, where such U.S. or Japanese
patents have been granted prior to the first shipment of a
Combined Engine Component or Combined Engine Product by Toshiba,
provided that Toshiba notifies Wink of such claim promptly in
writing of and gives Wink the exclusive authority to defend or
settle such claim and provided that such patents owned by,
controlled by, or licensed to only parties other than Toshiba or
its subsidiaries. Toshiba shall provide proper and full
information and assistance to settle or defend any such claim.
If the Licensed Engine Product becomes, or if Wink reasonably
believes it may become, the subject of any claim for
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<PAGE> 9
infringement or is adjudicatively determined to infringe then
Wink may, at its option and expense, either (i) procure for
Toshiba the right to sell or use, as appropriate, the Licensed
Engine Product or (ii) replace or modify the Licensed Engine
Product with other suitable and reasonably equivalent software
so that the Licensed Engine Product becomes noninfringing or
(iii) if (i) and (ii) are not commercially practicable, Wink may
terminate this Agreement.
8.2 Limitations. The foregoing obligations shall not apply to (i)
the Licensed Engine Product used in conjunction with other
products if the Licensed Engine Product used alone would not
infringe, (ii) modifications to the Licensed Engine Product made
by any party other than Wink or made according to another
party's specifications if the Licensed Engine Product would not
infringe but for such modifications, (iii) use of any version of
the Licensed Engine Product other than the then-current version
if the claim could have been avoided by use of such version or
(iv) any trademark claims regarding any marking or branding not
applied or approved by Wink.
8.3 Entire Liability a Obligation. THE FOREGOING PROVISIONS OF THIS
SECTION 8 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF WINK TO
TOSHIBA WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY
INTELLECTUAL PROPERTY RIGHTS BY THE WINK ENGINE OR THE LICENSED
ENGINE PRODUCT LICENSED TO TOSHIBA BY WINK PURSUANT TO THIS
AGREEMENT.
8.4 Toshiba Indemnification. Except with respect to those matters
for which Wink has agreed to indemnify Toshiba under Sections
8.1-8.3 above, Toshiba agrees to indemnify and hold Wink
harmless from and against any and all claims, actions,
liabilities, and costs, including reasonable attorney's fees,
arising with respect to its use and distribution of the Licensed
Engine Product.
9 MARKETING
9.1 Wink Marks and User Interface. From time to time, Wink shall
provide Toshiba for its use and its subdistributors' use a list
of required and permitted uses of Wink's trademarks and logos
that Wink may adopt, from time to time and include in an
amendment to Exhibit F (the "Wink Marks"), which shall be
amended by Wink subject to agreement by Toshiba, such agreement
not to be unreasonably withheld. With respect to distribution of
the Licensed Engine Product, Wink shall provide artwork for one
of the Wink Marks, which is a Wink logo that is designed for use
on and regarding Combined Engine Products outside Japan ("Wink
Logo") pursuant to Section 9.2. Samples of the Wink Logo are
found in Exhibit F. From time to time, Wink may change the Wink
Logo and Toshiba will begin using the new Wink Logo at its first
convenient opportunity, but no later than ninety (90) days after
Wink notifies Toshiba of the new Wink Logo.
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9.2 Use of Wink Logo.
9.2.1 Use of Wink Logo in Materials. Beginning ninety (90)
days after the Execution Date and during the term of
this Agreement:
(a) If Toshiba or its subdistributors advertise or
promote the functionality of the Licensed Engine
Product outside Japan, Toshiba shall, and shall
require its subdistributors to, use the Wink
Logo in connection with the Licensed Engine
Product as set forth in this Section, subject to
Wink's trademark usage policy then in effect.
All representations of Wink Logos Toshiba
intends to use shall first be submitted to Wink
for approval, which shall not be, unreasonably
withheld.
(b) Toshiba will include in a prominent location the
applicable Wink Logo in any product or marketing
materials that are distributed outside Japan
with or refer to the Combined Engine Component
or Combined Engine Product. It is satisfactory
for the Wink Logo to be subordinate to other
logos, such as the Toshiba logo or InterText or
Television logos, so long as the Wink Logo is
presented distinctly and legibly. To the extent
that Toshiba provides sample user documentation
or other consumer oriented materials to
purchasers of the Combined Engine Component for
distribution outside Japan, such sample user
documentation or other consumer-oriented
materials shall also include the Wink Logo.
Toshiba will also include in the user
documentation, or other materials describing
functionality of the Combined Engine Product for
distribution outside Japan, Wink copyright and
proprietary notices. The content and location of
such notices shall be agreed by the parties. To
the extent that Toshiba provides sample user
documentation or other consumer-oriented
materials to purchasers of the Combined Engine
Component for distribution outside Japan, such
sample user documentation or other
consumer-oriented materials shall also include
Wink copyright and proprietary notices, in the
same manner as presented in Toshiba's own user
documentation or other consumer-oriented
materials.
9.2.2 Use of Wink Logo on Combined Engine Products. In
recognition of the fact that Wink intends to establish
Wink's brand as a consumer-recognized enhancement to
consumer electronics products, Toshiba agrees to affix
by silk-screening or other permanent method the Wink
Logo on Combined Engine Products to be distributed
outside Japan by Toshiba or a subdistributor. The Wink
Logo must be affixed in a prominent location on such
Combined Engine Products and the remote controls for
such products. It is satisfactory for the Wink Logo to
be subordinate to other logos, such as the Toshiba logo,
so long as the Wink Logo is presented distinctly and
legibly. If the nature of the affixing requires changes
to the Wink Logo, Wink and Toshiba shall mutually agree
on such changes.
9.3 No Registration of Wink Marks. Except as expressly set forth in
this Agreement, nothing shall grant to Toshiba or its
subdistributors any right, title or interest in the Wink Marks.
At no time during the term of this Agreement shall Toshiba
register, attempt to register or cause the registration of any
of the Wink Marks other than in Wink's name and at Wink's
specific written request, except in the event Toshiba adopts,
uses or acquires a trademark, mark or trade name substantially
similar to a Wink Mark prior to Wink's adoption, use or
acquisition of such Wink Mark. Except to the extent such acts
may not be prohibited by applicable law, at no time during the
term of this Agreement shall Toshiba or its subdistributors
challenge or assist others to challenge the Wink Marks or the
registration thereof.
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9.4 Press Releases. The parties intend to cooperate and participate
in public relations programs to promote the Licensed Engine
Products and the relationship between the parties. Appropriate
personnel from each party shall participate in such public
relations program. The parties shall cooperate with respect to
and mutually approve (not to be unreasonably withheld or
delayed) all press releases issued by either party with respect
to this Agreement or the parties' relationship. Such approval is
intended to protect the timing of disclosure of the availability
of the Licensed Engine Products and of the existence of the
parties' relationship, as well as to ensure proper references,
accurate information and correct proprietary notices and
information. The contents of each press release shall be agreed
upon between the parties from time to time. Unless otherwise
agreed in writing by the parties, any press release issued
outside Japan pursuant to this Section shall contain: (i) in the
body of the release, the name and location of both parties; (ii)
in a footnote at the end of the release, both parties'
proprietary notices with respect to technology discussed in the
body of the release. Whenever feasible, the press release shall
also include the logo of each party.
9.5 Disclosures of Terms and Relationship. Each party agrees not to
disclose the terms of this Agreement to any third party without
the other's written consent in its sole discretion, except to
such party's accountants, attorneys and other professional
advisors, or as required by securities or other applicable laws.
9.6 Units for Marketing and Employee Use. Upon written request from
Wink, Toshiba agrees to sell to Wink, at Toshiba's wholesale
price, a maximum of two-hundred and fifty (250) units of each
Combined Engine Product and a maximum of ten (10) Combined
Engine Components for use by Wink in its marketing programs or
for resale or gift to Wink employees or consultants
("Marketing/Employee Units"). Marketing/Employee Units shall be
shipped at Wink's cost.
10 TRAINING, SUPPORT AND MAINTENANCE
10.1 Updates. Wink, in its sole discretion shall make Updates
available to Toshiba from time to time for use and distribution
consistent with this Agreement. The Toshiba Requested Updates,
as defined in Exhibit E. shall be accepted by Toshiba in
accordance with the acceptance procedure provided in Section
2.2. Wink is not responsible for the distribution of Updates to
Toshiba's subdistributors, Submanufacturers, or end-users.
Unless an end-user specifically refuses to accept a given
Update, Toshiba promptly shall make Updates available to all
subdistributors and end-users, if applicable. Toshiba shall
implement each Update to new production in its own facilities or
at Submanufacturers' facilities promptly after receipt of such
Update from Wink, but no later than forty-five (45) days after
receipt.
10.2 Support. Toshiba shall be responsible for providing all support
to its subdistributors, subsidiaries, and end user customers.
Toshiba shall also be responsible for all testing of Combined
Engine Components and Combined Engine Products containing
accepted Licensed Engine Products with new versions of hardware
and software provided by parties other than Wink. Wink shall
make available to Toshiba support services as set forth in
Exhibit E.
10.3 Equipment. The parties intend that Wink have an environment in
which to recreate field situations, to allow Wink to replicate
problems which may occur in the field and to test solutions for
such problems. In order to facilitate Wink's performance of the
support activities contemplated herein, Wink shall retain the
Equipment provided pursuant to Section 2.1 which is reasonably
necessary to functionally replicate a Combined Engine Component
and Combined Engine Product. Upon expiration or termination of
this Agreement, Wink shall return all of the Equipment to
Toshiba. Wink shall return all such Equipment to Toshiba
promptly upon request by Toshiba; provided that Wink's
development and support obligations under this Agreement shall
terminate to the extent Equipment returned to Toshiba is
required by Wink to fulfill its obligations.
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10.4 Training. Wink shall provide training for Toshiba employees as
mutually agreed from time to time at current Wink training rates
at the time training is provided.
10.5 Travel Expenses. In the event that, in the performance of its
services under Section 10 of this Agreement it is mutually
agreed by the parties that employees or contractors of Wink will
travel from Wink's facility, Toshiba shall pay and/or promptly
reimburse Wink for, all reasonable travel, room and board, car
rental and other similar expenses associated with such travel.
Notwithstanding the above, if both parties agree that travel by
Wink employees or contractors is necessary to fix bugs that are
Wink's fault, the expenses for such travel shall be borne by
Wink, unless otherwise agreed.
10.6 Source Code Escrow. Upon written request, Wink agrees to enter
into a Source Code Escrow Agreement in a form mutually
agreeable, governing the release of the source code of the
Licensed Engine Product. Expenses associated with such agreement
and escrow shall be the sole responsibility of Toshiba.
11 TERM AND TERMINATION
11.1 Term. This Agreement shall commence on the Effective Date and
shall continue in full force and effect for a term of five (5)
years from the Execution Date. The term of this Agreement may be
extended by written mutual agreement of the parties.
11.2 Termination for Cause. If either party materially breaches its
obligations under Section 13 (entitled "Confidentiality") of
this Agreement, the non-breaching party may immediately
terminate this Agreement and the remaining other Wink/Toshiba
Agreements upon written notice to the breaching party. If
Toshiba breaches the scope of any license grant under any of the
Wink/Toshiba Agreements, Wink may give written notice to Toshiba
that if such breach is not cured within thirty (30) days, this
Agreement and the other Wink/Toshiba Agreements shall terminate
immediately at the end of such thirty (30) day period. If either
party breaches its material obligations under this Agreement and
fails to cure such breach within thirty (30) day's from written
notice to cure, the non-breaching party may terminate this
Agreement.
11.3 Termination for Insolvency. This Agreement shall terminate upon
written notice given by a party, at such party's option and
without further notice, upon the earlier of: (i) the institution
by or against the other party of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the
settlement of the other party's debts, (ii) the other party's
making an assignment for the benefit of its creditors, (iii) the
other party's declaration in writing of its inability to pay
debts as they become due, or (iv) the other party's dissolution
or ceasing to conduct business as a going concern.
11.4 Effect of Termination. Upon the expiration or termination of
this Agreement, the following provisions shall take effect:
11.4.1 Any and all end user licenses granted by Toshiba or its
subdistributors shall continue in effect according to
their terms and conditions;
11.4.2 Within thirty (30) days after such expiration or
termination, both parties shall return and certify to
the other party the return of all Confidential
Information of the other party in its or its
Submanufacturers' possession at the time of expiration
or termination, or destroy all such Confidential
Information and certify such destruction to the other
party.
11.4.3 Toshiba shall pay all outstanding amounts owed to Wink
within forty-five (45) days of the end of the quarter
during which such expiration or termination occurs. In
the event Wink is
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performing development tasks for Toshiba at the time of
any termination, Toshiba shall also pay to Wink the next
payment due under the development schedule for such
work; and
11.4.4 The provisions of Sections 1, 2.4, 4.7, 4.8, 5, 6.4, 7,
8, 11, 13 and 14, the guarantee by Toshiba in Section
3.1.1 and all payment obligations accrued at the time of
expiration or termination shall survive the expiration
or termination of this Agreement for any reason.
11.5 Destruction of Inventory. Within ninety (90) days after the
effective date of termination of this Agreement, Toshiba shall
destroy, and shall certify to Wink the destruction of, all
copies of the Licensed Engine Products in its or its
subdistributors' possession. Notwithstanding the foregoing
sentence, during such ninety (90) day period, Toshiba and its
subdistributors shall have a right to sell off existing
inventory of Combined Engine Products or Combined Engine
Components.
11.6 Termination of other Wink/Toshiba Agreements. Except as
expressly provided in Section 11.2 above, termination of one of
the other Wink/Toshiba Agreements shall not result in
termination of or in any way affect this Agreement nor shall the
termination of this Agreement result in termination of or in any
way affect the other Wink/Toshiba Agreements.
12 MOST FAVORED NATION
If Wink, during the term of this Agreement, grants to an unaffiliated
third party a license under Wink's Intellectual Property Rights to the
Wink Engine which is in all material respects equivalent to this
Agreement and which contains provisions requiring the third party to
make payments at rates of royalty and payment terms more favorable than
provided in this Agreement, then Toshiba shall be entitled to have the
same royalty rate payable by such third party provided that Toshiba
accepts all other terms and conditions of the agreement with such third
party so that after such acceptance of all other terms and conditions,
Toshiba's agreement with Wink is identical to the third party's
agreement with Wink.
13 CONFIDENTIALITY
13.1 Obligation of Confidentiality. The parties acknowledge that by
reason of their relationship to each other hereunder, each may
have access to certain information and materials concerning the
other's business, plans, customers, technology and products that
is confidential and of substantial value to that other party,
which value would be impaired if such information were disclosed
to third parties ("Confidential Information"). Information
provided in writing shall be deemed Confidential Information if
it has been clearly identified by the disclosing party as
confidential; for Confidential Information which is orally
disclosed, the disclosing party shall indicate to the receiving
party at the time of disclosure the confidential nature of the
information and designate it as confidential in a written
memorandum sent to the receiving party within thirty (30) days
of disclosure, summarizing the confidential information
sufficiently for identification. Without limiting the foregoing,
Confidential Information shall include the source code of the
Licensed Engine Products. Each party agrees that, for a period
of seven (7) years after receipt of any Confidential Information
other than source code and for an indefinite period (i.e.,
perpetually) regarding the source code, it shall not use in any
way, for its own account or the account of any third party, nor
disclose to any third party, except as may be expressly
permitted under this Agreement, any such Confidential
Information revealed to it by the other party and shall take
every reasonable precaution to protect the confidentiality of
such information. Upon request by either party, the other party
shall advise whether or not it considers any particular
information or materials to be confidential, provided that the
Licensed Engine Products (except for documentation identified by
Wink as public) shall at all times be deemed Confidential
Information of Wink. Neither party shall develop or have
developed any software programs utilizing any of the other
party's Confidential Information.
-13-
<PAGE> 14
13.2 Exceptions. Information shall not be deemed Confidential
Information hereunder if such information:
13.2.1 Is or becomes part of the public domain through no fault
or breach on the part of the receiving party;
13.2.2 Is known to the receiving party prior to the disclosure
by the disclosing party and such knowledge can be shown
by written records;
13.2.3 Is subsequently rightfully obtained by the receiving
party from a third party who has the legal right to
disclose it;
13.2.4 Is independently developed by the receiving party
without the use of any Confidential Information or any
breach of this Agreement;
13.2.5 Is approved for public release by the disclosing party;
or
13.2.6 Is required to be disclosed by judicial action provided
that the receiving party has first given the disclosing
party reasonable notice of such requirement and fully
cooperates with the disclosing party in seeking
confidential treatment for any such disclosure.
13.3 Injunctive Relief. The parties acknowledge that any breach of
the provisions of this Section 13 may cause irreparable harm and
significant injury to an extent that may be extremely difficult
to ascertain. Accordingly, each party agrees that each will
have, in addition to any other rights or remedies available to
it at law or in equity, the right to seek injunctive relief to
enjoin any breach or violation of this Section 13.
14 GENERAL
14.1 Force Majeure. Nonperformance of either party shall be excused
to the extent that performance is rendered impossible by strike,
fire, flood, earthquake, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where
failure to perform is beyond the reasonable control of and is
not caused by the negligence of the nonperforming party.
14.2 No Waiver. Failure by either party to enforce any provision of
this Agreement will not be deemed a waiver of future enforcement
of that or any other provision.
14.3 No Oral Modification. No alteration, amendment, waiver,
cancellation or any other change in any term or condition of
this Agreement shall be valid or binding on either party unless
mutually agreed in writing.
14.4 Governing; Law Dispute Resolution. This Agreement shall be
governed by and construed under the laws of the State of
California, without reference to conflict of laws principles.
Any dispute or claim arising out of or in relation to this
Agreement, or the interpretation, making, performance, breach or
termination thereof, shall be finally settled by binding
arbitration under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce as presently in force
("Rules") and by three arbitrators appointed in accordance with
said Rules. Judgment on the award rendered may be entered in any
court having jurisdiction thereof. The place of arbitration
shall be San Francisco, California, U.S.A. Any monetary award
shall be in U.S. dollars and the arbitration shall be conducted
in the English language. The parties may apply to any court of
competent jurisdiction for temporary or permanent injunctive
relief, without breach of this Section 14.4 and without any
abridgment of the powers of the arbitrator.
-14-
<PAGE> 15
14.5 Import & Export Controls. Toshiba understands that Wink is
subject to regulation by agencies of the U.S. government which
prohibit export or diversion of certain product and technology
to certain countries. Any and all obligations of Wink including
without limitation obligations to provide products, technology,
documentation, or technical assistance, will be subject in all
respects to such United States laws and regulations that will
from time to time govern the license and delivery of technology
and products abroad or to foreign nationals by persons subject
to the jurisdiction of the United States. Toshiba warrants that
it will comply in all respects with the export and reexport
restrictions set forth in any export licenses obtained by the
Wink or Toshiba (if necessary). Toshiba warrants that it will
not, and will take all actions which may be reasonably necessary
to assure that its end-user do not, contravene such United
States laws or regulations. Wink agrees that no technical
information furnished by Toshiba hereunder or any direct
products thereof is intended to or will be exported to any
destination restricted by export control regulation of the
United States and/or Japan, without prior written authorization
from appropriate governmental authorities.
14.6 No Assignment. Neither this Agreement nor any rights or
obligations of Toshiba or Wink hereunder shall be assigned by
either party without the prior written consent of the other
party, which consent shall not be unreasonably withheld or
delayed, except that either party may assign its rights and
obligations hereunder to any entity (i) which controls, is
controlled by or is under common control with such party, or
(ii) which acquires all or substantially all of the assets or
business of such party to which this Agreement pertains;
provided, that in both cases such entity shall assume in writing
or by operation of law such party's obligations under this
Agreement. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their successors and assigns.
14.7 Independent Contractors. The relationship of the parties
established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be
construed to (i) give either party the power to direct and
control the day-to-day activities of the other, (ii) constitute
the parties as partners, joint venturers, co-owners or otherwise
as participants in a joint or common undertaking, or (iii) allow
either party to create or assume any obligation on behalf of the
other party for any purpose whatsoever.
14.8 Compliance with Laws. In exercising its rights under this
license, each party shall fully comply with the requirements of
any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of
rights under this license.
14.9 Notices. All notices under this Agreement shall be in writing
and sent by (i) certified air mail, return receipt requested,
postage prepaid, (ii) commercial courier service, or (iii) via
facsimile with a confirming notice sent by one of the methods
described in subsections (i) or (ii) above. If properly
addressed to or delivered at the address for each party set
forth above (for each party, to the attention of "Legal
Department"), a notice shall be deemed given upon delivery or,
where delivery cannot be effected due to the actions of the
addressee, upon tender.
14.10 Counterparts. This Agreement may be executed in any number of
counterparts and when so executed and delivered shall have the
same force and effect as though all signatures appeared on one
document.
14.10 Severability. The provisions of this Agreement shall be
severable, and if any provision of this Agreement shall be held
or declared to be illegal, invalid, or unenforceable, such
illegal, invalid or unenforceable provision shall be severed
from this Agreement and the remainder of the Agreement shall
remain in full force and effect, and the parties shall negotiate
a substitute, legal, valid and enforceable provision that most
nearly reflects the parties' intent in entering into this
Agreement.
-15-
<PAGE> 16
14.12 Entire Agreement. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements,
understandings, proposals and representations by the parties,
including but not limited to the Project Outline between the
parties dated February 24, 1995.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. TOSHIBA CORPORATION
By: /s/ Gary L. Hammer By: /s/ T. Kobayashi
Name: Gary L. Hammer Name: T. Kobayashi
General Manager
Title: VICE PRESIDENT Title: Legal Affairs Division
-16-
<PAGE> 17
EXHIBIT A
DEVELOPMENT PLAN OF WINK ENGINE
Dated as of_____________, 1997
1. Specifications
Specifications for the Licensed Engine Product are attached to this
Exhibit. The following documents comprise the Specifications:
* "Technical Specification for the Wink Engine Version 1.0 as
Customized for Toshiba TC90A1F IF Decoder" to be released in
December 1996.
* "ICAP Version 1.0 Technical Specification" (to be released in
December 1996).
2. Development Milestones: Deliverables, Deliverer, and Completion Dates
All development milestones by both Wink (including but not limited to
the porting of the Wink Engine) and Toshiba (including but not limited to the
creation of driver code that provides hardware interface for communications,
graphics and user interface libraries of the Licensed Engine Product, and the
modification of icons and translation of text strings appropriate for the
Japanese market) have been completed as of the Execution Date.
3. Schedule
Completed as of Execution Date.
-17-
<PAGE> 18
EXHIBIT B
TOSHIBA EQUIPMENT
This list covers the Equipment as defined in the Wink Engine License Agreement,
the Wink Online Server for InterText License Agreement and the Wink Application
Server License Agreement.
In addition to the two sample units of each Combined Engine Product listed
pursuant to Section 3.2 of the Agreement, Toshiba shall provide the items listed
below. For each of the following items, Toshiba shall provide (unless already
provided) the number of units of each item specified below, including licenses
for use by Wink if such licenses are required as well, and for items noted with
a "*", any documentation in Japanese and English. If documentation is not
sufficient for use by Wink engineers, then Toshiba shall provide reasonable
assistance to Wink engineers, including but not limited to providing Wink
reasonable training, installation assistance, responses to questions by email,
and specifications in Japanese and, if available, English.
The parties agree that they will amend this list to include any other items
reasonably necessary for Wink to develop, test, or maintain, on Wink's premises,
the Licensed Engine Product, the Licensed WAS Technology, and the Licensed WOS
Technology, excluding items that Wink should reasonably be expected to obtain on
its own as part of Wink's standard business assets (including standard PCs or
workstations, except to the extent that such PC or workstation is part of an
integrated piece of equipment distributed by Toshiba or a third-party for
development, testing, support, or use of the Combined Engine Products, Combined
Broadcast Server Products, and the Combined Online Server Products).
Notwithstanding the above two paragraphs, the parties recognize that given this
contract is being executed after development and testing has concluded, some
items (in one or more units) may have been provided by Toshiba during
development or testing and may have been returned to Toshiba on the expectation
that these items are no longer needed by Wink for maintenance. The list below
excludes such items (or the returned units of items listed below). If such items
(or additional units of items listed below) become reasonably necessary for Wink
to provide maintenance under this Schedule, then the parties agree that such
items shall be added to the list.
The following excludes minor items such as cables, keyboards, mice/mousepads,
EPROMs and OTP ROMs, which may have been provided by Toshiba but are not of
material cost.
Already at Wink (excluding documentation): PCs and workstations and related
equipment:
(2) HP Vectra VL 5/75 PC w/ Win 3.1J/DOS-J, PCNFS-J; CD7ROM drive
(1) HP Vectra VL2 4/66 w/ Win 3.1J/DOS-J, PCNFS-1; CD-ROM drive
(2) HP Vectra VE 4/66 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM drive
(1) Toshiba PV3000 Pentium-133 w/ Win 3.1J/DOS-J, PCNFS-J; CD-ROM
drive
(1) J-3100 (486) PC w/ Win 3.1J/DOS4, PCNFS-J
-18-
<PAGE> 19
(1) J-3100 (486) PC w/ RTM drivers
(1) Sony 17" PC monitor
(2) Toshiba PC monitors
(5) HP 15" Ergo Ultra VGA monitor
(1) Toshiba 15" color monitor
(1) Sun SPARCstation IPX w/ Sun OS 4.13
(1) Sun Monitor (approx 20")
(1) Smart5 system (Sparc4, 19" grayscale monitor, Solaris 2.4J)
(1) Smart4 system (Sparc4, 19" grayscale monitor, Solaris 2.4J)
(1) Toshiba AS-4085workstation (equivalent to SPARC 20) w/ Solaris
2.4J
(1) Toshiba 19" monitor for AS4085
(1) external Sun CD-ROM drive
(1) Omron 14.4k modem
(1) l0 baseT hub
RTMs, RTPs and related equipment:
(5) RTM cards
*(1) RTPSystem--includes:SND68,SVC-II Digital SerialConverter,
Teletext inserter, and
FW2000 w/20" Toshiba color monitor keyboard (Japanese, Sun type 5).
(1) external Toshiba CD-ROM drive (came with RTP)
(1) external Toshiba QIC tape drive (came with RTP)
Other equipment:
(2) Toshiba VCRs (non-IT enabled)
(1) BS-CS Tuner CSR-110 modified for development work
(3) old Teletext decoders
(3) ASCII telephone line emulators
(5) Koden StepDown (120V_100V) transformer (small)
(2) Nissyo DN-101 StepDown transformer
(2) Toyoden CD 117-15 StepDown transformer
(1) adapter socket for burning TV CPU
(2) 28" WideBazooka TV w/ IT (prototype) and remote control
(Note: one TV is dead) (3) 32" WideBazooka TV w/ IT (prototype)
and remote control (Note: one TV is dead)
(5) development IT settop box (dead) and remote control (Note: one
settop box is dead)
(1) ShibaSoku VG22F1 teletext signal generator
Not yet at Wink:
*(1) complete installation of Toshiba broadcast equipment system,
including (but not limited to) the Licensed
WAS Technology
*(1) complete installation of Toshiba online/response server system,
including (but not limited to) the Licensed
WOS Technology
-19-
<PAGE> 20
EXHIBIT C
TOSHIBA SUBSIDIARIES
Toshiba Video Products Pte., Ltd.
456 Alexandria Rd., #07-01/02
NOL Bldg., Singapore
Attn.: Mr. M. Kai, Vice President
Tel.: +65-273-7856
Fax: +65-274-8122
Toshiba Video Products Japan Co., Ltd.
1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-01, Japan
Attn.: Mr. M. Kai, Vice President
Tel.: +81-3-3457-8551
Fax: +81-3-3457-8533
Toshiba Visual-Equipment Corp.
2-29-8, Kamishiba-cho-Higashi, Fukaya, Saitama Pref. 366
Attn.: Technology Executive
(name & contact info to be identified by Toshiba as soon as practicable)
Tel.: +81-485-72-4621
Fax: +81-485-72-5381
-20-
<PAGE> 21
EXHIBIT D
TOSHIBA AND WINK PROPERTY
[ * ]
-Exhibit D-page 1-
<PAGE> 22
ICAP INTERNATIONAL RESIDENT ICON LIST
[ * ]
<PAGE> 23
EXHIBIT E
SUPPORT
The following provisions govern the support to be provided by Wink to Toshiba
under this Agreement.
1. Toshiba-Requested Updates. In the case that Toshiba does not wish to
wait for Wink to choose on its own to create an Update pursuant to Section 10.1,
Toshiba may request, from time to time, an Update version of the Licensed
Engine Product ("Toshiba-Requested Updates") in order to make minor feature
enhancements in a timeframe desired by Toshiba. Wink shall use commercially
reasonable efforts to schedule the Toshiba-Requested Update in a timeframe that
meets Toshiba's requested schedule.
2. Compensation. Toshiba-Requested Updates shall be treated in the same
manner as Updates, except that Wink's work shall be compensated by Toshiba.
Compensation shall be at the rate of [ * ]. The compensation terms listed herein
are subject to change annually, with 30 days written notice provided by Wink to
Toshiba.
3. Ownership. Ownership of the property created for the
Toshiba-Requested Update will be agreed according to the same basis as was used
in the development of the Wink Engine as customized by Wink for the TC90A01F and
Like Chips, Version 1.O. The fact of that Toshiba is compensating Wink for the
time spent providing this support shall not affect ownership of the results of
the work.
-23-
<PAGE> 24
EXHIBIT F
WINK MARK(s)
Wink Logo: The following are samples of the Wink Logo, to be used pursuant to
Section 9.
[LOGO NOT SHOWN] [LOGO NOT SHOWN]
wink itv wink itv
Black & White Logo 3-color Logo
(e.g., for silk-screening) (e.g., for printed materials)
Other Wink Marks relevant to Wink Engine License Agreement:
Wink ITVTM For use when referring in text to the Wink interactivity system
or the interactive functionality provided by Wink's technology.
Wink EngineTM For use when referring in text to the software inside a
Wink-enabled device that enables the Inter/Text/Wink
functionality.
-Exhibit D-page 4-
<PAGE> 25
ADDENDUM TO WINK ENGINE LICENSE AGREEMENT
THIS AMENDMENT (the "Amendment") hereby amends to the Wink Engine
License Agreement executed as of 30 September, 1997 (the "Agreement") between
Wink Communications, Inc., a corporation with offices at 1001 Marina Village
Parkway, Alameda, CA 94501 ("Wink") and Toshiba Corporation, with offices at 1-1
Shibaura, 1-Chome, Minato-ku, Tokyo 105-01, Japan ("Toshiba"). The Amendment is
executed by the parties as of this 30 day of September 1997 ("Execution Date")
to memorialize changes to the parties' relationship and its terms are effective
as of the Execution Date.
Unless specifically amended in this Amendment, all terms of the
Agreement remain in force.
AMENDMENT
1 TOSHIBA-REQUESTED UPDATE
1.1 Development Requested and Agreed To. Pursuant to Exhibit E
(entitled "Support") of the Agreement, Toshiba has requested
that Wink create a Toshiba-Requested Update. Such
Toshiba-Requested Update shall be an updated version of the
Licensed Engine Product ("Version 1.1") to be developed in a
timeframe to meet Toshiba's desired shipment schedule of
televisions and settop boxes. Wink agrees to develop the Version
1.1. Toshiba-Requested Update, at a discounted charge to Toshiba
of [ * ], to be paid within 30 days of acceptance by Toshiba of
the object code to the Licensed Engine Product Version 1. 1.
1.2 Development Plan for Version 1.1. An addendum to Exhibit A
("Exhibit A-1.1") shall be added to the Agreement, to reflect
relevant details concerning the development plan for the Version
1.1 Toshiba-Requested Update.
1.3 Ownership of Version 1.1. An addendum to Exhibit D ("Exhibit
D-1.1") shall be added to the Agreement, to reflect relevant
details concerning the property rights of Wink and Toshiba in
the Version 1.1 code.
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. TOSHIBA CORPORATION
By: /s/ Gary L. Hammer By: /s/ T. Kobayashi
Name: Gary L. Hammer Name: T. Kobayashi
General Manager
Title: VICE PRESIDENT Title: Legal Affairs Division
-Exhibit D-page 5-
<PAGE> 26
EXHIBIT A - 1.1
DEVELOPMENT PLAN OF LICENSED ENGINE VERSION 1.1
1. Specifications
Specifications for the Licensed Engine Product are attached to this
Exhibit. The following documents comprise the Specifications:
* "Wink Engine Functional Specification, Toshiba 1.1 TV/STB" dated
25 March l997 (author: James Theberge, Wink).
* "User States & Transitions" dated 10 March 1997, Document
Revision #970307 (author: Daikuhara Masao, TV Planning Dept,
Toshiba).
2. Development Milestones & Schedule: Deliverables, Deliverer, and
Completion Dates
<TABLE>
<CAPTION>
Remaining Deliverables to the Other Party Deliverer Completion Date
- - ----------------------------------------- --------- ---------------
(Calif. Time)
<S> <C> <C>
Final CPU ROM code for Toshiba Television
Version 1.1 delivered to Wink Toshiba 21 April 1997
Delivery to Toshiba of final object code,
Licensed Engine Product Version 1.1 for both
TV and Settop Box. Wink 12 May 1997*
</TABLE>
* Note: this is committed date. Target is to provide finished object code
for Licensed Engine Product Version 1.1 for TV sooner than this date,
and to provide finished object code for Licensed Engine Product Version
1.1 for Settop Box even sooner than that.)
-Exhibit D-page 6-
<PAGE> 27
EXHIBIT D - 1.1
TOSHIBA AND WINK PROPERTY
[ * ]
Exhibit D-1.1 - Page 1-
<PAGE> 28
ICAP INTERNATIONAL RESIDENT ICON LIST
[ * ]
<PAGE> 1
EXHIBIT 10.28
WINK ENGINE LICENSE AGREEMENT
THIS AGREEMENT is made as of the 6th day of Oct, 1997 ("Effective Date") by and
between WINK COMMUNICATIONS, INC., a California corporation ("Wink"), whose
address is 1001 Marina Village Parkway, Alameda, CA 94501 and TOSHIBA AMERICA
CONSUMER PRODUCTS, INC., a New Jersey corporation ("CE Manufacturer"), whose
address is 82 Totowa Rd., Wayne, NJ 07470.
1. DEFINITIONS
1.1 For purposes of this Agreement, "Development Plan" shall mean the plan
for completion of the development activities including the
specifications, each party's respective development obligations,
milestones, a schedule, deliverables, and other relevant items, all as
mutually agreed upon.
1.2 For purposes of this Agreement, "Wink Engine" shall mean Wink's software
engine pursuant to this Agreement, in machine executable, object code
format. "Updates" shall mean updates containing error corrections or
minor enhancements to the Licensed Engine Product created by or for Wink
and designated by a change in version number to the right of the decimal
point. Updates do not include major enhancements to the Licensed Engine
Product designated by changes in the version number to the left of the
decimal point.
1.3 For purposes of this Agreement, "Licensed Engine Product" shall mean the
object code format version 1.0 and any Updates (version 1.x) of the Wink
Engine and other Wink-owned-files that are provided with the Wink
Engine, all as customized by Wink for the CE Manufacturer decoder chip
and other chips, and any related documentation which Wink may create, in
Wink's sole discretion, for public distribution with versions 1.0 and
1.x of the Wink Engine.
1.4 For purposes of this Agreement, "Intellectual Property Rights" shall
mean all current and future worldwide patents and other patent rights,
copyrights, mask work rights, trade secrets, and all other intellectual
property rights, including without limitation all applications and
registrations with respect thereto.
1.5 For purposes of this Agreement, "Combined Products" shall mean Toshiba
televisions containing the Licensed Engine Product embedded in ROM or
flash ROM chips.
1.6 For purposes of this Agreement, "Transaction Processing Fees" shall mean
processing fees collected by Wink from advertisers for individual user
requests for information or purchases of goods or services.
1.7 For purposes of this Agreement "Final Acceptance" shall mean the date
that Wink delivers to CE Manufacturer a master diskette or other digital
storage media containing the Licensed Engine Product for use by CE
Manufacturer in accordance with the terms of this Agreement.
2. LICENSE
2.1 Wink shall grant CE Manufacturer a non-exclusive, non-transferable
license to use the Licensed Engine Product solely for the purpose of
incorporating the Wink Engine into a CE Manufacturer hardware component.
CE Manufacturer shall have no right to sublicense the foregoing rights.
The territory for the license of the Licensed Engine Product is the
United States of America provided, however that CE Manufacturer may ship
up to 2.5% of the Combined Products sold by CE Manufacturer in any given
year to Latin America without being in violation of this territorial
restriction.
Page 1 of 11
<PAGE> 2
2.2 Wink hereby grants CE Manufacturer a non-exclusive, irrevocable,
royalty-free right and license, under all of Wink's Intellectual
Property Rights in and to the Wink icon images to use, copy, have
copied, display, distribute and modify the Wink icon images in
connection with use of the Licensed Engine Product. Except as expressly
provided herein, Wink does not grant CE Manufacturer any right, title,
or interest in the Wink Property, whether by implication, estoppel or
otherwise. All property rights with respect to the Wink Property not
specifically granted herein are reserved to Wink.
3. PROPERTY RIGHTS
3.1 CE Manufacturer agrees that prior to, on and after the Effective Date,
Wink owns and shall own all right, title and interest in and to (a) the
Licensed Engine Product and all modifications and derivatives thereof,
(b) all Intellectual Property Rights relating to the design of the
Licensed Engine Product, (c) all files, code, or technology that is
related to the Wink Engine or the Licensed Engine Product (collectively,
the "Wink Property").
4. DEVELOPMENT
4.1. Wink shall use reasonable commercial efforts to complete each milestone
in accordance with the Development Plan. Upon completion of each
milestone, Wink shall deliver to CE Manufacturer all applicable
Deliverables for evaluation by CE Manufacturer. In the event CE
Manufacturer is late in the performance of its obligations with respect
to each milestone and such delay affects Wink's obligations hereunder,
Wink's performance of such affected obligations shall be delayed by the
same time period.
4.2. The parties intend that Wink have an environment in which to recreate
field situations, to allow Wink to replicate problems which may occur in
the field and to test solutions for such problems. In order to
facilitate Wink's performance of the support activities contemplated
herein, CE Manufacturer shall, at its own expense, provide Wink with all
of the hardware, software and equipment (the "Equipment') which is
reasonably necessary to functionally replicate a system of the type in
which the Wink Engine will actually be used. Upon expiration or
termination of this Agreement, Wink shall return all of the Equipment to
CE Manufacturer. CE Manufacturer shall retain ownership of all such
Equipment. Wink shall return all such software, hardware and equipment
to CE Manufacturer promptly upon request by CE Manufacturer, provided
that Wink's development and support obligations shall terminate to the
extent software, hardware or equipment returned to CE Manufacturer is
required by Wink to fulfill its obligations.
5. COMPENSATION
5.1 In consideration for the rights and licenses granted to it under Section
2 above, CE Manufacturer agrees to integrate Licensed Engine Product
into a minimum of [ * ] 1998 televisions, [ * ] 1999 televisions, and
[ * ] televisions. CE Manufacturer shall use reasonable efforts to
ship these quantities of Combined Products. However, CE Manufacturer
is unable to guarantee these quantities, since the quantities are
dependent upon the commercial acceptance of the Wink feature. CE
Manufacturer shall remit to Wink a quarterly per unit royalty payment
for each unit of Combined Product shipped from the factory for the U.S.
market and Latin America, net of returns. The per unit royalty is as
follows:
Wink agrees to reduce the Standard Wink Engine License Fees by
[ * ] for all Combined Products shipped from the factory for the
U.S. market and Latin America before April 1, 1999, as exhibited
by the Wink License Fee Schedule below:
- - --------
* Confidential Treatment has been requested with respect to certain
portions of this exhibit pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
Page 2 of 11
<PAGE> 3
Wink License Fee Schedule
<TABLE>
<CAPTION>
QUANTITY OF COMBINED STANDARD WINK ENGINE TOSHIBA'S WINK ENGINE LICENSE
PRODUCTS SHIPPED (IN UNITS) LICENSE FEE (PER UNIT) FEE FOR 1998 (PER UNIT)
<S> <C> <C>
0-100,000 [ * ] [ * ]
100,001-250,000 [ * ] [ * ]
250,001-500,000 [ * ] [ * ]
500,001-750,000 [ * ] [ * ]
750,001 or more [ * ] [ * ]
</TABLE>
CE Manufacturer shall pay to Wink the full Standard Wink Engine
License Fees for all Combined Products shipped from the factory
for the U.S. market and Latin America from April 1, 1999 through
March 31, 2001, as exhibited by the Wink License Fee Schedule
above.
Such royalty shall accrue upon shipment or other transfer by CE
Manufacturer.
If Wink, during the term of this Agreement, grants to an unaffiliated
third party a license under Wink's Intellectual Property Rights to the
Wink Engine which is in all material respects equivalent to this
Agreement and which contains provisions requiring the third party to
make payments at rates of royalty and payment terms more favorable than
provided in this Agreement, then CE Manufacturer shall be entitled to
have the same royalty rate payable by such third party provided that CE
Manufacturer ships a quantity of Combined Products for the U. S. and
Latin America market equal to or greater than the third party's
shipments for the U. S. and Latin America market.
5.2 CE Manufacturer shall make royalty payments to Wink due under this
Agreement within forty-five (45) days after the end of each CE
Manufacturer fiscal quarter during the term of this Agreement. Such
payments shall be accompanied by a written report in a form acceptable
to Wink (see Exhibit A) which details all of the following with respect
to the applicable period: volume of monthly shipments of Wink equipped
television units by model number. Past due payments shall bear interest
at a rate equal to the lesser of (i) one and one-half percent (1- 1/2 %)
per month or (ii) the maximum legal rate permitted under law, and CE
Manufacturer shall be liable for all reasonable costs and expenses
(including, without limitation, reasonable court costs and attorneys'
fees) incurred by Wink in collecting any past due payments.
CE Manufacturer agrees to allow Wink or its designee to audit and
examine such books, records and accounts delivered to CE Manufacturer no
more than twice during CE Manufacturer's fiscal year, during CE
Manufacturer's normal business hours, to verify the accuracy of the
reports and payments made to Wink under this Section 5. Such audits
shall be limited to the time period ending three (3) years after the
conclusion of each of CE Manufacturer's fiscal years which occur during
the term of this Agreement. In the event such audit determines that CE
Manufacturer has not paid Wink the entire amount of royalty payments, CE
Manufacturer agrees to pay, in addition to any damages to which Wink
might be entitled, the amount of such shortfall plus interest at a rate
of one and one-half percent (1.5%) per month or the highest rate allowed
by law, whichever is lower. The cost of such audit shall be borne by
Wink, provided that if any such audit reveals an underpayment to Wink of
at least five percent (5%), CE Manufacturer shall reimburse to Wink its
costs of such audit.
Page 3 of 11
<PAGE> 4
5.3 In consideration for the development provided under Article 5, CE
Manufacturer shall pay Wink a [ * ] integration fee. The integration fee
payment shall be due within 30 days after the Effective Date.
5.4 For the lifetime of the Combined Products manufactured before April 1,
2001, Wink agrees to revenue share with CE Manufacturer, its fees, on
all Wink generated transactions originating from CE Manufacturer
televisions. Wink will pay CE Manufacturer [ * ] of the Transaction
Processing Fees collected by Wink for the transactions. Wink shall make
revenue share payments to CE Manufacturer due under this Agreement
within forty-five (45) days after the end of each CE Manufacturer fiscal
quarter during the term of this Agreement.
Wink agrees to allow CE Manufacturer or its designee to audit and
examine such books, records and accounts related to Wink transactions
with CE Manufacturer television customers no more than twice during CE
Manufacturer's fiscal year, during Wink's normal business hours, to
verify the accuracy of the reports and payments made to CE Manufacturer
under this Section 5. Such audits shall be limited to the time period
ending three (3) years after the conclusion of each of CE Manufacturer's
fiscal years which occur during the term of this Agreement. In the event
such audit determines that CE Manufacturer has not been paid ten percent
(10%) of the Transaction Processing Fees collected by Wink for the
transactions with CE Manufacturer televisions, Wink agrees to pay, in
addition to any damages to which CE Manufacturer might be entitled, the
amount of such shortfall plus interest at a rate of one and one-half
percent (1.5%) per month or the highest rate allowed by law, whichever
is lower. The cost of such audit shall be borne by CE Manufacturer,
provided that if any such audit reveals an underpayment to CE
Manufacturer of at least five percent (5%), Wink shall reimburse to CE
Manufacturer its costs of such audit.
6. PROMOTION AND RESEARCH
6.1 Wink and CE Manufacturer shall participate in public relations programs,
starting with an initial announcement of the relationship between the
two companies. Timing and content of that announcement shall be mutually
agreed upon in writing by the parties. The joint press announcement
shall occur no later than 2 weeks from the date of executing this
Agreement.
6.2 CE Manufacturer agrees to promote and market the Wink feature to CE
Manufacturer customers, retailers and to the general public within the
United States. CE Manufacturer shall create and produce Wink related
marketing support materials and provide advertising support subject to
Wink's reasonable creative approval, of which approval will not be
unreasonably withheld.
Wink shall provide reasonable marketing support for Combined Products in
conjunction with CE Manufacturer's marketing efforts for Combined
Products. Wink shall have a minimum of twenty (20) national programmers
broadcasting Wink enhanced programming by December 31, 1998. Wink shall
use reasonable efforts to work with its programming partners to deliver
Wink related program promotions to subscribers and to the general public
within the United States.
6.3 CE Manufacturer is hereby granted the right to and shall place the Wink
logo on all Combined Products on the front panel and on the remote
control in clearly visible letters, no smaller than one-quarter inch in
height. (Samples of the Wink logo are displayed in Exhibit B).
6.4 Wink may, from time to time, undertake marketing tests and surveys,
rating polls and other research in connection with CE Manufacturer. CE
Manufacturer shall provide Wink with reasonable assistance in conducting
such research with respect to CE Manufacturer's customers. CE
Manufacturer agrees that Wink will have reasonable access to any and all
research regarding the deployment, launch, and usage of Wink service by
CE Manufacturer customers.
Page 4 of 11
<PAGE> 5
7. NOTICES
7.1 All notices, statements, and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission, personal
delivery, certified mail, return receipt requested, or by next day
express delivery, addressed, if to WINK COMMUNICATIONS at 1001 Marina
Village Parkway, Alameda, CA 94501 and if to TOSHIBA AMERICA CONSUMER
PRODUCTS, INC. at 82 Totowa Rd., Wayne, NJ 07470. The date of such
facsimile transmission, telegraphing or personal delivery or the next
day if by express delivery, or the date three (3) days after mailing,
shall be deemed the date on which such notice is given and effective.
8. TRADEMARKS
8.1 All right, title and interest in and to the Wink feature or other
rights, of whatever nature, related thereto shall remain the property of
Wink. Further, CE Manufacturer acknowledges and agrees that all names,
logos, marks, copyright notices or designations utilized by Wink in
connection with the Wink feature are the sole and exclusive property of
Wink, and no rights or ownership are intended to be or shall be
transferred to CE Manufacturer.
9. REPRESENTATION
9.1 Wink represents and warrants to CE Manufacturer that (i) it is a
corporation duly organized and validly existing under the laws of the
State of California; (ii) Wink has the corporate power and authority to
enter into this Agreement and to fully perform its obligations hereunder
(iii) Wink is under no contractual or other legal obligation which in
any way interferes with its ability to fully, promptly and completely
perform hereunder; and (iv) nothing contained in the service shall
violate the civil or property rights, copyrights, trademark rights or
right of privacy of any person, firm or corporation.
9.2 CE Manufacturer represents and warrants to Wink that (i) CE Manufacturer
is a corporation duly organized and validly existing under the laws of
the State of New Jersey; (ii) CE Manufacturer has the requisite power
and authority to enter in this Agreement and to fully perform its
obligations hereunder, (iii) CE Manufacturer is under no contractual or
other legal obligation which in any way interferes with its ability to
fully, promptly and completely perform hereunder.
10. CONFIDENTIALITY
10.1 During the Term of this Agreement, and for a period of five (5) years
thereafter, each party will maintain in confidence all information which
it receives from the other party marked as "confidential" ("Confidential
Information"). Neither party will use, disclose or grant use of such
Confidential Information disclosed to it by the other party except as
expressly authorized by this Agreement. Each party will use at least the
same standard of care as it uses to protect its own Confidential
Information to ensure that its employees, agents or consultants do not
disclose or make any unauthorized use of such Confidential Information.
Each party will promptly notify the other upon discovery of any
unauthorized use or disclosure of the Confidential Information.
Notwithstanding the foregoing, CE Manufacturer may disclose Confidential
Information to employees of Toshiba Corporation for evaluation of the
Licensed Engine Product or its inclusion in Combined Products.
10.2 The obligations of confidentiality contained in Section 10.1 will not
apply to the extent that it can be established by a party by competent
proof that such Confidential Information:
(a) was already known to such party, other than under an
obligation of confidentiality, at the time of
disclosure;
(b) was generally available to the public or otherwise part
of the public domain at the time of its disclosure to
such party (provided, however, that a combination of
features individually in the public domain shall not
fall within this exception unless the fact of such
combination is also in the public domain);
Page 5 of 11
<PAGE> 6
(c) became generally available to the public or otherwise
part of the public domain after its disclosure and other
than through any act or omission of such party in breach
of this Agreement;
(d) was disclosed to such party, other than under an
obligation of confidentiality, by a third party who had
no obligation to the other party not to disclose such
information to others;
(e) is authorized for release in writing by the disclosing
party;
(f) is developed by such party completely independently of
any such received Confidential information;
(g) is necessarily disclosed in a Licensed Product
11. WARRANTY AND INDEMNITY
11.1. Each party represents and warrants that neither the execution or
performance by such party of this Agreement, nor the consummation of any
transactions herein does or will violate any law, order, regulation or
ruling applicable to such party or its efforts hereunder. In addition,
Wink represents and warrants that (a) as of the Effective Date, no
action or proceeding alleging intellectual property infringement by the
Wink Engine has been threatened or is proceeding against Wink (nor,
insofar as Wink is aware, against any entity from which Wink has
obtained any rights related to the Wink Engine), (b) it has the right to
license the Intellectual Property Rights in and to the Wink Engine to CE
Manufacturer and (c) the Licensed Engine Product does not infringe upon
or violate any third party copyright, trade secret, trademark or any
U.S. patent right where such patent has been granted prior to the
Effective Date. CE Manufacturer's exclusive remedy, and Wink's sole
liability, for a breach by Wink of the warranties of subsections (a),
(b) and (c) above shall be Wink's indemnity set forth in this Section
11.
11.2. Wink agrees to defend, or at its option to settle, any claim, suit,
action or proceeding brought against CE Manufacturer by a third party as
a result of Wink's breach of its warranties under 12.l(b) and (c) above
(an "Action"), and to pay any settlement or final judgment entered
thereon against CE Manufacturer, subject to the limitations set forth
hereafter. Wink shall be relieved of its obligations hereunder unless CE
Manufacturer gives Wink (i) prompt written notice upon becoming aware of
the existence of an Action, (ii) sole control over the defense or
settlement of the Action and (iii) reasonable assistance in the defense
or settlement thereof. If it is, or in the opinion of Wink may be,
determined by competent authority that the Licensed Engine Product or
any part thereof, or the sale, distribution or use thereof as permitted
hereunder infringes any third party intellectual property rights
warranted in section 11.1(c) or is enjoined, then Wink at its sole
option and expense may (a) procure for CE Manufacturer the right under
such third party intellectual property rights listed in section 11.1(c)
to use, reproduce and distribute the Licensed Engine Product or such
part thereof or such trademark; (b) replace the Licensed Engine Product
or such part thereof or such trademark with other suitable software or
trademark without material degradation in performance or functionality;
(c) suitably modify the Licensed Engine Product or such part thereof or
such trademark to avoid infringement without material degradation in
performance or functionality; or (d) if none of the foregoing are
commercially reasonably feasible, terminate this Agreement.
11.3. The foregoing indemnity shall not apply to an Action to the extent it
arises out of (i) any modification of the Licensed Engine Product by a
party other than Wink or on Wink's behalf, (ii) any combination of the
Licensed Engine Product with hardware and/or software not supplied by
Wink (except the hardware of the CE Manufacturer Device), which
infringement does not cover the Wink Engine standing alone, or (iii) any
trademarks, trade names or other brandings not supplied by Wink. As used
in Subsection 11.3(i), "on Wink's behalf' shall mean that Wink has given
its written authorization for CE Manufacturer or a third party to
perform such modifications.
11.4. Wink warrants to CE Manufacturer that for a period of three (3) months
after Final Acceptance of the Licensed Engine Product and CE
Manufacturer-requested Updates and after delivery of any other Updates,
such Licensed Engine Product or Updates of any kind will operate under
ordinary use in substantial conformance with technical specifications
mutually agreed upon between Wink and CE Manufacturer. Wink does not
warrant that
Page 6 of 11
<PAGE> 7
the Licensed Engine Product or Updates of any kind will be error-free or
meet all of CE Manufacturer's requirements. (This Section 11.4 lists
separately Licensed Engine Products and the different kinds of Updates
for clarification purposes only. Unless otherwise noted, in other
sections of this Agreement, the definition of Licensed Engine Product
includes Updates.)
11.5 WINK'S LIABILITY ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED THE
AMOUNTS RECEIVED FROM CE MANUFACTURER HEREUNDER. IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR COST OF PROCUREMENT OF SUBSTITUTE GOODS,
SERVICES OR TECHNOLOGY NOR SHALL EITHER PARTY BE LIABLE FOR LOST PROFITS
OR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT THAT, WITH RESPECT TO
CLAIMS BY WINK AGAINST CE MANUFACTURER FOR BREACH OF THE SCOPE OF
LICENSES GRANTED IN THIS AGREEMENT, WINK SHALL BE ENTITLED TO RECOVER
LOST PROFITS. THE FOREGOING LIMITATIONS SHALL APPLY EVEN IF EITHER PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
11.6 THE FOREGOING PROVISIONS OF THIS SECTION 11 STATE THE ENTIRE LIABILITY
AND OBLIGATION (EXPRESS, IMPLIED, STATUTORY, IN ANY COMMUNICATION WITH
WINK OR OTHERWISE) OF WINK AND THE EXCLUSIVE REMEDY OF CE MANUFACTURER
AND ITS SUBDISTRIBUTORS WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY
PATENT, COPYRIGHT, TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL
PROPERTY RIGHT BY THE WINK ENGINES OR ANY PART THEREOF.
12. INDEMNITY BY CE MANUFACTURER
12.l. Except with respect to any claim, suit, action or proceeding arising out
of any intellectual property infringement by the Licensed Engine
Product, CE Manufacturer agrees to defend, or at its option to settle,
any claim, suit, action or proceeding brought against Wink by a third
party arising out of (i) the manufacture, use or sale of the Licensed
Engine Product or Combined Products or (ii) CE Manufacturer's
modification, use or distribution of the Licensed Engine Product, and to
pay any settlement or final judgment entered thereon against Wink,
subject to the limitations set forth hereafter. CE Manufacturer shall be
relieved of its obligations hereunder unless Wink gives CE Manufacturer
(i) prompt written notice upon becoming aware of the existence of any
such claim, suit, action or proceeding, (ii) sole control over the
defense or settlement of such claim, suit, action or proceeding and
(iii) reasonable assistance in the defense or settlement thereof.
12.2. THE FOREGOING PROVISIONS OF THIS SECTION 12 STATE THE ENTIRE LIABILITY
AND OBLIGATION (EXPRESS, IMPLIED, STATUTORY, IN ANY COMMUNICATION WITH
CE MANUFACTURER OR OTHERWISE) OF CE MANUFACTURER AND THE EXCLUSIVE
REMEDY OF WINK WITH RESPECT TO ANY CLAIMS BROUGHT AGAINST WINK ARISING
FROM CE MANUFACTURER'S USE OF THE LICENSED ENGINE PRODUCT OR EXERCISE OF
THE RIGHTS AND LICENSES GRANTED TO CE MANUFACTURER HEREUNDER.
13. TERM AND TERMINATION
13.1 This Agreement shall become effective upon the date accepted and signed
by Wink (the "Effective Date"), and shall continue to be effective
through March 31, 2001.
13.2 Except as otherwise provided herein, neither CE Manufacturer nor Wink
may terminate this Agreement except upon sixty (60) days prior written
notice and then only if the other has made a misrepresentation herein or
Page 7 of 11
<PAGE> 8
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within sixty (60) days of such notice.
13.3. Notwithstanding any other provision herein, Wink will have the right to
terminate this Agreement or all or any licenses granted herein if
Customer fails to comply with any of its material obligations under this
Agreement. Should Wink elect to exercise this right to terminate for
nonperformance, it must be done in writing specifically setting forth
those items of nonperformance. CE Manufacturer will then have sixty (60)
days from receipt of notification to remedy the items of nonperformance.
Should CE Manufacturer fail to correct these items of nonperformance,
Wink's termination of this Agreement shall be without prejudice to any
other remedies Wink may have, including, without limitation, all
remedies with respect to the unperformed balance of this Agreement;
provided, however, that if CE Manufacturer has not made payment of the
fees or charges due hereunder and such nonpayment continues after sixty
(60) days prior written notice by Wink, then Wink may terminate this
Agreement or any license granted herein.
13.4. Upon expiration of the term (including any extensions thereof) of this
Agreement or upon the termination of this Agreement or of any license
granted hereunder for any reason, all rights of CE Manufacturer to use
the Licensed Engine Product will cease and CE Manufacturer will
immediately (i) cease manufacturing of Combined Product and agree to
sell remaining inventory of Combined Product within six (6) months from
the date of termination of this contract. (ii) purge all copies of all
Licensed Engine Products from all computer processors or storage media
on which CE Manufacturer has installed or permitted others to install
such Licensed Engine Product, and (iii) when requested by Wink, certify
to Wink in writing, signed by an officer of CE Manufacturer, that all
copies of the Licensed Engine Product have been returned to Wink or
destroyed and that no copy of any Licensed Engine Product remains in CE
Manufacturer's possession or under its control.
14. GENERAL
The parties agree that in the event it is necessary to employ attorneys
to enforce the terms of this Agreement, the prevailing party in any
lawsuit shall be entitled to an award of reasonable attorneys' fees and
court costs.
a) This Agreement may not be assigned without prior written mutual consent
of CE Manufacturer and Wink.
b) This Agreement may be amended only by an instrument in writing, executed
by CE Manufacturer and Wink.
c) This Agreement will be governed in all respects by the laws of the State
of California.
d) This Agreement represents the entire agreement between the parties and
supersede and replace all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof
between CE Manufacturer and Wink.
e) The parties shall keep this Agreement and their relationship
confidential until such time as both parties agree to release
information to the public. Any press release or similar announcement
regarding this Agreement shall be approved by both parties prior to its
release.
Page 8 of 11
<PAGE> 9
IN WITNESS WHEREOF, the parties by their duly authorized representatives
have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. TOSHIBA AMERICA CONSUMER
PRODUCTS, IN
By: /s/ Maggie Wilderotte By: /s/ Toshihide Yasui
Name: Maggie Wilderotte Name: Toshihide Yasui
Title: President and CEO Title: President
Date: 10/8/97 Date: October 6, 1997
Page 9 of 11
<PAGE> 10
EXHIBIT A
SAMPLE REPORT FORMAT FOR TOSHIBA COMBINED
PRODUCT UNIT SHIPMENTS
The figures in the following table represent the units of Combined
Product shipped for the U.S. market and Latin America for retail sale
(net of returns):
<TABLE>
<CAPTION>
Model Number Month 1: Month 2: Month 3: Total for Quarter 1:
<S> <C> <C> <C> <C>
TP5OF60 542 63 105 710
TP5OF61 99 101 0 200
TP55F80 220 80 40 340
TP55F81 25 80 5 110
Total Units (net) 886 324 150 1,360
</TABLE>
Page 10 of 11
<PAGE> 11
EXHIBIT B
WINK LOGO
The following are samples of the Wink Logo, which shall be silk-screened on the
Combined Product and used in printed materials.
[COMPANY LOGO] [COMPANY LOGO]
wink itv wink itv
1-color Logo 3-color Logo
(e.g., for product silk-screening) (e.g., for printed materials)
Other relevant Wink Mark:
Wink ITV (TM) For use when referring in text to the Wink interactive system or
the interactive functionality provided by Wink's technology.
Page 11 of 11
<PAGE> 12
WINK COMMUNICATIONS AND TOSHIBA
INTERACTIVE MONTA TV
PROJECT OUTLINE
This Project Outline is made between Wink Communications, Inc., a California
corporation having a principal place of business at 2061 Challenger Drive,
Alameda, California 94501, U.S.A. (hereinafter referred to as "Wink") and
Toshiba Corporation, a Japanese corporation having a principal place of business
at 1-1, Shibaura 1-chome, Minato-ku, Tokyo 105, Japan (hereinafter referred to
as "Toshiba.")
Wink and Toshiba share the mutual goal to explore opportunities in the area of
interactive TV technologies. The first project of such collaboration is
developing and expanding use and acceptance of the interactive TV devices,
including the adapters to existing TV, that are enabled by information delivered
through the vertical blanking interval (VBI) and telephone lines (hereinafter
referred to "Interactive Monta TV.") This Project Outline provides a framework
for the two companies to proceed with the development of the Interactive Monta
TV with the goal of executing definite development agreement within two months
after the date of this Project Outline.
1. Development of Interactive Monta TV
(a) Wink has been developing the ICAP software which is designed to interpret
information transmitted with VBI and can run on the 8-bit processor incorporated
in the VBI decoding circuitry. Wink also has been developing the authoring tools
which run on the personal computers. Toshiba has developed the TC90AO1F-based
VBI decoder containing an 8-bit processor and the teletext software that will be
incorporated in the Toshiba TV products marketed in Japan. Based on these
technologies, Wink and Toshiba will cooperate to develop the interactive Monta
TV software and related authoring tools for the Japanese market in accordance
with the specifications and development schedules which will be specified in the
definitive agreement.
(b) Wink will develop and port the ICAP interpreter on the TC90AOlF decoder in
accordance with the specification requirements as derived from the current
Japanese teletext broadcasting system. Wink will develop the authoring tools
which run on the Windows3.1-based personal computers and generate information
programs for the Interactive Monta TV.
(c) Toshiba will develop the hardware interface modules for communication,
graphics and user interface libraries congruous with the ICAP interpreter and
the TC90AOlF decoder, and integrate the teletext software with the ICAP
interpreter. Toshiba will develop resources such as icons graphics and text
required for the Japanese market and modify the authoring tools for the Windows
3.11 environment.
(d) Wink and Toshiba will cooperate in installing the ICAP interpreter in the
Interactive TV and the authoring tools in the turn-key authoring systems for
broadcast program providers.
(e) Toshiba will develop a computer server designed to respond and interact with
the Interactive Monta TV. Wink will support Toshiba with interface for the ICAP
interpreter, communication libraries and other recommended functions.
2. Development Expenses
Ordinary development expenses incurred for the project will be borne by each
party, respectively, except those that are specifically defined in the
definitive agreement.
<PAGE> 13
3. Technological Information and On-site Engineers
(a) Wink and Toshiba will mutually disclose technological information required
for the development of the Interactive Monta TV and the authoring systems.
(b) To expedite the development process, even prior to conclusion of the
definitive agreement, Toshiba will dispatch engineers on site, as specified
below, to Wink to work with Wink engineers. Expenses including traveling and
hotel, required on the part of the dispatched engineers will be borne by
Toshiba. Wink will provide them with the offices, furniture and communication
services including telephone, fax, Internet access and access to the Toshiba
mail local access node.
Engineer(s) to work on interfaces to the TC90AOlF decoder - From February, 1995
Engineer(s) to work on the development of the authoring tools - From March, 1995
4. Invention and Know-how
(a) Software copyright for the software, as defined in 1.(c), which serves to
integrate the ICAP software with the TC90AO1F decoder developed by shared effort
will be owned by both parties including derivative portions of software with
significant enhancement and modifications to the portions of the original
software.
(b) Wink and Toshiba will confer to each other regarding patent applications on
invention, than relating to the original technologies as defined in 1. (a), (b),
(d) and (e), which resulting the shared development effort for the appropriate
procedures. Including these patents and both know-how which are developed by the
shared effort can be used by each party, or licensed to third parties without
royalty payable to the other.
5. Software license
(a) Wink and Toshiba will cooperate to promote the Interactive Monta TV as a
standard in the Japanese market. For this purpose Wink will license Toshiba the
Interactive Monta TV software and authoring tools that will be incorporated in
the Toshiba products. Wink will grant Toshiba the right to reproduce and deliver
the ICAP software and authoring tools with the Toshiba products and for the
demonstration and experimental purposes.
(b) Wink will grant the right for Toshiba to sublicense the TC90AO1F decoder
containing the ICAP software to other TV manufacturers who may want to use the
TC90AOIF decoder.
(c) Toshiba agrees that a prominent logo be affixed on the Interactive Monta TV
for purposes. The logo artwork will be determined by Wink, Toshiba and other TV
manufactures who use the ICAP software.
(d) The per copy licensing fee will be [*] or less for each Interactive Monta
TV product or other device containing the ICAP software. Further terms and
conditions regarding licensing the Toshiba products and the third party
licensing, including the licensing fee for authoring will be defined in the
definitive agreement.
6. Confidential Information
Any exchange of documents or other information will be governed by the
provisions of the Non-disclosure Agreement signed on January 9, 1995 between
Wink and Toshiba.
<PAGE> 14
Except as Wink and Toshiba may agree or as may be required by law, neither Wink
nor Toshiba will make any public announcement about or otherwise disclose to any
third party this Project Outline.
Wink Communications, Inc. Toshiba Corporation
By: /s/ Gary L. Hammer By: /s/ Toshihida Yasui
Title: VP, Business Development Title:Deputy General Manager Advanced-I
Group
Date: 24 February 1995 Date: February 16, 1995
<PAGE> 1
EXHIBIT 10.29
PERSONNEL SERVICES AGREEMENT
Agreement Effective Date:___________________
Between GE Information Services, Inc. ("GEIS"), 401 North Washington Street,
Rockville, Maryland 2085 and WINK COMMUNICATIONS ("Client"),with its principal
office 1001 Marina Village Parkway Alameda, CA 94501
I. PERSONNEL SERVICES
1.1 In connection with the use or proposed use of services provided
by GEIS under an Information Services Agreement or a
Teleprocessing Services Agreement with Client ("Information
Services"), GEIS will provide Client the personnel services
listed below ("Services") subject to the terms and conditions of
this Agreement and the Task Description applicable to each
Service.
1.2 The Services to be provided are described in the attached Task
Descriptions which are listed below:
TASK DESCRIPTIONS
Develop requirements definition document for the following portions of
the Wink Response Network. Billing System Interface, Wink Reporting and Routing
from the Response Delivery System, Web Interface from WR Delivery System Phase
II EDI to Van.
THE TASK DESCRIPTIONS LISTED ABOVE FORM AN INTEGRAL PART OF THIS
AGREEMENT.
Additional Task Descriptions may be added by written agreement of the
parties.
1.3 Client will provide GEIS and its personnel, to the extent
reasonably required to perform Services, access to and use of
catalogs or user numbers assigned to Client under the agreement
for Information Services. Client will be responsible for payment
for this usage in accordance with the terms of the agreement for
Information Services.
II. SOFTWARE DEVELOPMENT SERVICES (If the development of software is included in
any task description, the provisions of this Article 11 shall apply.)
2.1 SOFTWARE DEVELOPMENT. GEIS will design, develop, test and install
the software program and related documentation described in the
attached Task
<PAGE> 2
Description ("Program"). The Task Description contains the full
and complete specifications for the work to be performed. Any
features, reports, formats or procedures not explicitly detailed
in the Task Description will not be developed by GEIS unless
agreed in writing in accordance with Paragraph 2.5 below.
2.2 DEVELOPMENT SCHEDULE. GEIS will use reasonable efforts to
complete development of the Program in accordance with the
schedule contained in the Task Description. It is understood that
this schedule is an estimate and is dependent upon timely receipt
from Client of all necessary authorizations to proceed and all
necessary information such a specifications, test data, and check
calculations.
2.3 PROPERTY RIGHTS. Client will own and have all right and title in
all materials first developed under this Agreement. GEIS retains
the unrestricted right to copy, use, and authorize others to use
such materials. Each of the parties will take reasonable
precautions to protect the other party's intellectual property
rights in the materials contained in the Program. GEIS grants to
Client an irrevocable, non-exclusive, worldwide, royalty-free
license to use, execute and copy any pre-existing materials
contained in the Program in connection with Client's use of
information Services. Nothing in this Agreement will be construed
to restrain GEIS or its personnel in the use of the techniques
and skills of computer operation, system design, and programming
acquired in the performance of Services.
2.4 CLIENT MATERIAL AND DATA. Client agrees that any machine readable
input furnished to GEIS will be in good and usable condition.
Client will be responsible for the correctness and completeness
of any programs data or other materials provided to GEIS. Client
will retain copies of all such materials and will provide GEIS
with an additional copy of any programs, data or other materials
lost or damaged while in GEIS' possession. If the loss or damage
results directly from any negligent or willful act of GEIS, GEIS
will reimburse Client for the reasonable cost of providing
copies. All materials provided by Client will remain the property
of Client and, within ninety (90) days after the completion of
Services, will be returned to client or disposed of in accordance
with Client's instructions.
2.5 REVIEWS AND CHANGES. Client will review the progress of the work
with GEIS no less frequency monthly. All changes requested by
Client will be in writing. GEIS will notify Client if a requested
change would either require additional time or increase GEIS'
charges in excess of that provided in the Task Description. GEIS
will perform the change only if GEIS and Client agree in writing
on additional time and/or charges.
2.6 ACCEPTANCE. GEIS will notify Client when the Program is ready for
acceptance testing by Client. Client will perform the acceptance
test specified in the Task Description ("Acceptance Test") within
the time period specified. GEIS will have the
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<PAGE> 3
right to be present during the Acceptance Test. When the Program
meets all material requirements of the Acceptance Test, Client
will promptly notify GEIS in writing that it accepts the Program.
If Client fails for any reason to conduct the Acceptance Test
within the time period specified, Client will be deemed to have
accepted the Program. If the Program fails to meet all material
requirements of the Acceptance Test, Client will promptly notify
GEIS with reasonable detail of the deficiency and with sufficient
documentation and data to enable GEIS to replicate the
deficiency. GEIS will thereafter attempt to correct such
deficiencies and the Acceptance Test will then be repeated. If
GEIS fails to correct such deficiencies within a reasonable time
after receipt of Client notification of the deficiency, Client
will promptly, at its option, (i) terminate the applicable Task
Description by written notice to GEIS and return the Program and
all related materials to GEIS, or (ii) accept the Program despite
the deficiency. If Client elects to terminate the Task
Description, GEIS will promptly refund to Client all amounts paid
for the Program. If Client elects to accept the deficient
Program, the price of the Program shall be equitably reduced.
III. PAYMENT; TAXES; CHANGES
3.1. Client will be invoiced by GEIS for Services as stated in each
Task Description plus an amount. Equal to any applicable sales,
use, excise, value added, or similar taxes. In lieu of paying
such taxes, Client will provide GEIS with a tax-exemption
certificate acceptable to the taxing authorities. Fixed monthly
rates for Services initiated or terminated during a calendar
month will be prorated. In addition, Client will reimburse GEIS
for reasonable travel and living expenses incurred by GEIS for
travel approved by Client.
3.2 Invoices are payable upon receipt in U.S. dollars. Invoices not
paid within thirty (30) days from date of invoice are subject to
interest charges at an annual rate equal to the prime rate listed
in the Wall Street Journal for the date of invoice plus two
percentage points, or at the maximum lawful interest rate
allowable, whichever is lower. GEIS will give written notice of
any non-payment and specify a cure period of at least ten (10)
days. If an invoice remains unpaid after the cure period expires,
GEIS may (reserving all other remedies and rights) terminate this
Agreement without further notice to Client.
3.3 Except as otherwise expressly provided in a Task Description,
GEIS may change the prices under this Agreement or any Task
Description(s) on thirty-five (35) days prior written notice to
Client.
IV. NON-DISCLOSURE
4.1 Client acknowledges that GEIS' personnel may gain access to
Client's data in the course of providing Services to Client.
GEI'S will protect from unauthorized
-3-
<PAGE> 4
disclosure or access Client data in its possession to which its
personnel gain access by using the same degree of care that GEIS
takes to protect its own data of a similar nature. However, this
obligation will not apply to Client data which is or becomes
publicly available without fault on the part of GEIS, is already
in GEIS' possession prior to the time GEIS gains access data
under this Agreement, is independently developed by GEIS, or is
rightfully obtained from third parties.
V. WARRANTY
5.1 GEIS warrants that each Service will be performed substantially
in accordance with the applicable Task Description. GEIS further
warrants that any Program developed pursuant to Article II will
conform in all material respects to the applicable Task
Description. These warranties will apply only to failures to meet
the applicable warranty which are reported to GEIS in writing
within ninety (90) days after (i) the date of the failure in the
case of Services, or (ii) the date of acceptance in the case of a
Program.
5.2 GEIS' sole obligations for failure to meet these warranties, will
be as follows: (a) For failure to perform any Service
substantially in accordance with the Task Description, GEIS will
refund any charges paid for individual services which were not
performed as warranted and will attempt to correct any such
failure. If GEIS does not restore the affected Service to
warranted performance within a reasonable time, Client may
terminate the affected Service. (b) For failures of any Program
to conform in all material respects to the Task Description, GEIS
will promptly attempt to correct such failure provided that
Client makes available to GEIS sufficient documentation and data
to enable GEIS to replicate the failure. If GEIS fails to correct
the failure within a reasonable time after receipt of Client
report of the failure, Client will promptly, at its option, (i)
terminate the applicable Task Description by written notice to
GEIS and return the Program and all related materials to GEIS, or
(ii) retain the Program despite the failure. If Client elects to
terminate the Task Description, GEIS will promptly refund to
Client all amounts paid for the Program. If Client elects to
retain the Program, the price for the Program shall be equitably
reduced.
5.3 The warranties and remedies stated in Sections 5.1 and 5.2 are
exclusive. NO OTHER WARRANTIES, EXPRESS IMPLIED, OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WILL APPLY. In addition, the warranties and
remedies stated in Sections 5.1 and 5.2 will not apply to any
Program that is modified after delivery by GEIS to Client.
5.4 GEIS DOES NOT WARRANT THAT THE SERVICES OR PROGRAMS WILL
MEET CLIENT'S REQUIREMENTS OR THAT USE OF THE SERVICES OR
PROGRAMS WILL BE UNINTERRUPTED OR ERROR-FREE. CLIENT
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<PAGE> 5
ASSUMES THE RESPONSIBILITY TO TAKE ADEQUATE PRECAUTIONS
AGAINST DAMAGES TO ITS OPERATIONS WHICH COULD BE CAUSED BY
DEFECTS, INTERRUPTIONS, OR MALFUNCTIONS IN THE SERVICES OR
PROGRAMS.
VI. EXCLUSIONS AND LIMITATION OF LIABILITY; EXCLUSIVE REMEDIES
6.1 AS A MATERIAL CONDITION OF RECEIVING GEIS' SERVICES AT THE PRICES
SPECIFIED IN THE APPLICABLE TASK DESCRIPTION, AND IN REGARD TO
ANY AND ALL CAUSES ARISING OUT OF OR RELATING TO THIS AGREEMENT,
INCLUDING BUT NOT LIMITED TO CLAIMS OF NEGLIGENCE, BREACH OF
CONTRACT OR WARRANTY, FAILURE OF A REMEDY TO ACCOMPLISH ITS
ESSENTIAL PURPOSE, OR OTHERWISE, CLIENT AGREES:
(a) THE LIABILITY OF GEIS WITH RESPECT TO ANY SERVICE WILL NOT
EXCEED, IN THE AGGREGATE, THE GREATER OF: (i) THE AMOUNTS
PAID BY CLIENT TO GEIS FOR THE SERVICE IN THE THREE (3)
MONTHS PRECEDING THE EVENT WHICH IS THE CAUSE OF LIABILITY
OR (ii) TEN THOUSAND DOLLARS ($10,000);
(b) THE LIABILITY OF GEIS WITH RESPECT TO ANY PROGRAM WILL NOT
EXCEED, IN THE AGGREGATE, THE AMOUNTS PAID BY CLIENT TO
GEIS FOR THE PROGRAM, OR PART THEREOF, WHICH IS THE CAUSE
OF LIABILITY;
(c) GEIS WILL NOT BE LIABLE TO CLIENT FOR SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES (EVEN IF GEIS HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), INCLUDING,
BUT NOT LIMITED TO, LOST PROFITS OR SAVINGS, LOSS OF USE
OF SERVICES OR PROGRAMS, COST OF CAPITAL, COST OF
SUBSTITUTE SERVICES OR PROGRAMS, DOWN TIME COSTS, OR
DAMAGES AND EXPENSES ARISING OUT OF THIRD PARTY
CLAIMS.
6.2 THE REMEDIES SPECIFIED IN THIS AGREEMENT ARE EXCLUSIVE.
VII. FORCE MAJEURE
7.1 Except for the failure to make payments when due, neither party
will be liable to the other by reason of any failure in
performance of this Agreement if the failure arises out of the
unavailability of communications facilities or energy sources,
acts of God, acts of the other party, acts of governmental
authority, fires, strikes, delays in
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<PAGE> 6
transportation, riots or war, or any cause beyond the reasonable
control of that party. If any such event prevents Client from
receiving any Service and continues for more than one (1) month,
Client may terminate the Task Description for the affected
Service upon delivery of written notice to GEIS.
VIII. GENERAL PROVISIONS
8.1 Client will not directly or indirectly solicit or offer
employment to, or accept from others, services by an employee of
GEIS during the performance of Services by said employee and for
six (6) months thereafter.
8.2 The provisions of this Agreement are for the sole benefit of the
parties, and not for the benefit of any other persons or legal
entities.
8.3 Neither party may assign this Agreement without the prior written
consent of the other party, which consent will not be
unreasonably withheld; provided, however, that either party may
assign this Agreement, without consent, to a successor in
interest to substantially all of the business of that party to
which the subject matter of this Agreement relates.
8.4 If any part or parts of this Agreement are held to be invalid,
the remaining parts of the Agreement will continue to be valid
and enforceable.
8.5 This Agreement will be governed by the law of the State of
Maryland, excluding its conflict-of-laws rules. Each party waives
the right to jury trial in any suit based upon or arising out of
this Agreement
8.6 The export or re-export of any Program by Client might require
authorization by a U.S. government agency. It is Client's
responsibility to determine and comply with any such requirement,
including, if necessary, making timely application in its own
name for any export license which might be required.,
8.7 The headings in this Agreement are for reference purposes only;
they will not affect the meaning or construction of the terms of
this Agreement.
8.8 Any action of any kind by either party arising out of this
Agreement must be commenced within two (2) years from the date
the right, claim, demand or cause of action shall first arise.
8.9 Any notice under this Agreement shall be given in writing by
personal delivery or by mail directed to the address of the party
which is set forth in this Agreement or to such other address as
may be substituted by notice to the other party. All notices
shall be effective upon receipt.
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<PAGE> 7
8.10 The provisions of Sections 3.2, 4.1, 6.1, 6.2, 8.5, 8.6, and 8.8
shall survive any termination or expiration of any Task
Description or of this Agreement.
8.11 This Agreement (including the applicable Task Descriptions)
contains the complete and exclusive understanding of the parties
with respect to the subject matter hereof. No waiver,
alteration, or modification of any of the provisions hereof will
be binding unless in writing and signed by a duly authorized
representative of the party to be bound. Neither the course of
conduct between the parties nor trade usage will act to modify
or alter the provisions of this Agreement. If Client issues a
purchase order or other similar document it shall be for Client
internal purposes and, therefore, even if it is acknowledged by
GEIS, the terms and conditions of such purchase order or similar
document will have no effect on this Agreement or the Services.
GE INFORMATION SERVICES, INC. WINK COMMUNICATIONS
(Client)
By: /s/ Mary Ashton By: /s/ Timothy Travaille
Title: Region Mgr Title: VP-OPS
Date: 11/10/97 Date: 9/6/97
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<PAGE> 1
EXHIBIT 10.30
POLICY NUMBER: 485-58-59 R/N
[SYMBOL NOT SHOWN] AMERICAN INTERNATIONAL COMPANIES
DIRECTORS AND OFFICERS LIABILITY AND
PRIVATE COMPANY REIMBURSEMENT INSURANCE POLICY
<TABLE>
<S> <C>
[ ] AIU Insurance Company [ ] Illinois National Insurance Company
[ ] New Hampshire Insurance Company [ ] National Union Fire Insurance Company of
Pittsburgh, Pa.
[ ] Granite State Insurance Company [ ] Birmingham Fire Insurance Company of
Pennsylvania
[ ] American International South
Insurance Company
</TABLE>
(each of the above being a capital stock company)
NOTICE: EXCEPT TO SUCH EXTENT AS MAY OTHERWISE BE PROVIDED HEREIN, THE
COVERAGE OF THIS POLICY IS GENERALLY LIMITED TO LIABILITY FOR ONLY THOSE CLAIMS
THAT ARE FIRST MADE AGAINST THE INSUREDS DURING THE POLICY PERIOD AND REPORTED
IN WRITING TO THE INSURER PURSUANT TO THE TERMS HEREIN. PLEASE READ THE POLICY
CAREFULLY AND DISCUSS THE COVERAGE THEREUNDER WITH YOUR INSURANCE AGENT OR
BROKER.
NOTICE: THE LIMIT OF LIABILITY AVAILABLE TO PAY JUDGMENTS OR
SETTLEMENTS SHALL BE REDUCED BY AMOUNTS INCURRED FOR LEGAL DEFENSE. AMOUNTS
INCURRED FOR LEGAL DEFENSE SHALL BE APPLIED AGAINST THE RETENTION AMOUNT.
NOTICE: THE INSURER DOES NOT ASSUME ANY DUTY TO DEFEND; HOWEVER, WITH
RESPECT TO EMPLOYMENT PRACTICES CLAIMS, THE INSURER MAY UNDER CERTAIN CONDITIONS
TENDER THE DEFENSE OF A CLAIM. IN ALL EVENTS, THE INSURER MUST ADVANCE DEFENSE
COSTS PAYMENTS PURSUANT TO THE TERMS HEREIN PRIOR TO THE FINAL DISPOSITION OF A
CLAIM.
<PAGE> 2
DECLARATIONS
ITEM 1. NAMED CORPORATION: WINK COMMUNICATIONS
MAILING ADDRESS: 1001 MARINA VILLAGE PARKWAY
ALAMEDA, CA 94501
STATE OF INCORPORATION OF THE NAMED CORPORATION: California
NAMED PARENT: N/A
ITEM 2. SUBSIDIARY COVERAGE: any past, present or future Subsidiary of the
Named Corporation
ITEM 3. POLICY PERIOD: From: JUNE 01, 1997 To: JUNE 01, 1998 (12:01 A.M.
standard time at the address stated in Item 1.)
ITEM 4. LIMIT OF LIABILITY: $1,000,000 aggregate for Coverages A, B and C
combined (including Defense Costs)
ITEM 5. RETENTION:
EMPLOYMENT PRACTICES CLAIMS
<TABLE>
<S> <C>
Judgments, Settlements and Defense Costs None
(Non-indemnifiable Loss)
Judgments, Settlements and Defense Costs $25,000 for Loss arising from Claims
(Coverage C(iii) and Indemnifiable Loss) alleging the same Wrongful Act or
related Wrongful Acts (waivable under
Clause 6 in certain circumstances)
OTHER CLAIMS:
Judgments, Settlements and Defense Costs (Non-
Indemnifiable Loss) None
Judgments, Settlements and Defense Costs $25,000 for Loss arising from Claims
(Indemnifiable Loss) alleging the same Wrongful Act or
related Wrongful Acts
</TABLE>
<PAGE> 3
ITEM 6. CONTINUITY DATES:
A. All Coverages (For Claims other than June 01, 1997
Coverage C(iii) and Outside Entity
Coverage):
B. Coverages C(iii) June 01, 1997
C. Outside Entity coverage: Per Outside Entity: June 01, 1997
ITEM 7. PREMIUM: $6,000
ITEM 8. NAME AND ADDRESS OF INSURER ("Insurer"):
(This policy is issued only by the insurance company indicated
below.)
National Union Fire Insurance Company of Pittsburgh, Pa.
70 Pine Street
New York, NY 10270
IN WITNESS WHEREOF, the Insurer has caused this policy to be signed on
the Declarations Page by its President, Secretary and a duly authorized
representative of the Insurer.
/s/ Elizabeth M. Tuck /s/ Kristan P. Moor
SECRETARY PRESIDENT
Goldman, Richard N & Co
One Bush Street, 9th Floor
San Francisco, CA 94104
/s/ Tracy R. Sogal
AUTHORIZED REPRESENTATIVE
<PAGE> 4
[SYMBOL NOT SHOWN]
AMERICAN INTERNATIONAL COMPANIES
DIRECTORS AND OFFICERS LIABILITY AND PRIVATE COMPANY
REIMBURSEMENT INSURANCE POLICY
In consideration of the payment of the premium, and in reliance upon
the statements made to the Insurer by application forming a part hereof and its
attachments and the material incorporated therein, the insurance company
designated in Item 8 of the Declarations, herein called the "Insurer", agrees as
follows:
1. INSURING AGREEMENTS
COVERAGE A: DIRECTORS AND OFFICERS INSURANCE
This policy shall pay the Loss of each and every Director or Officer of
the Company arising from a Claim first made against the Directors or
Officers during the Policy Period or the Discovery Period (if
applicable) and reported to the Insurer pursuant to the terms of this
policy for any actual or alleged Wrongful Act in their respective
capacities as Directors or Officers of the Company except when and to
the extent that the Company has indemnified the Directors or Officers.
The Insurer shall, in accordance with and subject to Clause 8, advance
Defense Costs of such Claim prior to its final disposition. This
Coverage A does not apply to an Employment Practices Claim.
COVERAGE B: PRIVATE COMPANY REIMBURSEMENT INSURANCE
This policy shall pay the Loss of the Company arising from a Claim
first made against the Directors or Officers of the Company during the
Policy Period or the Discovery Period (if applicable) and reported to
the Insurer pursuant to the terms of this policy for any actual or
alleged Wrongful Act in their respective capacities as Directors or
Officers of the Company, but only when and to the extent that the
Company has indemnified the Directors or Officers for such Loss
pursuant to law, common or statutory, or contract, or the Charter or
By-laws of the Company duly effective under such law which determines
and defines such rights of indemnity. The Insurer shall, in accordance
with and subject to Clause 8, advance Defense Costs of such Claim prior
to its final disposition. This Coverage B does not apply to an
Employment Practices Claim.
COVERAGE C: EMPLOYMENT PRACTICES LIABILITY INSURANCE
This policy shall pay the Loss of:
(i) each and every Director, Officer or employee of the Company arising
from an Employment Practices Claim first made against such Insured
during the Policy Period or the
<PAGE> 5
Discovery Period (if applicable) an reported to the Insurer pursuant to
the terms of this policy for any actual or alleged Wrongful Act in
their respective capacities as Directors, Officers or employees, except
when and to the extent that the Company has indemnified such Insured;
or
(ii) the Company arising from an Employment Practices Claim first
made against a Director, Officer or employee of the Company
during the Policy Period or the Discovery Period (if
applicable) and reported to the Insurer pursuant to the terms
of this policy for any actual or alleged Wrongful Act in their
respective capacities as Directors, Officers or employees, but
only when and to the extent that the Company has indemnified
such Insured pursuant to law, common or statutory, or
contract, or the Charter or By-laws of the Company duly
effective under such law which determines and defines such
rights of indemnity; and
(iii) the Company arising from an Employment Practices Claim first
made against the Company , during the Policy Period or the
Discovery Period (if applicable) and reported to the Insurer
pursuant to the terms of this policy for any actual or alleged
Wrongful Act, so long as such Claim is also made and
continuously maintained against at least one Director, Officer
or employee of the Company.
In accordance with and subject to Clause 8 and subject otherwise to the
terms and conditions of the policy, the Insured may at its option tender the
defense of an Employment Practices Claim for which coverage is provided by this
policy to the Insurer. Regardless of whether the defense is so tendered, the
Insurer shall advance Defense Costs of such Claim prior to its final
disposition. Selection of counsel to defend a Class Employment Practices Claim
shall be made in accordance with Clause 9 of the policy.
2. DEFINITIONS
(a) "Claim" means:
(1) a written demand for monetary or non-monetary relief, or
(2) a civil, criminal or administrative proceeding for
monetary or non-monetary relief which is commenced by:
(i) service of a complaint or similar pleading; or
(ii) return of an indictment (in the case of a
criminal proceeding); or
(iii)receipt or filing of a notice of charges.
The term "Claim" shall include an Employment Practices Claim.
(b) The "Company" means: (1) the Named Corporation designated in
Item 1. of the Declarations; (2) any Subsidiary thereof, and
(3) the Named Parent.
<PAGE> 6
(c) "Continuity Date" means the date set forth in:
(1) Item 6A of the Declarations with respect to
all coverages other than Coverage C (iii)
and Outside Entity coverage; or
(2) Item 6B of the Declarations with respect to
Coverage C (iii) only; or
(3) Item 6C of the Declarations with respect to
Claims against a Director or Officer of the
Company arising out of such Director or
Officer serving as a director, officer,
trustee or governor of an Outside Entity.
(d) "Defense Costs" means reasonable and necessary fees, costs and
expenses consented to by the Insurer (including premiums for
any appeal bond, attachment bond or similar bond, but without
any obligation to apply for or furnish any such bond)
resulting solely from the investigation, adjustment, defense
and appeal of a Claim against the Insureds, but excluding
salaries of Officers or employees of the Company.
(e) "Director(s) or Officer(s)" or "Insured(s)" means:.
(1) any past, present or future duty elected or
appointed Directors or Officers of the
Company. Coverage will automatically apply
to all new Directors and Officers after the
inception date of this policy; or
(2) in the event the Company operates outside
the United States, then the terms
"Director(s) or Officer(s)" or "Insured(s)"
shall also mean those titles, positions or
capacities in such foreign Company which is
equivalent to the position of Director or
Officer in a corporation incorporated within
the United States. Coverage will
automatically apply to a new Directors and
Officers after the inception date of this
policy; or
(3) with respect to Employment Practices Claims
only, the terms "Director(s) or Officer(s)"
or "Insured(s)" shall include: (i) any past,
present or future employee of the Company,
whether such employee is in a supervisory,
co-worker or subordinate position or
otherwise and (ii) the Company to the extent
described in Insuring Clause C (iii).
Coverage shall apply to all new employees
after the inception date of the policy.
<PAGE> 7
(f) "Employment Practices Claim" means a Claim made against an
Insured relating to a past, present or prospective employee of
the Company arising out of: (1) any actual or alleged wrongful
dismissal, discharge or termination (either actual or
constructive) of employment; (2) employment related
misrepresentation; (3) wrongful failure to employ or promote;
(4) wrongful deprivation of career opportunity; (5) wrongful
discipline; (6) failure to grant tenure or negligent employee
evaluation; (7) failure to provide adequate employee policies
and procedure; (8) sexual or workplace harassment of any kind,
(including the alleged creation of a harassing workplace
environment); or (9) unlawful discrimination, (including
sexual or workplace harassment or creation of a harassing
workplace environment) whether direct, indirect, intentional
or unintentional.
(g) "Loss" means damages, judgments, settlements and Defense
Costs; however, Loss shall not include civil or criminal fines
or penalties imposed by law, punitive or exemplary damages,
the multiplied portion of multiplied damages, taxes, any
amount for which the Insureds are not financially liable or
which are without legal recourse to the Insureds, or matters
which may be deemed uninsurable under the law pursuant to
which this policy shall be construed.
With respect to an Employment Practices Claim, "Loss" shall
not include:
(1) any obligation pursuant to any workers' compensation,
disability benefits, unemployment compensation,
unemployment insurance, retirement benefits, social
security benefits or similar law; or
(2) (i) front pay, future damages or other future
economic relief or (ii) any employment-related
benefits (other than back pay) to which the claimant
would have been entitled as an employee had the
Insured provided the claimant with a continuation,
reinstatement or commencement of employment; or
(3) any liability or costs incurred by any Insured to
modify any building or property in order to make said
building or property more accessible or accommodating
to any disabled person.
(h) "Named Parent" means the Named Parent designated in Item 1 of
the Declarations.
Coverage as is afforded under this policy with respect to a
Claim made against the Named Parent or a Director or Officer
of the Named Parent shall only apply if: (1) such Claim
relates to a Wrongful Act committed by a Director or Officer
of the Company (other than the Named Parent); and (2) a
Director or Officer of the Company (other than the Named
Parent) is and
<PAGE> 8
remains a defendant in the action along with such
Director or Officer of the Named Parent.
A corporation ceases to be a Named Parent when it
ceases to own more than 50% of the issued and
outstanding voting stock of the Named Corporation,
either directly, or indirectly through one or more of
its subsidiaries.
In all events coverage as is afforded under laws
policy with respect to a Claim made against the
Directors or Officers of the Named Parent, or an
Employment Practices Claim made against the Named
Parent shall not apply to any Wrongful Act committed
or allegedly committed after the time that such Named
Parent ceases to be a Named Parent.
(i) "No Liability" means with respect to an Employment Practices
Claim made against the Insured(s): (1) a final judgment of no
liability obtained prior to trial, in favor of all Insureds,
by reason of a motion to dismiss or a motion for summary
judgment, after the exhaustion of all appeals, or (2) a final
judgment of no liability obtained after trial, in favor of all
Insureds, after the exhaustion of all appeals. In no event
shall the term "No Liability" apply to an Employment Practices
Claim made against an Insured for which a settlement has
occurred.
"Outside Entity" Means:
(1) a not-for-profit organization under section 501(c)(3)
of the internal Revenue Code of 1986 (as amended); or
(2) any other corporation, partnership, joint venture or
other organization listed by endorsement to this
policy.
(k) "Policy Period" means the period of time from the inception
date shown in Item 3 of the Declarations to the earlier of the
expiration date shown in Item 3 of the Declarations or the
effective date of cancellation of this policy, however, to the
extent that coverage under this policy replaces coverage in
other policies terminating at noon standard time on the
inception date of such coverage hereunder, then such coverage
as is provided by this policy shall not become effective until
such other coverage has terminated.
(l) "Subsidiary" means:
(1) any corporation of which the National
Corporation owns on or before the inception
of the Policy Period more than 50% of the
issued and
<PAGE> 9
outstanding voting stock either directly, or
indirectly through one or more of its
Subsidiaries;
(2) automatically any corporation whose assets
total less than 10% of the total
consolidated assets of the Company ( defined
here to refer only to Clause 2, Definition
(b)(1) and (2), and not to include the Named
Parent) as of the inception date of this
policy, which corporation becomes a
Subsidiary during the Policy Period. The
Named Corporation shall provide the Insurer
with full particulars of the new Subsidiary-
before the end of the Policy Period;
(3) a corporation which becomes a Subsidiary
during the Policy Period (other than a
corporation described in paragraph (2)
above) but only upon the condition that
within 90 days of its becoming a Subsidiary,
the Named Corporation shall have provided
the Insurer with full particulars of the new
Subsidiary and agreed to any additional
premium and/or amendment of the provisions
of this policy required by the Insurer
relating to such new Subsidiary. Further,
coverage as shall be afforded to the new
Subsidiary is conditioned upon the Named
Corporation paying when due any additional
premium required by the Insurer relating to
such new Subsidiary.
A corporation becomes a Subsidiary when the
Named Corporation owns more than 50% of the
issued and outstanding voting stock, either
directly, or indirectly through one or more
of its Subsidiaries. A corporation ceases to
be a Subsidiary when the Named Corporation
ceases to own more than 5O% of the issued
and outstanding voting stock, either
directly, or indirectly through one or more
of its Subsidiaries.
In all events, coverage as is afforded under
this policy with respect to a Claim made
against a Director or Officer of any
Subsidiary, or an Employment Practices Claim
against any Subsidiary shall only apply for
Wrongful Acts committed or allegedly
committed after the effective time that such
Subsidiary became a Subsidiary and prior to
the time that such Subsidiary ceased to be a
Subsidiary.
(m) "Wrongful Act" means:
(1) with respect to individual Directors or Officers, any
breach of duty, neglect, error, misstatement,
misleading statement, omission or act by the
Directors or Officers in their respective capacities
as such, or any matter claimed against them solely by
reason of their status as Directors or Officers, or
any matter
<PAGE> 10
claimed against the Directors or Officers of the
Company arising out of their serving as a director,
officer, trustee or governor of an Outside Entity in
such capacity, but only if such service is at the
specific written request or direction of the Company.
(2) with respect to the Company under Insuring Clause
C(iii), any breach of duty, neglect, error,
misstatement, misleading statement, omission or act
by the Company, but solely with respect to an
Employment Practices Claim.
3. EXTENSIONS
Subject otherwise to the terms hereof, his policy shall cover Loss
arising from any Claims made against the estates, heirs, or legal
representatives of deceased Directors or Officers, and the legal
representatives of Directors or Officers in the event of incompetency,
insolvency or bankruptcy, who were Directors or Officers at the time
the Wrongful Acts upon which such Claims are based were committed.
Subject otherwise to the terms hereof, this policy shall cover Loss
arising from all Claims made against the lawful spouse (whether such
status is derived by reason of statutory law, common law or otherwise
of any applicable jurisdiction in the world) of an individual Director
or Officer for all Claims arising solely out of his or her status as
the spouse of an individual Director or Officer, including a Claim that
seeks damages recoverable from marital community property, property
jointly held by the individual Director or Officer and the spouse, or
property transferred from the individual Director or Officer to the
spouse; provided, however, that this extension shall not afford
coverage for any Claim for any actual or alleged Wrongful Act of the
spouse, but shall apply only to Claims arising out of any actual or
alleged Wrongful Acts of an individual Director or Officer, subject to
the policy's terms, conditions and exclusions.
4. EXCLUSIONS
The Insurer shall not be liable to make any payment for Loss in
connection with a Claim made against an Insured:
(a) arising out of, based upon or attributable to the gaining in
fact of any profit or advantage to which an Insured was not
legally entitled;
(b) arising out of, based upon or attributable to the committing
in fact of any criminal or deliberate fraudulent act;
<PAGE> 11
[The Wrongful Act of a Director or Officer shall not be
imputed to any other Director or Officer for the purpose of
determining the applicability of the foregoing exclusions 4(a)
and 4(b)]
(c) for emotional distress, or for injury from libel or slander,
or defamation or disparagement, or for injury from a violation
of a person's right of privacy; provided, however, this
exclusion shall not apply to an Employment Practices claim;
(d) alleging, arising out of, based upon or attributable to the
facts alleged, or to the same or related Wrongful Acts alleged
or contained in any claim which has been reported, or in any
circumstances of with notice has been given, under any policy
of which this policy is a renewal or replacement or which it
may succeed in time;
(e) alleging, arising out of, based upon or attributable to any
pending or prior litigation as of the Continuity Date, or
alleging or derived from the same or essentially the same
facts as alleged in such pending or prior litigation;
(f) with respect to Coverage C (iii) only, for any Wrongful Act
occurring prior to the Continuity Date, if the Insured knew o
r could have foreseen that such Wrongful Act could lead to an
Employment Practices Claim under this policy;
(g) with respect to serving as a director, officer, trustee or
governor of an Outside Entity, for any Wrongful Act occurring
prior to the Continuity Date if the Insured knew or could have
reasonably foreseen that such Wrongful Act could lead to a
Claim under this policy;
(h) alleging, arising out of, based upon or attributable to any
actual or alleged act or omission of the Directors or Officers
of the Company serving in their capacities as directors,
officers, trustees or governors of any other entity, other
than the Company or an Outside Entity, or by reason of their
status as directors, officers, trustees or governors of such
other entity;
(i) which is brought by any Insured or by the Company provided,
however, this exclusion shall not apply to:
(1) any Claim brought by an Insured where such Claim is
in the form of a cross-claim or third-party claim for
contribution or indemnity which is part of and
results directly from a Claim which is not otherwise
excluded by the terms of his policy; or
<PAGE> 12
(2) an Employment Practices Claim brought by an employee
other than an employee who is or was a Director of
the Named Corporation or the Named Parent.
Provided further, however, in the event that an Insured brings a
cross-clam or third-party claim, as described in sub-paragraph (1),
against another Insured, then solely with respect to the Insured who
brings the cross-claim or third-party claim the Insurer shall not be
liable for any Loss in connection with the Claim made against such
Insured out of which such cross-claim or third-party claim results;
(j) for any Wrongful Act arising out of the Insured serving as a
director, officer, trustee or governor of an Outside Entity if
such Claim is brought by the Outside Entity or by any
director, officer, trustee or governor thereof,
(k) for bodily injury, sickness, disease, or death of any person,
or damage to or destruction of any tangible property,
including the loss of use thereof,
(1) alleging, arising out of, based upon, attributable to, or in
any way involving, directly or indirectly:
(1) the actual, alleged or threatened discharge,
dispersal, release or escape of pollutants; or
(2) any direction or request to test for, monitor, clean
up, remove, contain, treat, detoxify or neutralize
pollutants, including but not limited to a Claim
alleging damage to the Company or its securities
holders.
Pollutants include (but is not limited to) any solid, liquid, gaseous
or thermal irritant or contaminant, including smoke, vapor, soot,
fumes, acids, alkalis, chemicals and waste. Waste includes (but is not
limited to) materials to be recycled, reconditioned or reclaimed;
(m) for violation(s) of any of the responsibilities, obligations
or duties imposed by the Employee Retirement Income Security
Act of 1974, the Fair Labor Standards Act (except the Equal
Pay Act), the National Labor Relations Act, the Worker
Adjustment and Retraining Notification Act, the Consolidated
Omnibus Budget Reconciliation Act, the Occupational Safety and
Health Act, any rules or regulations of the foregoing
promulgated thereunder, and amendments thereto or any similar
provisions of any federal, state or local statutory law or
common law;
(n) alleging, arising out of, based upon or attributable to:
<PAGE> 13
(1) the purchase or sale, or offer or solicitation of an
offer to purchase or sell, any securities of the
Company, Outside Entity or an Affiliate ("Offering of
Securities"); or
(2) any Claim brought by a securities holder of the
Company or an Affiliate whether directly, or
derivatively on behalf of the Company, Outside Entity
or an Affiliate, or by class action;
provided, however, this exclusion shall not apply to any Offering of
Securities by the Company in the event that within 30 days prior to the
effective time of such Offerings of Securities: (1) the Company gives
written notice of such Offering of Securities to the Insurer, together
with all particulars and underwriting information required thereto; and
(2) the Company accepts such terms, conditions and additional premium
required by the Insurer for such coverage. Such coverage is also
subject to the Company paying when due any such additional premium. In
the event the Company gives written notice and all particulars pursuant
to (1) above then the Insurer shall offer a quote relating to such
Offering of Securities within 30 days of receipt of such written notice
and particulars, subject to any terms, conditions and additional
premium as the Insurer may in its discretion require.
The term "Affiliate" means (i) any person or entity that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or in common control with, the Company, or (ii) any
person or entity that directly, or indirectly through one or more
intermediaries is a successor in interest to the Company.
(o) alleging, arising out of, based upon or attributable to any
actual or alleged liability of an Insured under any express
employment contract or agreement; provided, however, that this
exclusion shall not apply if the Insured would have had such
liability even in the absence of such contract or agreement.
5. LIMIT OF LIABILITY (FOR ALL LOSS - INCLUDING DEFENSE COSTS)
The Limit of Liability stated in Item 4 of the Declarations is the
limit of the Insurer's liability for all Loss, under Coverage A,
Coverage B and Coverage C combined, arising out of all Claims first
made against the Insureds during the Policy Period or the Discovery
Period (if applicable); however, the Limit of Liability for the
Discovery Period shall be part of, and not in addition to, the Limit of
Liability for the Policy Period. Further, any Claim which is made
subsequent to the Policy Period or Discovery Period (if applicable)
which pursuant to Clause 7(b) or 7(c) is considered made during the
Policy Period or Discovery Period shall also be subject to the one
aggregate Limit of Liability stated in Item 4 of the Declarations.
<PAGE> 14
Defense Costs are not payable by the Insurer in addition to the limit
of liability. Defense Costs are part of Loss and as such are subject to
the Limit or Liability for Loss.
6. RETENTION CLAUSE
The Insurer shall only be liable for the amount of Loss arising from a
Claim which is in excess of the Retention amount stated in Item 5 of
the Declarations, such Retention amount to be borne by the Company
and/or the Insureds and shall remain uninsured, with regard to all Loss
under (1) Coverage A, B or C (i), or C(ii) for which the Company has
indemnified or is permitted or required to indemnify the Director(s) or
Officer(s) ("Indemnifiable Loss") or (2) Coverage C (iii) A single
Retention amount shall apply to Loss arising from all Claims alleging
the same Wrongful Act or related Wrongful Acts.
Notwithstanding the foregoing, solely with respect to an Employment
Practices Claim under this policy, no Retention shall apply for an
Employment Practices Claim in the event of a determination of No
Liability of all Insureds, and the Insurer shall thereupon reimburse
the Defense Costs paid, as the case may be, by the Company or an
Insured.
7. NOTICE/CLAIM REPORTING PROVISIONS
NOTICE HEREUNDER SHALL BE GIVEN IN WRITING TO THE INSURER NAMED IN ITEM
8 OF THE DECLARATIONS AT THE ADDRESS INDICATED IN ITEM 8 OF THE
DECLARATIONS. IF MAILED, THE DATE OF MAILING SHALL CONSTITUTE THE DATE
THAT SUCH NOTICE WAS GIVEN AND PROOF OF MAILING SHALL BE SUFFICIENT
PROOF OF NOTICE.
(a) The Company or the Insureds shall, as a condition precedent to
the obligations of the Insurer under this policy, give written
notice to the Insurer of any Claim made against an Insured as
soon as practicable and either:
(1) anytime during the Policy Period or during the
Discovery Period (if applicable); or
(2) within 30 days after the end of the Policy Period or
the Discovery Period (if applicable), as long as such
Claim is reported no later than 30 days after the
date such Claim was first made against an Insured.
(b) If written notice of a Claim has been given to the Insurer
pursuant to Clause 7(a) above, then any Claim which is
subsequently made against the Insureds and reported to the
Insurer alleging, arising out of, based upon or attributable
to the facts alleged in the Claim for which such notice has
been given, or alleging any Wrongful Act which is the same as
or related to any Wrongful Act alleged in the Claim of which
<PAGE> 15
such notice has been given, shall be considered made at the
time such notice was given.
(c) If during the Policy Period or during the Discovery Period (if
applicable) the Company or the Insureds shall become aware of
any circumstances which may reasonably be expected to give
rise to a Claim being made against the Insureds and shall give
written notice to the Insurer of the circumstances and the
reasons for anticipating such a Claim, with full particulars
as to dates, persons and entities ;involved, then any Claim
which is subsequently made against the Insureds and reported
to the Insurer alleging, arising out of, based upon or
attributable to such circumstances or alleging any Wrongful
Act which is the same as or related to any Wrongful Act
alleged or contained in such circumstances, shall be
considered made at the time such notice of such circumstances
was given.
8. DEFENSE COSTS, SETTLEMENTS, JUDGMENTS (INCLUDING THE ADVANCEMENT OF
DEFENSE COSTS)
The Insurer does not assume any duty to defend. The Insureds shall
defend and contest any Claim made against them.
With respect to an Employment Practices Claim, the Insureds shall have
the right to tender the defense of the Claim to the Insurer, which
right shall be exercised in writing by the Named Corporation on behalf
of all insured to the Insurer pursuant to Clause 7 of this policy. This
right shall terminate if not exercised within 30 days of the date the
Employment Practices Claim is first made against an Insured. Further,
from the date the Employment Practices Claim is first made against the
Insureds to the date when the Insurer accepts the tender of the defense
of such Claim, the Insureds shall take no action, or fail to take any
required action, that prejudices the rights of the Insureds or the
Insurer with respect to such Claim. Provided that the Insureds have
complied with the foregoing, the Insurer shall be obligated to assume
the defense of the Employment Practices Claim alleging a Wrongful Act,
even if such Employment Practices Claim is groundless, false or
fraudulent. The assumption of the defense of the Employment Practices
Claim shall be effective upon written confirmation thereof sent by the
Insurer to the Named Corporation. Once the defense has been so
tendered, the Insured shall have the right to effectively associate
with the Insurer in the defense of such Employment Practices Claim,
including, but not limited to, negotiating a settlement, subject to the
provisions of this Clause 8. However, the Insurer shall not be
obligated to defend such Employment Practices Claim after the Limit of
Liability has been exhausted, or after an Insured's rejection of a
settlement offer as described in this Clause 8.
Under Coverage A and Coverage B and Coverage C, when the Insurer has
not assumed the defense of an Employment Practices Claim pursuant to
Clause 8, the Insurer shall advance,
<PAGE> 16
at the written request of the Insured, Defense Costs prior to the final
disposition of a Claim. Such advance payments by the Insurer shall be
repaid to the Insurer by the Insureds or the Company, severally
according to their respective interests, in the event and to the extent
that the Insureds or the Company shall not be entitled under the terms
and conditions of this policy to payment of such Loss.
The Insureds shall not admit or assume any liability, enter into any
settlement agreement, stipulate to any judgment, or incur any Defense
Costs without the prior written consent of the Insurer. Only those
settlements, stipulated judgments and Defense Costs which have been
consented to by the Insurer shall be recoverable as Loss under the
terms of this policy. The Insurer's consent shall not be unreasonably
withheld, provided that the Insurer, when it has not assumed the
defense of an Employment Practices Claim pursuant to this Clause 8,
shall be entitled to effectively associate in the defense and the
negotiation of any settlement of any Claim.
The Insurer shall have the right to effectively associate with the
Company in the defense of any Claim that appears reasonably likely to
involve the Insurer, including but not limited to negotiating a
settlement. The Company and the Insureds shall give the Insurer full
cooperation and such information as it may reasonably require.
With respect to an Employment Practices Claim, the Insurer may make any
settlement of any Claim it deems expedient with respect to any Insured
subject to such Insured's written consent. If any Insured withholds
consent to such settlement, the Insurer's liability for all Loss on
account of such Claim shall not exceed the amount for which the Insurer
could have settled such Claim plus Defense Costs incurred as of the
date such settlement was proposed in writing by the Insurer. Further,
in the event that the Insurer is defending the Employment Practices
Claim pursuant to this Clause 8 , then the Insurer shall be relieved of
its duty to defend and shall thereafter tender the Claim back to the
Insureds, who shall thereafter at their own expense and on their own
behalf be responsible for the defense and any negotiation of such Claim
independently of the Insurer.
The Company is not covered in any respect under Coverage A or C(i); the
Company is covered, subject to the policy's terms, conditions and
exclusions, only with respect to its indemnification of the Directors
or Officers of the Company under Coverage B and C(ii); the Company is
covered under Coverage C(iii). Accordingly, the Insurer has no
obligation under this policy for Defense Costs incurred by, judgments
against or settlements by the Company arising out of a Claim made
against the Company other than a covered Employment Practices Claim, or
any obligation to pay Loss arising out of any legal liability that the
Company has to the claimant except as respects a covered Employment
Practices Claim against the Company and its Directors or Officers.
With respect to (i) Defense Costs jointly incurred by, (ii) any joint
settlement made by, and/or (iii) any adjudicated judgment of joint and
several liability against the Company and
<PAGE> 17
any Director or Officer, in connection with any Claim other than an
Employment Practices Claim, the Company and the Director(s) or
Officer(s) and the Insurer agree to use their best efforts to determine
a fair and proper allocation of the amounts as between the Company and
the Director(s) or Officer(s) and the Insurer, taking into account the
relative legal and financial exposures of and the relative benefits
obtained by the Directors and Officers and the Company. In the event
that a determination as to the amount of Defense Costs to be advanced
under the policy cannot be agreed to, then the Insurer shall advance
such Defense Costs which the Insurer states to be fair and proper until
a different amount shall be agreed upon or determined pursuant to the
provisions of this policy and applicable law.
9. PRE-AUTHORIZED CLASS ACTION EMPLOYMENT PRACTICES DEFENSE ATTORNEYS
Only with respect to an Employment Practices Claim in the form of a
class action (hereinafter a "Class Employment Practices Claim"):
Affixed as Appendix A hereto and made a part of this policy is a list
of Panel Counsel law firms ("Panel Counsel Firms") from which a
selection of legal counsel shall be made to conduct the defense of any
Class Employment Practices Claim against an Insured pursuant to the
terms set forth below.
In the event the Insurer has assumed the defense pursuant to Clause 8
of this policy, then the Insurer shall select a Panel Counsel Firm to
defend the Insureds. Upon the written request of the Named Corporation,
the Insurer may consent to a law firm selected by the Named
Corporation, whether or not a Panel Counsel Firm, to defend the
Insureds, which consent shall not be unreasonably withheld. If at any
time thereafter a dispute arises between the Insurer and the Insureds
involving the defense of the Claim, the Insurer and the Insured shall
select a mutually agreeable replacement defense counsel from the Panel
Counsel list.
In the event the Insureds are defending the Class Employment Practices
Claim, then the Insureds shall select a Panel Counsel Firm to defend
the Insureds.
The selection of the Panel Counsel Firm, whether done by the Insurer or
the Insureds pursuant to the above rules, shall be from the
jurisdiction in which the Class Employment Practices Claim is brought.
In the event a Class Employment Practices Claim is brought in a
jurisdiction not included on the list, the selection shall be made from
a listed jurisdiction which is the nearest geographic jurisdiction to
either where the Class Employment Practices Claim is maintained or
where the corporate headquarters of the Named Corporation is located.
In such instance the Insureds also may, with the consent of the
Insurer, which consent shall not be unreasonably withheld, select a
non-Panel Counsel Firm in the jurisdiction in which the Class
Employment Practices Claim is brought to function as "local counsel" on
the Class Employment
<PAGE> 18
Practices Claim to assist the Panel Counsel Firm which will function as
"lead counsel" in conducting the defense of the Class Employment
Practices Claim.
With the express prior written consent of the Insurer, an Insured may
select a Panel Counsel Firm different from that selected by other
Insured defendants if such selection is required due to an actual
conflict of interest or is otherwise reasonably justifiable.
The list of Panel Counsel Firms may be amended from time to time by the
Insurer. However, no change shall be made to the specific list attached
to this policy during the Policy Period without the consent of the
Named Corporation.
10. DISCOVERY CLAUSE
Except as indicated below, if the Insurer or the Named Corporation
shall cancel or refuse to renew this policy, the Named Corporation
shall have the right, upon payment of an additional premium of 75% of
the "full annual premium", to a period of one year following the
effective date of such cancellation or nonrenewal (herein referred to
as the "Discovery Period") in which to give to the Insurer written
notice of Claims first made against the Insureds during said one year
period for any Wrongful Act occurring prior to the end of the Policy
Period and otherwise covered by this policy. As used herein, "full
annual premium" means the premium level in effect immediately prior to
the end of the Policy Period. The rights contained in this paragraph
shall terminate, however, unless written notice of such election
together with the additional premium due is received by the Insurer
within 30 days of the effective date of cancellation or nonrenewal.
In the event of a Transaction, as defined in Clause 12, the Named
Corporation shall have the right, within 30 days before the end of the
Policy Period, to request an offer from the Insurer of a Discovery
Period (with respect to Wrongful Acts occurring prior to the effective
time of the Transaction) for a period of no less than three years or
for such longer or shorter period as the Named Corporation may request.
The Insurer shall offer such Discovery Period pursuant to such terms,
conditions and premium as the Insurer may reasonably decide. In the
event of a Transaction, the right to a Discovery Period shall not
otherwise exist except as indicated in this paragraph.
The additional premium for the Discovery Period shall be fully earned
at the inception of the Discovery Period. The Discovery Period is not
cancelable. This clause and the rights contained herein shall not apply
to any cancellation resulting from non-payment of premium.
<PAGE> 19
11. CANCELLATION CLAUSE
This policy may be canceled by the Named Corporation at any time only
by mailing written prior notice to the Insurer or by surrender of this
policy to the Insurer or its authorized agent.
This policy may be canceled by or on the behalf of the Insurer only in
the event of nonpayment of premium by the Named Corporation. In the
event of non-payment of premium by the Named Corporation, the Insurer
may cancel this policy by delivering to the Named Corporation or by
mailing to the Named Corporation, by registered, certified, or other
first class mail, at the Named Corporation's address as shown in Item 1
of the Declarations, written notice stating when, not less than 30 days
thereafter, the cancellation shall be effective. The mailing of such
notice as aforesaid shall be sufficient proof of notice. The Policy
Period terminates at the date and hour specified in such notice, or at
the date and time of surrender.
If the period of limitation relating to the giving of notice is
prohibited or made void by any laws controlling the construction
thereof, such period shall be deemed to be amended so as to be equal to
the minimum period of limitation permitted by such law.
12. CHANGE IN CONTROL OF NAMED CORPORATION
If during the Policy Period:
a. the Named Corporation shall consolidate with or merge
into, or sell all or substantially all of its assets
to any other person or entity or group of persons
and/or entities acting in concert; or
b. any person or entity or group of persons and/or
entities acting in concert shall acquire an amount of
the outstanding securities representing more than 50%
of the voting power for the election of Directors of
the Named Corporation, or acquires the voting rights
of such an amount of such securities;
(either of the above events herein referred to as the "Transaction")
then this policy shall continue in full force and effect as to Wrongful
Acts occurring prior to the effective time of the Transaction, but
there shall be no coverage afforded by any provision of this policy for
any actual or alleged Wrongful Act occurring after the effective time
of the Transaction. This policy may not be canceled after the effective
time of the Transaction and the entire premium for this policy shall be
deemed earned as of such time. The Named Corporation shall also have
the light to an offer by the Insurer of a Discovery Period described in
Clause 10 of the policy.
The Named Corporation shall give the Insurer written notice of the
Transaction as soon as practicable, but not later than 30 days after
the effective date of the Transaction.
<PAGE> 20
13. SUBROGATION
In the event of any payment under this policy, the Insurer shall be
surrogated to the extent of such payment to all the Company's and the
Insureds' rights of recovery thereof, and the Company and the Insureds
shall execute all papers required and shall do everything that may be
necessary to secure such rights including the execution of such
documents necessary to enable the Insurer to effectively bring suit in
the name of the Company and/or the Insureds. In no event, however,
shall the Insurer exercise its rights of subrogation against an Insured
under this policy unless such Insured has been convicted of a criminal
act, or been judicially determined to have committed a deliberate
fraudulent act, or obtained any profit or advantage to which such
Insured was not legally entitled.
14. OTHER INSURANCE AND INDEMNIFICATION
Such insurance as is provided by this policy shall apply only as excess
over any other valid and collectible insurance.
In the event of a Claim against a Director or Officer of the Company
arising out of his or her serving as a director, officer, trustee or
governor of an Outside Entity, coverage as is afforded by this policy
shall be specifically excess of indemnification provided by such
Outside Entity and any insurance provided to such Outside Entity with
respect to its directors or officers.
Further, in the event such other insurance provided to the Company or
the Outside Entity is provided by the Insurer or any member company of
American International Group, Inc. (AIG) (or would be provided but for
the application of the retention amount, exhaustion of the limit of
liability or failure to submit a notice of a Claim) then the maximum
aggregate Limit of Liability for all Losses combined covered by virtue
of this policy as respects any such Claim shall be reduced by the limit
of liability (as set forth on the Declarations Page) of the other AIG
insurance provided to the Company or such Outside Entity.
15. NOTICE AND AUTHORITY
It is agreed that the Named Corporation shall act on behalf of the
Subsidiaries, the Named Parent and all Insureds with respect to the
giving of notice of Claim or giving and receiving notice of
cancellation, the payment of premiums and the receiving of any return
premiums that may become due under this policy, the receipt and
acceptance of any endorsements issued to form a part of this policy and
the exercising or declining to tender the defense of an Employment
Practices Claim to the Insurer and the exercising or declining of any
right to a Discovery Period.
<PAGE> 21
16. ASSIGNMENT
This policy and any and all rights hereunder are not assignable without
the written consent of the Insurer.
17. ARBITRATION
It is hereby understood and agreed that all disputes or differences
which may arise under or in connection with this policy, whether
arising before or after termination of this policy, including any
determination of the amount of Loss, shall be submitted to the American
Arbitration Association under and in accordance with its then
prevailing commercial arbitration rules. The arbitrators shall be
chosen in the manner and within the time frames provided by such rules.
If permitted under such rules, the arbitrators shall be three
disinterested individuals having knowledge of the legal, corporate
management, or insurance issues relevant to the matters in dispute.
Any party may commence such arbitration proceeding in either
New York, New York; Atlanta, Georgia; Chicago, Illinois; or Denver,
Colorado. The arbitrators shall give due consideration to the general
principles of Delaware law in the construction and interpretation of
the provisions of this policy; provided, however, that the terms,
conditions, provisions and exclusions of this policy are to be
construed in an evenhanded fashion as between the parties, including
without limitation, where the language of this policy is alleged to be
ambiguous or otherwise unclear, the issue shall be resolved in the
manner most consistent with the relevant terms, conditions, provisions
or exclusions of the policy (without regard to the authorship of the
language, the doctrine of reasonable expectation of the parties and
without any presumption or arbitrary interpretation or construction in
favor of either party or parties, and in accordance with the intent of
the parties).
The written decision of the arbitrators shall be provided to both
parties and shall be binding on them. The arbitrators' award shall not
include attorney fees or other costs.
Each party shall bear equally the expenses of the arbitration.
18. ACTION AGAINST INSURER
Except as provided in Clause 17 of the policy, no action shall lie
against the Insurer unless, as a condition precedent thereto, there
shall have been full compliance with all of the terms of this policy,
nor until the amount of the Insureds' obligation to pay shall have been
finally determined either by judgment against the Insureds after actual
trial or by written agreement of the Insureds, the claimant and the
Insurer.
Any person or organization or the legal representative thereof who has
secured such judgment or written agreement shall thereafter be entitled
to recover under this policy to the extent of the
<PAGE> 22
insurance afforded by this policy. No person or organization shall have
any right under this policy to join the Insurer as a party to any
action against the Insureds or the Company to determine the Insureds'
liability, nor shall the Insurer be impleaded by the Insureds or the
Company or their legal representatives. Bankruptcy or insolvency of the
Company or the Insureds or of their estates shall not relieve the
Insurer of any of its obligations hereunder.
19. HEADINGS
The descriptions in the headings of this policy are solely for
convenience, and form no part of the terms and conditions of coverage.
<PAGE> 23
ENDORSEMENT # 1
This endorsement, effective 12:01 AM, June 01, 1997 forms a part of policy
number 485-58-59 issued to WINK COMMUNICATIONS
by National Union Fire Insurance Company of Pittsburgh, Pa.
NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT
(BROAD FORM)
In consideration of the premium charged, it is hereby understood and agreed
that the Insurer shall not be liable to make any payment for Loss in
connection with any claim or claims made against the Directors or Officers:
A. alleging, arising out of, based upon, attributable to, or in any way
involving, directly or indirectly the hazardous properties of nuclear
material, including but not limited to:
(1) nuclear material located at any nuclear facility owned by, or
operated by or on behalf of, the Company, or discharged or
dispersed therefrom; or
(2) nuclear material contained in spent fuel or waste which was or
is at any time possessed, handled, used, processed, stored,
transported or disposed of by or on behalf of the Company; or
(3) the furnishing by an insured or the Company of services,
materials, parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear
facility; or
(4) claims for damages to the company or its shareholders which
alleges, arises from, is based upon, is attributed to or in
any way involves, directly or indirectly, the hazardous
properties of nuclear material.
B. (1) which is insured under a nuclear energy liability policy
issued by the Nuclear Energy Liability Insurance Association,
Mutual Atomic Energy Liability underwriters or Nuclear
Insurance Association of Canada or would be insured under any
such policy but for its termination or exhaustion of its Limit
of Liability; or
(2) with respect to which (a) any person or organization is
required to maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law amendatory thereof, or
(b) the Company or any insured is, or had this policy not been
issued would be,
<PAGE> 24
entitled to indemnity from the United States of America, or
any agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with any
person or organization.
As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive properties;
"nuclear material" means source material, special nuclear material or
byproduct material;
<PAGE> 25
NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT# 1
(BROAD FORM)
"source material", "special nuclear material", and "byproduct material" have
the meanings given them in the Atomic Energy Act of 1954 or in any law
amendatory thereof;
"spent fuel" means any fuel element or fuel component, solid or liquid, which
has been used or exposed to radiation in a nuclear reactor;
"waste" means any waste material (1) containing byproduct material and (2)
resulting from the operation by any person or organization of any nuclear
facility included within the definition of nuclear facility under paragraph
(a) or (b) thereof;
"nuclear facility" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating the isotopes
of uranium or plutonium, (2) processing or utilizing spent fuel, or (3)
handling, processing or packaging waste,
(c) any equipment or device used for the processing, fabricating or alloying
of special nuclear material if at any time the total amount of such material
in the custody of the insured at the premises where such equipment or device
is located consists of or contains more than 25 grams of plutonium or uranium
233 or any combination thereof, or more than 250 grams of uranium 235.
(d) any structure, basin, excavation, premises or place prepared or used for
the storage or disposal of waste, and includes the site on which any of the
foregoing is located, all operations conducted on such site and all-premises
used for such operations;
"nuclear reactor" means any apparatus designed or used to sustain nuclear
fission in a self-supporting chain reaction or to contain a critical mass of
fissionable material.
/s/ Tracy R. Sogal
AUTHORIZED REPRESENTATIVE
<PAGE> 26
ENDORSEMENT # 2
This endorsement, effective 12:01 AM, June 01, 1997 forms a part of policy
number 485-58-59 issued to WINK COMMUNICATIONS
by National Union Fire Insurance Company of Pittsburgh, Pa.
CAPTIVE INSURANCE COMPANY
In consideration of the premium charged, it is hereby understood and agreed
that the Insurer shall not be liable to make any payments for Loss in
connection with any claim or claims made against the Directors or Officers
alleging, arising out of, based upon or attributable to the ownership,
management, maintenance and/or control by the Company of any captive insurance
company or entity including but not limited to claims alleging the insolvency
or bankruptcy of the Named Corporation as a result of such ownership,
operation, management and control.
/s/ Tracy R. Sogal
AUTHORIZED REPRESENTATIVE
<PAGE> 27
ENDORSEMENT# 3
This endorsement, effective 12:01 AM, June 01, 1997 forms a part of policy
number 485-58-59 issued to WINK COMMUNICATIONS
by National union fire Insurance Company of Pittsburgh, Pa.
COMMISSIONS EXCLUSION
In consideration of the premium charged, It is hereby understood and agreed
that the Insurer shall not be liable to make any payment for Loss in
connection with any claim made against the Directors and Officers, alleging,
arising out of, based upon or attributable to:
(I) Payments, commissions, gratuities, benefits or any other favors to or for
the benefit of any full or part-time domestic or foreign governmental or armed
services officials, agents, representatives, employees or any members of their
family or any entity with which they are affiliated; or
(II) Payments, commissions, gratuities, benefits or any other favors to or for
the benefit of any full or part-time officials, directors, agents, partners,
representatives, principal shareholders, or owners or employees, or affiliates
(as that term is defined in The Securities Exchange Act of 1934, including any
of their officers, directors, agents, owners, partners, representatives,
principal shareholders or employees) of any customers of the company or any
members of their family or any entity with which they are affiliated; or
(III) Political contributions, whether domestic or foreign.
/s/ Tracy R. Sogal
AUTHORIZED REPRESENTATIVE
<PAGE> 28
ENDORSEMENT# 4
This endorsement, effective 12:01 AM, June 01, 1997 forms a part of policy
number 485-58-59 issued to WINK COMMUNICATIONS
by National Union Fire Insurance Company of Pittsburgh, Pa.
CALIFORNIA CANCELLATION/NONRENEWAL
ENDORSEMENT
Wherever used in this endorsement: 1) "we", "us", "our", and "insurer" mean
the insurance company which issued this policy; and 2) "you", "your", "named
insured", "First Named Insured", and "Insured" mean the Named Corporation,
Named Organization, Named Sponsor, Named Insured, or Insured stated in the
declarations page; and 3) "Other Insured(s)" means all other persons or
entities afforded coverage under the policy.
In consideration of the premium charged, it is hereby understood and agreed
that the cancellation clause is replaced with the following:
CANCELLATION
The First Named Insured shown in the declarations may cancel the policy by
mailing or delivering to the Insurer advance written notice of cancellation.
If the policy has been in effect for more than sixty (60) days or if it is a
renewal, effective immediately, the Insurer may not cancel the policy unless
such cancellation is based on one or more of the following reasons:
1. Nonpayment of premium, including payment due on a prior policy Issued
by the Insurer and due during the current policy term covering the same
risks.
2. A judgement by a court or an administrative tribunal that the named
Insured has violated any law of this state of or of the United States
having as one of its necessary elements an act which materially
Increases any of the risks insured against.
3. Discovery of fraud or material misrepresentation by either of the
following:
a. The Insured or Other Insured(s) or his or her representative
in obtaining the insurance; or
b. The named Insured or his or her representative in pursuing a
claim under the policy.
<PAGE> 29
4. Discovery of willful or grossly negligent acts or omissions, or of any
violations of state laws or regulations establishing safety standards,
by the named Insured or Other Insured(s) or a representative of same,
which materially increase any of the risks insured against.
5. Failure by the named Insured or Other Insured(s) or a representative of
same to implement reasonable loss control requirements which were
agreed to by the Insured as a condition of policy issuance or which
were conditions precedent to the use by the Insurer of a particular
rate or rating plan if the failure materially increases any of the
risks insured
6. A determination by the commissioner that the loss of, or changes in, an
insurer's reinsurance covering all or part of the risk would threaten
the financial integrity or solvency of the Insurer.
7. A determination by the commissioner that a continuation of the policy
coverage could place the Insurer in violation of the laws of this state
or the state of its domicile or that the continuation of coverage would
threaten the solvency of the Insurer.
8. A change by the Named Insured or Other Insured(s) or a representative
of same in the activities or property of the commercial or industrial
enterprise which results in a material added risk, a materially
increased risk or a materially changed risk, unless the added,
increased, or changed risk is included in the policy.
Notice of cancellation shall be delivered or mailed to the producer of record
and the named Insured at least thirty (30) days prior to the effective date of
cancellation. Where cancellation is for nonpayment of premium or fraud, notice
shall be given no less than ten (10) days prior to the effective date of
cancellation.
NONRENEWAL
If the Insurer decides not to renew the policy, the Insurer shall mail or
deliver to the producer of record and the named Insured notice of nonrenewal
at least sixty (60) days but no more than 120 days prior to the end of the
policy period. The notice shall contain the reason for nonrenewal of the
policy.
RENEWAL
If a policy has been in effect for more than sixty (60) days or if the policy
is a renewal, effective immediately no increase in premium, reduction in
limits, or change in the conditions of coverage shall be effective during the
policy period unless based upon one of the following reasons:
1. Discovery of willfull or grossly negligent acts or omissions, or of any
violations of state laws or regulations establishing safety standards
by the named Insured or Other Insured(s) which materially increase any
of the risks or hazards insured against.
<PAGE> 30
2. Failure by the named Insured or Other Insured(s) to implement
reasonable loss control requirements which were agreed to by the
Insured as a condition of policy issuance or which were conditions
precedent to the use by the Insurer of a particular rate or rating
plan, if the failure materially increases any of the risks insured
against.
3. A determination by the commissioner that loss of or changes in an
insurer's reinsurance covering all or part of the risk covered by the
policy would threaten the financial integrity or solvency of the
Insurer unless the change in the terms or conditions or rate upon which
the premium is based is permitted.
4. A change by the named Insured or Other Insured(s) in the activities or
property of the commercial or industrial enterprise which results in a
materially added risk, a materially increased risk, or materially
changed risk, unless the added, increased, or changed risk is included
in the policy.
Written notice shall be mailed or delivered to the named Insured and the
producer of record at least thirty (30) days prior to the effective date of
any increase, reduction or change.
All other terms, conditions and exclusions of the policy remain the same.
/s/ Tracy R. Sogal
AUTHORIZED REPRESENTATIVE
<PAGE> 31
ENDORSEMENT #5
This endorsement, effective 12:01 AM, June 01, 1997, forms a part of policy
number 485-58-59 issued to WINK COMMUNICATIONS
by: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
EXCLUSION (n) IPO MODIFICATION
FOR THE PRIVATE COMPANY FORM
I
In consideration of the premium charged, it is hereby understood and agreed
that Clause 4, exclusions (i), (j) and (n) are deleted in their entirety and
replaced by the following:
(i) which is brought by any Insured, by the Company or by the Parent; or
which is brought by any security holder of the Company or the Parent,
whether directly or derivatively, unless such security holder's Claim
is instigated and continued totally independent of, and totally without
the solicitation of, or assistance of, or active participation of, or
intervention of, any Insured, the Company or the Parent; provided,
however, this exclusion (i) shall not apply to:
(1) any Claim brought by an Insured where such Claim is in the
form of a cross-claim or third party claim for contribution or
indemnity which is part of and results directly from a Claim
which is not otherwise excluded by the terms of this policy;
or
(2) an Employment Practices Claim brought by an employee other
than an employee who is or was a Director of the Named
Corporation or the Parent.
Provided further, however, in the event that an Insured brings a cross-claim
or third party claim, as described in sub-paragraph (1), against another
Insured, then solely with respect to the Insured who brings the cross-claim or
third party claim the Insurer shall not be liable for any Loss in connection
with the Claim made against such Insured out of which such cross-claim or
third party claim results.
(j) for any Wrongful Act arising out of the Insured serving as a director,
officer, trustee or governor of an Outside Entity if such Claim is
brought by the Outside Entity or by any director, officer, trustee or
governor thereof; or which is brought by any security holder of the
Outside Entity, whether directly or derivatively, unless such security
holder's Claim is instigated and continued totally independent of, and
totally without the solicitation of, or assistance of, or active
participation of, or intervention of, the Outside Entity, any director,
officer, trustee or governor thereof, any Insured, the Company or the
Parent.
<PAGE> 32
(n) alleging, arising out of, based upon or attributable to (1) the
purchase or sale, or offer or solicitation of an offer to purchase or
sell, any security of the Company, Outside Entity or an Affiliate AND
(2) brought on or after the effective time of a purchase or sale, or an
offer or solicitation of an offer to purchase or sell, any securities
of the Company, Outside Entity or an Affiliate, by or on the behalf of
the Company, Outside Entity or an Affiliate, in an INITIAL PUBLIC
OFFERING, (hereinafter an OFFERING OF SECURITIES).
This exclusion (n) shall apply, but not be limited to, any such Claim
which alleges, arises out of, is based upon or is attributable to any
Claim arising out of any alleged misrepresentations or non-disclosures
in any written or oral statement, including but not limited to any
Registration Statement, prospectus, offering circular, or other
document or statement relating to the OFFERING OF SECURITIES, as well
as any failure to file any document required to be filed with the
Securities and Exchange Commission.
It is further understood and agreed that the Insurer shall not be
liable to make any payment for Loss in connection with any Claim made
against the Insured(s) brought by a security holder of the Company,
Outside Entity or an Affiliate on or after the effective time of an
OFFERING OF SECURITIES, regardless of whether the securities held by
such security holder were purchased in such OFFERING OF SECURITIES, are
traceable to the OFFERING OF SECURITIES, or were purchased in the open
market subsequent to the OFFERING OF SECURITIES.
Notwithstanding the foregoing, however, this endorsement (n) shall not
apply:
(1) to any Claim brought by a security holder of the Company,
Outside Entity or an Affiliate with regard to securities
purchased or held by such security holder prior to the
effective time of the OFFERING OF SECURITIES; or
(2) in the event that within thirty days prior to the effective
time of an OFFERING OF SECURITIES: the Company gives written
notice thereof together with all particular and underwriting
information relating thereto; the Insurer agrees, in its
discretion, to grant coverage subject to such terms,
conditions and additional premium as it may require; and the
Company accepts such terms, conditions and additional premium.
Such coverage is also subject to the Company paying when due
any such additional premium.
The term "Affiliate" means (i) the Parent, (ii) any person or entity that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or in common control with, the Company or the Parent, or (iii)
any person or entity that directly or indirectly through one or more
intermediaries is a successor in interest to the Company or the Parent.
<PAGE> 33
II
In consideration of the premium charged, it is hereby understood and agreed
that clause 4, Exclusions, is amended by adding the following to the end
thereof:
(p) arising out of, based upon or attributable to payments to an Insured of
any remuneration without the previous approval of the stockholders of
the Company, Outside Entity or an Affiliate which payment without such
previous approval shall be held to have been illegal;
[The Wrongful Act of any Director or Officer shall not be imputed to
any other Director or Officer for the purposes of determining the
applicability of the foregoing exclusion (p)]
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Tracy R. Sogal
AUTHORIZED REPRESENTATIVE
<PAGE> 34
ENDORSEMENT #6
This endorsement effective 12:01 AM, June 01, 1997, forms a part of policy
number 485-58-59 issued to WINK COMMUNICATIONS
by NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
In consideration of the premium charged, it is hereby understood and agreed
that the following amendments shall be made to this policy and incorporated
therein:
(1) Clause 1. Insuring Agreements, Coverage C: Employment Practices
Liability Insurance, is deleted in its entirety.
(2) The last sentence of Clause 1. Insuring Agreements, Coverage A
("Directors and Officers Insurance") and Coverage B ("Private Company
Reimbursement Insurance") shall remain in full force and effect.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Tracy R. Sogal
AUTHORIZED REPRESENTATIVE
<PAGE> 35
[SYMBOL NOT SHOWN] AMERICAN INTERNATIONAL COMPANIES(R)
Name of Insurance Company to which Application is made
(herein called the "Insurer")
DIRECTORS AND OFFICERS LIABILITY AND
PRIVATE COMPANY REIMBURSEMENT INSURANCE POLICY
Wink Communications, Inc.
Name of Insurance Policy to which Application is applicable
NOTICE: THE POLICY PROVIDES THAT THE LIMIT OF LIABILITY AVAILABLE TO PAY
JUDGMENTS OR SETTLEMENTS SHALL BE REDUCED BY AMOUNTS INCURRED FOR LEGAL DEFENSE.
FURTHER NOTE THAT AMOUNTS INCURRED FOR LEGAL DEFENSE SHALL BE APPLIED AGAINST
THE RETENTION AMOUNT.
IF A POLICY IS ISSUED, IT WILL BE ON A CLAIMS-MADE BASIS.
1. APPLICANT'S
(a) Corporation name Wink Communications, Inc.
(b) State of incorporation California
(c) Date of incorporation 10/7/94
(d) Address 1001 Marina Village Parkway
Alameda, CA 94501
(e) Parent Corporation: same
Name and Address
(f) Nature of business Software Development
(g) Primary SIC code(s):
(h) Corporation has been continually operating since 1994
<PAGE> 36
(i) Total number of locations (please check): one__ two X three__
more than three__
(j) Does the Applicant operate any retail outlets? Yes__ No X (If
"Yes", total number
of retail outlets:_______________.)
2. (a) Amount of insurance requested: $ 1 Million
(b) Self-insured retention desired (each loss): $ 25,000.00
3. STOCK OWNERSHIP
(a) Are any securities, equity or debt, of the Applicant (or its
Subsidiaries) publicly traded? Yes___ No X
(b) Total number of voting shares outstanding 17,259,550
(c) Total number of voting shareholders 29
(d) Total number of voting shares owned by its Directors (direct
and beneficial) 6,748,500
(e) Total number of voting shares owned by its Officers (direct
and beneficial) who are not Directors 1.44m
(f) Does any shareholder own five percent or more of the voting
shares directly or beneficially? If so, designate name and
percentage of holdings. (If no such shareholders, check here:
"none" yes.)
Brian Dougherty 26.4% Maggie Wilderotter 7.6%
(g) Are there any other securities convertible to voting stock? If
so, describe fully. (If none, check here: "none"_____.)
Options and warrants may be exercised for Common or Series B
stock, which is voting stock
4. (a) Complete list of all Directors of the Applicant by name and
affiliation with other corporations. (If included as an
attachment herein, check here X.) See Exhibit Schedule
(b) Complete list of all Officers of the Applicant by name and
affiliation with other corporations. (If included as an
attachment herein, check here X.) See Exhibit Schedule
<PAGE> 37
5. List of all direct and Indirect Subsidiary corporations:
<TABLE>
<CAPTION>
DATE DOMESTIC OR
BUSINESS OR PERCENTAGE ACQUIRED FOREIGN AND
TYPE OF OF OR COUNTRY
NAME OPERATION OWNERSHIP CREATED OF INCORPORATION
<S> <C> <C> <C> <C>
Wink Japan, Inc. 100% 1/30/97 Foreign, Japan
</TABLE>
Coverage to include all Subsidiaries? Yes X No __. If "Yes", include complete
list of Directors and Officers of each Subsidiary. If "No", include complete
list of Directors and Officers of each Subsidiary for which coverage is
requested. If included as an attachment herein, check here: X.
6. Are any plans for merger, acquisition or consolidation of or by the
Applicant or any of its Subsidiaries being considered? Yes X No __
(a) If "Yes", have they been approved by the board of directors?
Yes__ No__ Date of Approval___________________
(b) If "Yes", have they been submitted to the shareholders for
approval? Yes__ No__ Date of Approval_______________
7. Does the Applicant or any of its Subsidiaries anticipate any
registration of securities under the Securities Act of 1933 or any
other offering of securities within the next year? Yes__ No X (if
"Yes", give details and submit offering materials if available.)
8. (a) There has not been nor is there now pending any claim(s)
against any person proposed for insurance in his or her
capacity as a Director or Officer of the named Applicants or
any of its Subsidiaries except as follows: (Attach complete
details. If no such claims, check here: "none" X.)
(b) There has not been nor is there now pending any employment
practices claim(s) against the Applicants or any of its
Subsidiaries except as follows: (Attach complete details. If
no such claims, check here "none": X.)
9. (a) No Director or Officer has knowledge or information of any
act, error or omission which might give rise to a claim under
the proposed policy except as follows: (Attach complete
details. If they have no such knowledge or information, check
here "none" X.)
<PAGE> 38
(b) Neither the Applicants nor any of its Subsidiaries has
knowledge or information of any act, error or omission which
might give rise to an employment practices claim under the
proposed policy except as follows: Attach complete details. If
they have no such knowledge or information, check here "none":
X.)
10. Has any Director or Officer:
(a) Been involved in any antitrust, copyright or patent
litigation? Yes__ No X
(b) Been charged in any civil or criminal action or administrative
proceeding with a violation of any federal or state antitrust
or fair trade law? Yes__ No X
(c) Been charged in any civil or criminal action or administrative
proceeding with a violation of any federal or state securities
law or regulation? Yes__ No X
(d) Been involved in any representative actions, class actions, or
derivative suits? Yes__ No X
(If any of the above are answered "Yes", attach full details.)
It is agreed that with respect to Questions 9 and 10 above, that if such
knowledge, information or involvement exists, any claim or action arising
therefrom is excluded from the proposed coverage.
11. Does the Applicant have a human resources department: [X] Yes. [ ] No.
(If "Yes", how many employees in this department. If "No", how is this
function handled, please attach full details.) 2
12. How many officers and other employees have resigned, been terminated
(with or without cause) or retired within the last 24 months:
Employees_____________________
Officers___________________
13. (a) Does the applicant have a written human resources manual
or equivalent- written management guidelines and, if so, does
the manual / guidelines indicate a policy or procedure with
respect to the following events? (If no such manual or
guidelines exist, check here: "none"[ ].) If such manual or
guidelines exist, please also indicate whether decisions
regarding these events are subject to prior review by the
Applicant's Human Resources Department, Legal Department or
Outside Legal Advisor.
<PAGE> 39
Individual decisions are always reviewed by
<TABLE>
<CAPTION>
WITHIN HR HR LEGAL OUTSIDE
MANUAL DEPT DEPT LEGAL
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
(1) Written application for employment [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
(2) Confidential treatment of medical [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
examinations
(3) Legally prohibited discrimination [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
(4) Sexual Harassment [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
(5) Compliance with the Americans with [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
Disabilities Act
(6) Compliance with the 1991 Civil [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
Rights Act
(7) Employee disciplinary actions [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
(8) Terminations, layoffs and early [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
retirements
(9) Employee outplacement services [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
(10) Employee appraisals/reviews [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No [ ]Yes, [ ] No
</TABLE>
(b) Does the applicant have an employee handbook which is
distributed to all employees? [ ] Yes. [ ] No. (If "Yes", please attach
such handbook to this application and so indicate here: []Attached.)
14. Is the Applicant currently undergoing or does the Applicant contemplate
undergoing during the next 12 months any employee layoffs to early
retirement. (including ones resulting from any type of company
restructuring or office, plant or store closing)?
[ ] Yes. [ ] No. (if "Yes", please attach full details.)
15. Please provide on a separate attachment full details on all Wrongful
Termination, Discrimination and Sexual Harassment claims made against
the Applicant or any of its directors, officers or employees during the
last five years including amounts of any judgments or settlements and
costs of defense? (If no such claims, check here [ ] None.)
16. Please provide on a separate attachment full details on all inquiries,
investigations, grievance filings or other administrative hearings
previously filed or currently before any local, state or federal agency
governing employer responsibility to employees.
<PAGE> 40
17. PREVIOUS DIRECTORS AND OFFICERS INSURANCE
(a) Name of insurance company N/A
(b) Limit of Liability N/A
(c) Self-insured retention N/A
(d) Policy expiration date N/A
(e) Premium (indicate one year or other) N/A
(f) Loss experience (Attach full details.
If no losses, check here: N/A
18. Has any insurance carrier refused, canceled or nonrenewed any Directors
and Officers or Employment Practices insurance coverage?*** Yes__ No X
(If "Yes", attach full details including when and reason.)
[***MISSOURI APPLICANTS NEED NOT REPLY.]
19. Previous Employment Practices Insurance
(a) Name of insurance company NONE
(b) Limit of Liability
(c) Self-insured retention
(d) Policy expiration date
(e) Premium (indicate one year or other)
(f) Loss experience (Attach full details. If no losses, check here:____
20. Name of Risk Manager and General Counsel (or equivalent position) and
number of years in current position:
Risk Mgr: Chanel S. Aquino - 2.5 years.
Outside General Counsel: Wilson, Sonsini, Goodrich & Rosati
<PAGE> 41
21. ATTACH COPIES OF THE FOLLOWING FOR THE APPLICANT AND, TO THE EXTENT
AVAILABLE, EACH OF ITS SUBSIDIARIES:
(a) Latest annual report or audited Financial Statement.
See Exhibit Schedule
(b) Latest interim financial statement available.
See Exhibit Schedule
(c) All proxy statements and Notices of Annual Meeting of
Stockholders within the last twelve months. N/A
(d) Copy (certified by Corporate Secretary) of the indemnification
provisions of the charter and the by-laws. Also attach copy of
any corporate indemnification agreement. See Exhibit Schedule
No corporate indemnification agreements.
(e) Latest CPA management letter along with applicant's responses
to any recommendations made therein. N/A
(f) Employee Handbook. N/A
(g) Human Resources Manual/Guidelines. N/A
(h) Procedures respecting applicants for employment, employee
discipline, termination, alleged harassment or discrimination.
N/A
(i) Latest EEO-1 report N/A
THE UNDERSIGNED AUTHORIZED OFFICER OF THE APPLICANT DECLARES THAT THE
STATEMENTS SET FORTH HEREIN ARE TRUE. THE UNDERSIGNED AUTHORIZED OFFICER
AGREES THAT IF THE INFORMATION SUPPLIED ON THIS APPLICATION CHANGES BETWEEN
THE DATE OF THIS APPLICATION AND THE EFFECTIVE DATE OF THE INSURANCE, HE/SHE
(UNDERSIGNED) WILL, IN ORDER FOR THE INFORMATION TO BE ACCURATE ON THE
EFFECTIVE DATE OF THE INSURANCE, IMMEDIATELY NOTIFY THE INSURER OF SUCH
CHANGES, AND THE INSURER MAY WITHDRAW OR MODIFY ANY OUTSTANDING QUOTATIONS
AND/OR AUTHORIZATIONS OR AGREEMENTS TO BIND THE INSURANCE.
SIGNING OF THIS APPLICATION DOES NOT BIND THE APPLICANT OR THE INSURER TO
COMPLETE THE INSURANCE, BUT IT IS AGREED THAT THIS APPLICATION SHALL BE THE
BASIS OF THE CONTRACT SHOULD A POLICY BE ISSUED, AND IT WILL BE ATTACHED TO
AND BECOME PART OF THE POLICY.
<PAGE> 42
ALL WRITTEN STATEMENTS AND MATERIALS FURNISHED TO THE INSURER IN
CONJUNCTION WITH THIS APPLICATION ARE HEREBY INCORPORATED BY REFERENCE
INTO THIS APPLICATION AND MADE A PART HEREOF.
FOR KENTUCKY APPLICANTS: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD
ANY INSURANCE COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE
CONTAINING ANY MATERIALLY FALSE INFORMATION OR CONCEALS FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME.
FOR NEW YORK APPLICANTS: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD
ANY INSURANCE COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR
STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS
FOR THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL
THERETO, COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME, AND SHALL ALSO
BE SUBJECT TO A CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE
STATED VALUE OF THE CLAIM FOR EACH SUCH VIOLATION.
FOR OHIO APPLICANTS: ANY PERSON WHO, WITH INTENT TO DEFRAUD OR KNOWING THAT HE
IS FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR FILES A
CLAIM CONTAINING A FALSE OR DECEPTIVE STATEMENT IS GUILTY OF INSURANCE FRAUD.
FOR PENNSYLVANIA APPLICANTS: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO
DEFRAUD ANY INSURANCE COMPANY OR OTHER PERSON FILES AN APPLICATION FOR
INSURANCE OR STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION OR
CONCEALS FOR THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT
MATERIAL THERETO COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND
SUBJECTS SUCH PERSON TO CRIMINAL AND CIVIL PENALTIES.
FOR NEW JERSEY APPLICANTS: ANY PERSON WHO INCLUDES ANY FALSE OR
MISLEADING INFORMATION ON AN APPLICATION FOR AN INSURANCE POLICY IS
SUBJECT TO CRIMINAL AND CIVIL PENALTIES.
FOR FLORIDA APPLICANTS: ANY PERSON WHO KNOWINGLY AND WITH INTENT TO
INJURE, DEFRAUD, OR DECEIVE ANY INSURER FILES A STATEMENT OF CLAIM OR AN
APPLICATION CONTAINING ANY FALSE, INCOMPLETE OR MISLEADING INFORMATION
IS GUILTY OF A FELONY IN THE THIRD DEGREE.
<PAGE> 43
Signed /s/ Maggie Wilderotter
(Applicant)
Date July 31, 1997
Title President & CEO Corporation___________
(must be signed by Chairman of the Board or President (Corporate Seal)
Attest
------------------------------------
Broker
------------------------------------
Address
------------------------------------
Please read the following statement carefully and sign where indicted.
If a policy is issued, this signed statement will be attached to the policy.
The undersigned authorized officer of the Applicant hereby acknowledges
that he/she is aware that the limit of liability contained in this policy
shall be reduced, and may be completely exhausted, by the costs of legal
defense and, in such event, the Insurer shall not be liable for the cost of
legal defense or for the amount of any judgment or settlement to the extent
that such exceeds the limit of liability of this policy.
The undersigned authorized officer of the Applicant hereby further
acknowledges that he/she is aware that legal defense costs that are incurred
shall be applied against the retention amount.
Signed /s/ Maggie Wilderotter
(Applicant)
Date July 31, 1997
Title President & CEO
(must be signed by Chairman of the Board or President)
<PAGE> 1
EXHIBIT 10.31
[COMPANY NAME] Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, NY II 788-7000
(516) DIAL CAI (342-5224)
FAX (516) DIAL FAX (342-5329)
November 28, 1995
VIA AIRBORNE
Mr. Gary Hammer
Wink Communications, Inc.
2061 Challenger Drive
Alameda, CA 94501
RE: SUBLEASE AT 1001 MARINA VILLAGE PARKWAY
Dear Gary:
I am enclosing one (1) original, fully executed Sublease Agreement for
your records. I am also enclosing a copy of the letter to the Overlandlord in
which I am requesting approval of the Sublease. I will advise you as soon as I
receive the Overlandlord's consent.
We look forward to having Wink Communications as our subtenant, and we
wish you much success in the new space.
Sincerely,
/s/ Bonnie L. Roberman
Bonnie L. Roberman
Attorney
cc: Walter Imperatore
Kelly Angrisani
<PAGE> 2
[COMPANY NAME] Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, NY II 788-7000
(516) DIAL CAI (342-5224)
FAX (516) DIAL FAX (342-5329)
November 28, 1995
VIA AIRBORNE
Ms. Kathryn E. Luck
Alameda Real Estate Investments
1150 Marina Village Parkway
Suite 100
Alameda, CA 94501
RE: SUBLEASE TO WINK COMMUNICATIONS
1001 MARINA VILLAGE PARKWAY
Dear Kathryn:
I am enclosing one (1) fully executed original of the above referenced
Sublease which has been signed by Computer Associates and Wink Communications.
You will note that this document is in substantially the same form as the
previous CA subleases in the Marina Village area,
If acceptable, kindly provide me with an executed Landlord's Consent to
Sublease form. If you have any questions, I can be reached at (516) 342-2678.
Sincerely,
/s/ Bonnie L. Roberman
Bonnie L. Roberman
Attorney
cc: Gary Hammer, Wink Communications
Walter Imperatore
Kelly Angrisani
<PAGE> 3
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the date set forth in
Section 1.1(e) below, by and between the Sublandlord and the Subtenant set forth
below.
W I T N E S S E T H;
1. SUBLEASE SUMMARY AND DEFINITIONS
1.1 The Sublease provisions and definitions set forth in this Section 1.1
in summary form are solely to facilitate convenient reference by the parties. If
there is any conflict between this Section and any other provisions of this
Sublease, the latter shall control.
<TABLE>
<S> <C> <C>
(a) Sublandlord's Name COMPUTER ASSOCIATES
and address: INTERNATIONAL, INC.
1 Computer Associates Plaza
Islandia, NY 11788-7000
Attn: Senior Vice President - Facilities
(b) Sublandlord's State of Delaware
Incorporation:
(c) Subtenant's Name and WINK COMMUNICATIONS, INC.
address: 2061 Challenger Drive
Alameda, CA 94501
Attn: Mr. Gary Hammer
(d) Subtenant's State of
Incorporation: California
(e) Sublease Date: November 1995
(f) Overlandlord's Name Alameda Real Estate Investments
and Address:
(g) Overlease: Dated June 25, 1992 between Alameda Real
Estate Investments and ASK Computer Systems,
Inc. as amended by Amendment No. I dated
July 31, 1993 and
</TABLE>
1
<PAGE> 4
<TABLE>
<S> <C> <C>
Amendment No. 2 dated November 30, 1993, and
Amendment No. 3 dated December 1, 1994.
(h) Unincorporated Articles: 1) 2 (including 2A, 2B, 2C and
provisions of the 2D), 3A) 3B(xiv), 4 (including. 4A, 4B, 4C,
Overlease: 4D 4EI 4F and 4G), 7B, 7C, 7D, 7F, 7G, 9,
10 (including 10A, 10B, 10C, 10D and 10E),
12, 16, 17, 21, 23, 25A, 25B, 25C, 25D, 31H,
32, 36, 41, 43 and 45, as well as the 6th
sentence of Subsection 31(B) with respect to
the relationship between Sublandlord and
Subtenant.
Exhibits: A, B, C
(i) Building: 1001 Marina Village Parkway
Alameda, CA
Premises: 17,377 Rentable Square Feet comprising the
entire first floor
(k) Sublease February 1, 1996
Commencement Date:
(1) Sublease Expiration January 31, 2000
Date:
(m) Base Rent:
</TABLE>
<TABLE>
<CAPTION>
Annual
Rent per rentable
Yearly Periods square foot Monthly Base Rent Annual Base Rent
- - -------------- ----------------- ----------------- ----------------
<S> <C> <C> <C>
2/l/96 - 7/31/96 $ N/A $18,680.28 $ N/A
8/l/96 - 1/31/97 $ N/A $22,372.89 $ N/A
2/l/97 - 1/31/98 $18.60 $26,934.35 $323,212.20
2/1/98 - 1/31/99 $19.20 $27,803.20 $333,638.40
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
2/l/99 - 1/31/00 $19.80 $28,672.05 $344,064.60
</TABLE>
<TABLE>
<S> <C> <C>
(n) Prepaid Base Rent to be
applied to Subtenant's
obligation to pay Base
Rent at the commencement
of the Sublease Terra: $58,647.38
(o) Operating Expenses: See Section 13
(p) Subtenant's 24.32%, which share was determined by dividing the
Proportionate Share: 73,241 Rentable Square Feet in the "Leased Space" (as
defined in the Overlease) by the 17,377
Rentable Square Feet in the Premises. To the
extent that the Rentable Square Feet in the
Leased Space is increased or decreased
during the "Sublease Term" (as hereinafter
defined), Tenant's Proportionate Share shall
be adjusted to the quotient (expressed as a
percentage) obtained when 17,377 is divided
by the then Rental Square Feet in the Leased
Space.
(q) Security Deposit: $58,647.38
(r) Alterations: "As Is" - Subtenant is obligated to spend $30,409.75
on tenant improvements in the Premises on or before
April 30, 1996, such work to -be performed pursuant
to provisions of Article 14 hereof. Subtenant shall
present Sublandlord with proof of such improvements
no later than May 30, 1996.
(s) Brokers: For Sublandlord: Blickman Turkus
For Subtenant: Cushman & Wakefield
(t) Parking: As per Overlease - 3.5 spaces per thousand square
feet.
</TABLE>
2. SUBLEASE GRANT
2.1 By lease (hereinafter referred to as the 'Overlease") described above,
the Overlandlord leased to Sublandlord certain space (hereinafter called the
"Leased Space") in the Building in accordance with the terms of the Overlease. A
true, correct and
3
<PAGE> 6
complete copy of the Overlease and all amendments or modifications thereto is
annexed hereto as EXHIBIT A.
2.2 In consideration of the obligation of Subtenant to pay rent as herein
provided and in consideration of the other terms, covenants and conditions
hereof, Sublandlord hereby leases to Subtenant and Subtenant hereby hires from
Sublandlord, upon and subject to the provisions of this Sublease and the
Overlease, the rentable area as set forth in SECTION 1.1 herein (comprising a
portion of the Leased Space) and as shown hatched on EXHIBIT B a annexed hereto
and made a part hereof (hereinafter called the "Premises"). Sublandlord hereby
grants to Subtenant the right to use in common with other tenants of the
"Building" (as defined in the Overlease), the "Common Areas" (as defined in the
Overlease), and the "Outside Areas" (as defined in the Overlease) as such rights
are granted to Sublandlord under the terms of the Overlease. This Sublease is
made subject to the terms and conditions of the Overlease.
3. SUBLEASE TERM
3.1 Subject to the other provisions hereof, this Sublease shall continue
in full force and effect for a primary term beginning on the Sublease
Commencement Date and ending on the Sublease Expiration Date as defined above.
Such term, as it may be extended or modified only by written agreement of the
parties, is herein called the "Sublease Term."
3.2 Possession of the Premises shall be delivered to Subtenant no later
than three (3) days after the last to occur of- (a) the execution of this
Sublease by the parties; and (b) the consent to this Sublease by Overlandlord as
provided in Section 9 hereof. During any such period of possession prior to the
commencement of the "Sublease Term" (as defined in Section 3 hereof), Subtenant
shall have no obligation to pay "Base Rent" (as defined in Section 4 hereof);
provided, however, Subtenant shall reimburse Sublandlord for "Subtenant's
Proportionate Share" (as defined in Section 1.1[p] hereof) of the "Operating
Expenses" and "Property Taxes" (as those terms are defined in Section 13.1
hereof) paid by Sublandlord under the Overlease with respect to that period of
possession prior to the Sublease Tenn.
4. RENT; SECURITY DEPOSIT
4.1 Subtenant, in consideration of this Sublease agrees to pay to
Sublandlord as rent ("Base Rent") the amounts set forth in SECTION 1.1 hereof.
Base Rent is payable in advance and without demand, at Sublandlord's office (or
such other location as Sublandlord shall designate) by check in equal monthly
installments, on the first day of each month during the Sublease Term without
any set-off, off-set, abatement or reduction whatsoever, except as herein
provided. Subtenant's failure to receive an invoice from Sublandlord for the
rent shall not-relieve Subtenant from its obligation of timely payment
hereunder.
4
<PAGE> 7
4.2 As used in this Sublease, "Rent" shall mean the Base Rent, Subtenant's
"Share of Expenses" to be reimbursed pursuant to Section 13, and all other
monetary obligations provided for in this Sublease to be paid by Subtenant, an
of which constitute rental in consideration for this Sublease.
4.3 In the event the Rent is not paid when due as aforesaid,. interest
shall accrue thereon at the lesser of twenty-one percent (21%) per annum or the
maximum rate permitted by law. In addition, if the Rent is not paid by the tenth
day of any given month, Subtenant shall pay as a penalty to Sublandlord an
additional amount equal to five percent (5%) of the Rent due, but not less than
One Hundred Dollars ($100.00).
4.4 The Security Deposit shall be held by Sublandlord as a fund from which
to cure any defaults of Subtenant hereunder and to reimburse Sublandlord for any
expenses incurred as a result of Subtenant's failure to perform hereunder. To
the extent that Sublandlord draws upon the Security Deposit during the Sublease
Term, Subtenant, upon receipt of Sublandlord's request, shall deposit sufficient
funds with Sublandlord to replenish the Security Deposit so that Security
Deposit is fully funded in the amount initially deposited. In holding the
Security Deposit, Sublandlord is not Subtenant's fiduciary, Sublandlord may
commingle the Security Deposit with its funds and Sublandlord shall have no
obligation to pay Subtenant any interest thereon. At the end of the Sublease
Term and upon the surrender of the Premises as provided in this Sublease, so
long as Subtenant is not in default hereunder or otherwise in debt to
Sublandlord, the Security Deposit (or the remaining balance thereof) shall be
returned to Subtenant.
5. ASSIGNMENT OR UNDERLETTING
5.1 Subtenant shall not (a) assign this Sublease, nor (b) permit this
Sublease to be assigned by operation of law or otherwise, nor (c) underlet all
or any desk space therein to be occupied by any person(s) other than employees
of Sub tenant, without first obtaining:
(a) Overlandlord's consent and all other required consents to such
assignment or subletting as set forth in and pursuant to the
Overlease, and
(b) Sublandlord's consent.
5.2 Notwithstanding anything hereinbefore contained in Section 5.1 hereof,
in the event Subtenant desires Sublandlord's consent to an assignment of this
Sublease or an underletting of all of the Premises, if consent to such transfer
is required, Subtenant by notice in writing (a) shall notify Sublandlord of the
name of 'the proposed assignee or undertenant, furnish such information as to
the proposed assignee's or undertenant's financial responsibility and standing
as Sublandlord may reasonably require, and advise
5
<PAGE> 8
Sublandlord of the covenants, agreements, terms, provisions and conditions
contained in the proposed assignment or underlease and (b) shall offer to vacate
the Premises and to surrender the same to Sublandlord as of a date (hereafter
called the "Surrender Date") specified in said offer which shall be the last day
of any calendar month during the term hereof, provided. however, that the
Surrender Date shall be the effective date of the proposed assignment or the
commencement date of the term of the proposed underlease. If Sublandlord accepts
such offer, Subtenant shall surrender to Sublandlord, effective as of the
Surrender Date, all Subtenant's right, title and interest in and to the entire
Premises. If the Premises be so surrendered by Subtenant, this Sublease shall be
canceled and terminated as of the Surrender Date with the same force and effect
as if the Surrender Date were the date hereinbefore specified for the expiration
of the full terra of this Sublease, and Subtenant shall not be obligated for any
costs which accrue after the Surrender Date unless such costs are caused by
Subtenant's acts.
5.3 In the event Sublandlord does not accept such offer of Subtenant
referred to in Section 5.2 hereof, Sublandlord covenants not to unreasonably
withhold, condition or delay its consent to such proposed assignment or
undertaking, by Subtenant of the Premises to the proposed assignee or
undertenant on said covenants, agreements, terms, provisions and conditions set
forth in notice to Sublandlord referred to in clause (a) of the first sentence
of Section 5.2 hereof; provided, however, that Sublandlord shall not in any
event be obligated to consent to any such proposed assignment or underletting
unless:
(a) the proposed assignee or undertenant is of a financial standing
and is engaged in a business and the Premises will be used in a
manner which is in keeping with the then standards of the Building;
(b) the proposed assignee or undertenant is a reputable party;
(c) Sublandlord shall have the right, upon prior written notice to
Subtenant, to require Subtenant thereafter to pay to Sublandlord a
sum equal to: (i) one half of any rent or other consideration paid
to Subtenant by any undertenant which is in excess of the fixed
annual rent and additional rent then being paid by Subtenant to
Sublandlord pursuant to the terms of this Sublease; and (ii) one
half of any other profit or gain realized by Subtenant (excluding
profit made in connection with the sale of a business, e.g.
goodwill) from any such assignment or underletting in connection
with any underletting; all sums payable hereunder by Subtenant shall
be paid to Sublandlord on a monthly basis as additional rent and, if
requested by Sublandlord, Subtenant shall promptly enter into a
written agreement with Sublandlord setting forth the amount of
additional rent to be paid to Sublandlord pursuant to this Section;
6
<PAGE> 9
(d) there shall be no default by Subtenant under any of the terms,
covenants and conditions of this Sublease beyond applicable cure
periods at the time that Sublandlord's consent to any such
assignment or underletting is requested and on the effective date of
the assignment or the proposed underlease;
(e) the proposed assignee or undertenant shall not be (i) a
government or any subdivision of agency thereof, (ii) a school,
college, university or education institution of any type, whether
for profit or non-profit, (iii) a direct competitor of Sublandlord
or (iv) an employment or recruitment agency;
(f) such proposed underletting will result in there being no more
than one (1) occupant of the Premises including Subtenant;
(g) Subtenant shall reimburse Sublandlord for any reasonable
expenses incurred in connection with the proposed assignment or
underleage, including gall costs associated with the granting of
consent.
5.4 Subtenant may, without Sublandlord's consent and without participation
by Sublandlord in the assignment proceeds, assign its interest in this Sublease
to: (a) an "Affiliate" (as hereinafter defined); (b) a successor corporation
related to Subtenant by merger, consolidation, non-bankruptcy reorganization or
government action or engage in a merger, consolidation on other reorganization
of Subtenant; or (c) a purchaser of substantially all of Subtenant's assets
related to the business being operated at the Premises, so long as the Affiliate
and Subtenant combined under (a), the successor or the entity which continues as
the Subtenant under (b), or the purchaser under (c) has a net worth equal to or
- - -greater than the net worth of Subtenant on the date of the Sublease; provided
in all such instances that the transferee assumes the obligations of the
Subtenant in a writing delivered to Sublandlord and provided further that the
transferor remains liable as a primary obligor for the obligations of Subtenant
under this Sublease (excluding a transferor corporation which does not survive a
merger or other reorganization). For the purpose of this Section 5.4, an
"Affiliate" is a person or entity that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control with
Subtenant. For the purpose of the foregoing definition, the term "control" means
the ownership of fifty percent (50%) or more of the beneficial interest or
voting power of the appropriate entity.
6. TERMS OF THE OVERLEASE
6.1 All of the terms and conditions of the Overlease, except for those
referenced in Section 1.1(h) hereof, are incorporated and made a part of this
Sublease; provided, however, all references in such 'incorporated provisions to
"Landlord," Tenant," "Lease"
7
<PAGE> 10
and "Premises" shall refer to Sublandlord, Subtenant, this Sublease and the
Premises, respectively. To the extent that such provisions of the Overlease
incorporated into this Sublease conflict with any other provisions of d-this
Sublease (namely those set out in the text of this' Sublease), the provisions
set out in the text of this Sublease shall control.
6.2 In the event that the Overlease terminates for any reason whatsoever,
this Sublease shall terminate concurrently therewith. Upon termination of this
Sublease, whether by forfeiture, lapse of time or otherwise, or upon the
termination of Subtenant's right to possession, Subtenant will at once
'Surrender and deliver up the Premises in the same condition as existed after
the completion of Subtenant's work contemplated by Section 1.1(r), reasonable
wear and tear excepted. Upon the termination of this Sublease, whether by
forfeiture, lapse of time or otherwise, all obligations of the parties which
have accrued and remain unsatisfied shall survive such termination.
6.3 Subtenant shall be bound by and subject to all of the restrictions
imposed upon Sublandlord as the tenant under the Overlease and Subtenant shall
not violate any of the provisions of the Overlease.
6.4 This Sublease is subject to, and Subtenant accepts this Sublease
subject to, any amendments and supplements to the Overlease hereafter made
between Overlandlord and Sublandlord, provided that any such amendment or
supplement to the Overlease will not prevent or adversely affect the use by
Subtenant of the Premises in accordance with the terms of this Sublease,
increase the obligations of Subtenant or decrease the rights under the Sublease
or in any other way materially adversely affect Subtenant.
6.5 This Sublease is subject and subordinate to the Overlease and to all
ground or underlying leases and to all mortgages which may now or hereafter
affect. such leases or the real property of which the Premises are a part and
all renewals, modifications, replacements and extensions to any of the
foregoing. This Section 6.5 shall be self-operative and no further instrument of
subordination shall be required. To confirm such subordination, Subtenant shall
execute promptly any certificate that Sublandlord may request.
7. CONDITION OF PREMISES
7.1 Subtenant has examined the Premises, is aware of the physical
condition thereof, and agrees to take the same "as is," (unless otherwise
provided in Section 14 herein) with the understanding that there shall be no
obligation on the part of Sublandlord to incur any expense whatsoever in
connection with the preparation of the Premises -for Subtenant's occupancy
thereof. Any work performed by Subtenant shall be in accordance with the terms
of the Overlease and Section 14 herein.
8
<PAGE> 11
8. USE OF PREMISES
8.1. Subtenant agrees to use the Premises as executive, administrative and
general office use.
9. CONSENT OF OVERLANDLORD
9.1 This Sublease is conditioned upon the consent thereto by Overlandlord,
which consent shall be evidenced by Overlandlord's signature appended hereto or
a separate consent in the form utilized by Overlandlord for such purposes.
Sublandlord shall be solely responsible for any fees or charges imposed by the
Overlandlord in connection with the obtaining of such consent. Provided
Overlandlord's consent does not materially affect the terms of this Sublease,
Subtenant shall immediately execute any documents requested by Overlandlord in
order to obtain Overlandlord's approval. Sublandlord shall use its reasonable
efforts to obtain Overlandlord's consent to this. Sublease. In the event that
such consent of Overlandlord is not received by December 21, 1995, either party
hereto shall have the right to terminate this Sublease by written notice given
to the other party hereto, which notice shall be effective upon receipt;
provided, however, in the event that Sublandlord delivers such consent of
Overlandlord within five (5) days of Sublandlord's receipt of such termination
notice from Subtenant, such termination notice shall be void and this Sublease
shall remain in full force and effect. In connection with Sublandlord's request
to Overlandlord for Overlandlord's consent to this Sublease, Subtenant agrees to
cooperate to the greatest extent reasonably possible, which cooperation shall
include, but shall not be limited to, providing Subtenant's financial
information with all reasonable dispatch. Subtenant agrees that it is the
intention of the parties that the request for Overlandlord's consent to this
Sublease is to be made unfettered by any other issue and Subtenant agrees not to
raise any other issue that might require Overlandlord's consideration until
Overlandlord has consented to this Sublease.
9.2 Sublandlord makes no representation with respect to obtaining
Overlandlord's approval of this Sublease and, in the event that Overlandlord
notifies Sublandlord that Overlandlord will not give such approval, Sublandlord
will so notify Subtenant and, upon receipt of such notification by Sublandlord
of the disapproval by 0verlandlord, this Sublease shall be deemed to be null and
void and without force or effect, and Sublandlord and Subtenant shall have no
further obligations or liabilities to the other with respect to this Sublease.
9.3 Except as otherwise specifically provided herein, wherever in this
Sublease Subtenant is required to obtain Sublandlord's consent or approval,
Subtenant understands that Sublandlord may be required to first obtain the
consent or approval of Overlandlord. If Overlandlord should refuse such consent
or approval, Sublandlord shall be released of any obligation to grant its
consent or approval whether or not Overlandlord's refusal, in Subtenant's
opinion, is arbitrary 'or unreasonable.
9
<PAGE> 12
10. DEFAULT
10.1 Subtenant acknowledges that certain services to be rendered to the
Premises are to be rendered by Overlandlord under the Overlease. Anything in
this Sublease to the contrary notwithstanding, if there exists a breach by
Sublandlord of any of its obligations under this Sublease and, concurrently, a
corresponding breach by Overlandlord under the Overlease of its obligations
under the Overlease exists, then and in such event, Subtenant's sole remedy
against Sublandlord in the event of any breach of obligations under this
Sublease shall be the right to pursue a claim in the name of Sublandlord against
Overlandlord, and Sublandlord agrees that it will, at Subtenant's expense,
cooperate with Subtenant in the pursuit of such claim.
10.2 Anything contained in any provisions of this Sublease to the contrary
notwithstanding, Subtenant agrees, for the benefit of both Sublandlord and
Overlandlord, with respect to the Premises, to comply with and remedy any
default claimed by Overlandlord under the Overlease and caused by Subtenant,
within the period allowed to Sublandlord as tenant under the Overlease, even if
such time period is shorter that the period otherwise allowed in the Overlease,
due to the fact that notice of default from Sublandlord to Subtenant is given
after the corresponding notice of default from Overlandlord. Sublandlord agrees
to forward to Subtenant, upon receipt thereof by Sublandlord, a copy of each
notice of default received by Sublandlord in its capacity as tenant-under the
Overlease. Subtenant agrees to forward to Sublandlord, upon receipt thereof,
copies of any notices received by Subtenant with respect to the-Premises from
Overlandlord or from any governmental authorities. Sublandlord and Subtenant
each agree to indemnify and hold the other harmless from and against all claims,
penalties and expenses, including reasonable attorneys' fees, based upon any
uncured default by such party during the term hereof and its performance of
those terms, covenants and provisions of the Overlease which are or shall be
applicable to such party.
10.3 Subtenant acknowledges that upon breach of any provisions of this
Sublease by Subtenant, any rights or options granted to Subtenant under this
Sublease or the Overlease relating to expansion, renewal, or any other equity
option, shall immediately terminate and shall not be exercisable for the
remainder of the Sublease term. If and whenever there shall occur any event of
default of this Sublease, beyond any applicable cure period, Sublandlord may, at
Sublandlord's option, in addition to any other remedy or right given under the
Overlease or by law or equity, do any one or more of the following:.
(a) Terminate this Sublease without notice to Subtenant, in which
Subtenant shall immediately surrender possession of the Premises to
Sublandlord;
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<PAGE> 13
(b) Terminate Subtenant's right to possession of the Premises under
this Sublease without terminating the Sublease itself, by written
notice to Subtenant in which event Subtenant shall immediately
surrender possession of the Premises to Sublandlord
(c) Enter upon and take possession of the Premises and expel or
remove Subtenant and any other occupant therefrom, with or without
having terminated this Sublease;
(d) Alter locks and other security devices at the Premises with or
without having terminated this Sublease or Subtenant's right to
possession under the Sublease;
(e) Enter upon the Premises by force if necessary without being
liable for prosecution or any claim for damages therefor, and do
whatever Subtenant is obligated to do under the terms of this
Sublease; and Subtenant agrees to reimburse Sublandlord on demand
for any direct or indirect expenses which Sublandlord or
Overlandlord may incur in thus effecting compliance with Subtenant's
obligations under this Sublease, and Subtenant further agrees that
Sublandlord shall not be liable for any damages resulting to
Subtenant from such action;
(f) Accelerate all rental payments due under the Sublease for the.
remainder of the Sublease Term. Sublandlord shall use reasonable
diligence to relet the Premises after such default by Subtenant, and
the net proceeds of such reletting (after deducting reasonable
expenses) shall be credited against the amount due under the
Sublease.
10.4 It is hereby expressly stipulated by Sublandlord and Subtenant that
any of the above listed actions including, without limitation, termination of
this Sublease, termination of Subtenant's right to possession, and re-entry by
Sublandlord, will not affect the obligations of Subtenant for the unexpired
Sublease Term, including the obligations to pay unaccrued monthly rentals and
other charges provided in this Sublease for the remaining portion of the
Sublease Term. If an event of default occurs, and is not cured within -the
applicable cure period, if any, Sublandlord is entitled and is hereby
authorized, without notice to Subtenant, to enter upon the Premises by use of a
master key, a duplicate key, or other peaceable means, and to change, alter,
and/or modify the door locks on all entry doors of the Premises, thereby
permanently excluding Subtenant, and its officers, principals, agents,
employees, and representatives therefrom. In the event that Sublandlord has
either terminated Subtenant's right to possession of the Premises pursuant to
the foregoing provisions of this Sublease, or has terminated the Sublease by
reason of Subtenant's default,
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<PAGE> 14
Sublandlord shall not thereafter be obligated to provide Subtenant with a key to
the Premises at any time; provided, however, that in any such instance, during
Sublandlord's normal business hours and at the convenience of Sublandlord, and
upon the written request of Subtenant accompanied by such written waiver and
releases as the Sublandlord may require, Sublandlord will escort Subtenant or
its, authorized personnel to the Premises to retrieve any personal belongings or
other property of Subtenant. If Sublandlord elects to exclude Sub tenant from
the Premises without permanently repossessing the Premises or terminating the
Sublease pursuant to the foregoing provisions of this Sublease, the Sublandlord
(at any time prior to actual permanent repossession or termination) shall not be
obligated to provide Subtenant a key to re-enter the Premises until such time as
all delinquent rental and other amounts due under this Sublease have been paid
in full (and all other defaults, if any, have been completely cured to
Sublandlord's satisfaction), and Sublandlord has been given assurance reasonably
satisfactory to Sublandlord evidencing Subtenant's ability to satisfy its
remaining obligations under this Sublease. During any such temporary period of
exclusion, Sublandlord will, during Sublandlord's regular business hours, and at
Sublandlord's convenience, upon written request by Subtenant accompanied by such
waivers and releases as the Sublandlord may require, escort Subtenant or its
authorized personnel to the Premises to retrieve personal belongings of
Subtenant or its employees. This remedy of Sublandlord shall be in addition to,
and not in lieu of, any of its other remedies set forth in this Sublease, the
Overlease, or otherwise available to Sublandlord at law or in equity.
10.5 Exercise by Sublandlord of any one or more remedies hereunder granted
or otherwise available shall not be deemed to be an acceptance or surrender of
the Premises by Subtenant, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Sublandlord and Subtenant. No such alteration of locks or other security devices
and no removal or other exercise of dominion by Sublandlord over the property of
Subtenant or others at the Premises shall be deemed unauthorized or constitute a
conversion, Subtenant hereby consenting, after any event of default, to the
aforesaid exercise of dominion over Subtenant's property within the Premises.
All claims for damages by reason of such re-entry and/or repossession and/or
alteration of locks or other security devices are hereby waived, as are all
claims for damages by reason of any distress warrant, forcible detainer
proceedings, sequestration proceedings or other legal process. Subtenant 'agrees
that any re-entry by Sublandlord may be pursuant to a judgment obtained in
forcible detainer proceedings or other legal proceedings without the necessity
for any legal proceedings, as Sublandlord may elect, and Sublandlord shall not
be liable in trespass or otherwise.
10.6 Neither Subtenant nor Sublandlord shall be liable for consequential
damages caused by such party's default under this Sublease.
12
<PAGE> 15
11. SUBLANDLORD REPRESENTATION
11.1 Sublandlord represents (a) that it is the sole holder of the interest
of the tenant under the Overlease and Sublandlord possesses fun power and
authority to enter into this Sublease (subject to obtaining the consent of
Overlandlord) and (b) that the Overlease is in full force and effect.
12. BROKERS
12.1 Each party (in this Section 12.1, the "Indemnitor") covenants,
represents and warrants to the other party (in this Section 12.1, the
"Indemnitee") that Indemnitor has had no dealings or communications with any
broker or agent in connection with the consummation of this Sublease other than
those set forth, in SECTION 1.1 hereof, and Indemnitor covenants and agrees to
pay, hold harmless and indemnify Indemnitee from and against any and all cost,
expense (including reasonable attorneys' fees) or liability for any
compensation, commissions or charges claimed by any broker or agent other than
such brokers with respect to this Sublease or the negotiation thereof based on
dealings or communications with Indemnitor.
13. OPERATING EXPENSES/TAXES
13.1 During the first eleven (11) months of the Sublease Term consisting
of the period from February 1, 1996, through and including December 31, 1996,
Subtenant shall have no separate obligation to reimburse Sublandlord for any
portion of the "Operating Expenses" (as defined in the Overlease) or "Property
Taxes" (as defined in the Overlease) as the Base Rent during that period
includes a component for such charges. The parties hereby estimate that the
component charge for Operating Expenses and Property Taxes is $.65 per square
foot. At the expiration of the 1996 calendar year (the "Base Year"), Sublandlord
shall provide Subtenant with a statement of the Operating Expenses and Property
Taxes paid by Sublandlord under the Overlease during the Base Year.
13.2 As used in this Sublease, the term "Calendar Year" means each period
of January 1st through the following December 31st after the Base Year.
Commencing with the first Calendar Year after the Base Year and continuing each
Calendar Year thereafter, Subtenant shall reimburse Sublandlord for "Subtenant's
Proportionate Share" (as that term is defined in Section 1.1[p] hereof) of that
portion of the aggregate Operating Expenses and Property Taxes paid by
Sublandlord (as tenant) to Overlandlord for that particular Calendar Year that
exceeds the aggregate Operating Expenses and Property Taxes paid by Sublandlord
(as tenant) to Overlandlord during the Base Year, which amount to be reimbursed
to Sublandlord by Subtenant is hereinafter referred to as "Subtenant's Share of
Expenses.
13.3 Subtenant's Share of Expenses shall be paid to Sublandlord in equal
monthly installments paid at the same time as Base Rent is paid on the basis of
Sublandlord's
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<PAGE> 16
reasonable estimate of Subtenant's Share of Expenses for each Calendar Year.
Following the end of each Calendar Year, Sublandlord shall deliver reasonable
proof of the Operating Expenses and Property Taxes paid to Overlandlord by
Sublandlord as the tenant under the Overlease during that Calendar Year and the
calculation of Subtenant's Share of Expenses for the Calendar Year in question.
In the event that such statement shows that Subtenant has underpaid the amount
due as Subtenant's Share of Expenses, Subtenant shall promptly pay the
deficiency to Sublandlord; if the statement shows that Subtenant has overpaid
the amount due as Subtenant's Share of Expenses, the overpayment amount shall be
credited against the next due monthly installments thereof to be made by
Subtenant, except, at the end of the Sublease Term, the overpayment amount shall
be refunded to Subtenant promptly.
13.4 If Subtenant notifies Sublandlord of any failure by Overlandlord to
perform or observe Overlandlord's obligations under the Overlease, as such
obligations relate to the Premises demised under the Sublease and areas
appurtenant their etc., Sublandlord shall make demand upon the Overlandlord so
to perform and observe the obligations and shall thereafter take such action as
may be reasonably be required to enforce the provisions of the Overlease.
13.5 Under the terms of the Overlease, Overlandlord is obligated to
furnish the Premises with electricity for lighting and the operation of normal
desk-top office machines, heat, ventilating and air conditioning, elevator
service, lighting replacement for building standard fixtures, rest room
supplies, window washing with reasonable frequency, and daily janitor service on
normal business days. Sublandlord shall not be responsible for providing any
such services to Subtenant. Normal Business days for the Building shall include
Monday through Friday excluding the following holidays: New Years Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas and other national
legal holidays. Overlandlord shall not be in default hereunder or be liable for
any damages directly or indirectly resulting from, nor shall the rental herein
reserved by abated by reason of (i) the installation, use or interruption of use
of any equipment in connection with the furnishing of any of the foregoing
services, (ii) failure to furnish or delay in furnishing any such services, or
(iii) the limitation, curtailment, rationing or restrictions on use of water,
electricity, gas or any other form of energy serving the Premises. Subtenant
shall reimburse Overlandlord for the cost of providing heat, air conditioning
and utility services in excess of that required for normal office use or during
other than usual business hours for the Building of 8:00 a.m. to 6:00 p.m. as
well as the cost of providing power for other than normal desk-top office
equipment. In the event of any interruption in services to Subtenant during the
Sublease Term, Subtenant shall be entitled to the same remedies as are available
to Sublandlord as Tenant under the Overlease.
14
<PAGE> 17
13.6 Except for damages caused by Subtenant, its agents or invitees, and
subject to the provisions of the Overlease, under the terms of the Overlease,
Overlandlord is obligated to keep in good condition and repair the foundations
and exterior walls and roof of the Building and all common areas within the
Building not leased to subtenants. Subtenant expressly waives the benefits of
any statute which would otherwise afford Subtenant the right to make repairs at
Overlandlord's or Sublandlord's expense or to terminate this Sublease because of
Overlandlord's failure to keep the Premises or the Building in good order,
condition, and repair.
13.7 Omitted.
13.8 Subtenant shall not, without Overlandlord's prior consent, make any
alterations, improvements, or additions in or about the Premises. In requesting
Overlandlord's consent, Subtenant shall submit to Overlandlord complete
drawings, and specifications describing such work and the identity of the
proposed contractor. As a condition to giving such consent, Overlandlord may,
among other things, require that Subtenant remove any tion-office use
alterations, improvements or additions that Subtenant may install including, for
example, kitchens, computer rooms and specially improved file rooms at the
expiration of the term which would, if left, require unusual and unreasonable
expense to be incurred to readapt the space for normal office use and restore
the Premises to their prior condition. Overlandlord shall have the right at any
time and from time to time to post and maintain on the Premises such. notices as
Overlandlord reasonably deems necessary to protect the Premises, Overlandlord
and Sublandlord from mechanics' liens or. any other liens. In any event,
Subtenant shall pay when due all claims for labor or materials furnished to -or
for Subtenant at or for use in the Premises to the extent such payments are due
and owing. Subtenant shall not permit any mechanics' liens to be levied against
the Premises for any labor or materials furnished to Subtenant or claimed to
have been furnished to Subtenant or to Subtenant's agents or contractors in
connection with work of any character performed or claimed to have been
performed on the Premises by or at the direction of Subtenant or shall remove
such liens of record by bonding against same within fifteen (15) days after the
filing of the liens. AR alterations, improvements, or additions in or about the
Premises performed by or on behalf of Subtenant shall be done in a first-class,
workmanlike manner, shall not unreasonably lessen the value of the leasehold
improvements in the Premises, and shall be completed in compliance with all
applicable laws, ordinances, regulations, and orders of any governmental
- - -authority having jurisdiction there over, as well as the requirements of
insurers of the Premises and the Building. Upon Overlandlord's request,
Subtenant shall remove any contractor, subcontractor, or material supplier from
the Premises and the Building if the work or presence of such person or entity
results in labor disputes in or about the Building or the Marina Village
Project, or damage to the Premises, Building or Project. Unless Overlandlord
requires their removal as set forth above, all alterations, improvements or
15
<PAGE> 18
additions which may be made on the Premises shall become the property of
Overlandlord and remain upon and be surrendered with the Premises at the
expiration of the term; provided, however, that Subtenant's machinery, equipment
and trade fixtures, other than any which may be affixed to the Premises so that
they cannot be removed without material damage-to the Premises, shall remain the
property of Subtenant and may be removed by Subtenant provided further Subtenant
shall be responsible for repairing all damage to the Premises caused by such
removal.
13.9 To the extent that Sublandlord incurs any obligation to pay
Overlandlord of Additional Rent" pursuant to Section 12 of the Overlease during
the Sublease Term, Subtenant shall reimburse Sublandlord for Subtenant's
Proportionate Share thereof upon receipt of Sublandlord's request therefor,
which request shall be accompanied by reasonable evidence of Sublandlord's
payment (or obligation to pay) such "Additional Rent" pursuant to the Overlease.
14. ALTERATIONS
14.1 In the event Subtenant is permitted to perform alterations in the
Premises pursuant to Section 13.8 hereof, Subtenant shall make no changes,
alterations, additions, improvements or decorations in, to or about the Premises
without submitting detailed plans and construction schedules to Sublandlord and
receiving Sublandlord's prior written consent to such plans. Subtenant shall
make no changes, alterations, additional improvements or decorations which would
result in Overlandlord charging Sublandlord for the cost of same, including any
removal costs associated therewith and, if Subtenant makes any such changes,
alterations, additions or improvements, Subtenant shall comply with all laws and
regulations relating to such construction including, but not limited to, receipt
of certificates of occupancy, permits and ADA requirements, and shall be
responsible for all costs associated therewith. Sublandlord may impose
reasonable guidelines as may be necessary to protect its occupancy and rights
provided in the Overlease, including placing reasonable restrictions on times
when certain types of work may be performed in order to prevent undue intrusion
and noise to Sublandlord or other tenants in the Leased Space.. Subtenant shall
also be required to obtain such approval from Overlandlord, and Sublandlord's
consent shall not constitute the consent of Overlandlord.
15. QUIET ENJOYMENT
15.1 So long as Subtenant pays all of the rent and additional rent due
under this Sublease and performs all of Subtenant's other obligations
hereunder,' Sublandlord shall assure that Subtenant shall peacefully and quietly
have, hold and enjoy the Premises, and any other areas to which Sublandlord has
rights under the Overlease, subject, however, to the terms, provisions and
obligations of this Sublease and the Overlease.
16
<PAGE> 19
15.2 In the event Subtenant does not completely vacate the Premises by the
Sublease Expiration Date or earlier termination of this Sublease, Subtenant
shall indemnify and hold harmless Sublandlord in respect of any and all holdover
charges or penalties imposed under the Overlease upon Sublandlord in respect of
the entire Leased Space. -in this regard, Subtenant shall, if requested by
Sublandlord, in Sublandlord's sole discretion, defend Sublandlord against any
action or proceeding brought against Sublandlord which arises out of said
holdover.
16. DAMAGE AND DESTRUCTION
16.1 In the event that the Overlease terminates as a result of the damage
or destruction of the Building, this Sublease shall terminate concurrently
therewith. In the event that the Building is damaged such that the Overlease is
not terminated but Subtenant is prevented thereby from using the Premises in the
manner contemplated at the time that this Sublease is made, Subtenant shall have
the right to terminate this Sublease if such damage and destruction is not
repaired within one hundred eighty (180) days of the date of such damage and
destruction. No such notice of termination by Subtenant shall be effective
unless accompanied by the applicable "Termination Fee." The Termination Fee
represents (a) the unamortized rent abatement given to Subtenant at the
commencement of the Sublease Term as an inducement to enter into this Sublease,
and (b) the unamortized real estate brokerage fee paid by Sublandlord with
respect to this Sublease. The applicable Termination Fee shall be the principal
balance shown on the Amortization Schedule that is Exhibit C, annexed hereto and
incorporated herein, for the month in which such termination notice is given.
The termination notice given by Subtenant shall be effective upon receipt by
Sublandlord so long as such notice is accompanied by the full and unconditional
payment of the Termination Fee.
17. NO WAIVER
17.1 The failure of either party to seek redress for violation of
Sublandlord to insist upon the strict performance of, or to insist upon the
strict performance of any covenant or condition of this Sublease or of any of
the Rules and Regulations set forth or hereafter adopted by Sublandlord, shall
not prevent a subsequent act which would have originally constituted a violation
- - -from having all the force and effect of an original violation. The receipt by
Sublandlord of rent with knowledge of the breach on any covenant of this
Sublease shall be deemed to have been waived by Sublandlord unless such waiver
be in writing signed by Sublandlord. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated base rent,
additional rent or other charge, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice to Sublandlord's right to recover the balance of such base
rent, additional rent or other charge, or pursue. any other remedy in this
Sublease
17
<PAGE> 20
provided. No act or thing done by Sublandlord or Sublandlord's agents during the
term hereby demised shall be deemed an acceptance of a surrender of the Premises
and no agreement to accept such surrender shall be valid unless in writing
signed by Sublandlord. No employee of Sublandlord of Sublandlord's agent shall
have any power to accept the keys of the Premises prior to the expiration of the
Sublease and the delivery of keys to any such agent or employee shall not
operate as a termination of the Sublease or a surrender of the Premises.
18. NOTICES
18.1 Any notice, demand or communication which, under the terms of this
Sublease or under any statute or municipal regulation must or may be given or
made by the parties hereto, shall be in writing and given or made by: (a)
express courier, overnight or better service that requires a signatures as a
condition of delivery (such as Federal Express); or (b) mailing the same by
registered or certified mail, return receipt requested addressed to the address
and person designated in Section 1.1(a) and (c) herein.
18.2 Either party, however, may designate such new or other address to
which such notices, demands or communications thereafter shall be given, made or
mailed by notice (given in the manner prescribed herein). Any such notice,
demand or communication shall be deemed given or served, as the case may be,
upon receipt or attempted delivery if delivery is refused or is not possible.
19. MISCELLANEOUS
19.1 This Sublease may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
19.2 This Sublease shall not be binding upon Sublandlord unless and until
it is signed by Sublandlord and delivered to Subtenant. This Section 19.2 shall
not be deemed to modify the provisions of Section 9 hereof.
19.3 This Sublease constitutes the entire agreement between the parties
and all representations and understandings have been merged herein.
18
<PAGE> 21
19.4 This Sublease shall inure to the benefit of all the parties hereto,
their successors and (subject to the provisions hereof) their assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals of
the day and year first above written.
ATTEST: COMPUTER ASSOCIATES
INTERNATIONAL, INC., Sublandlord
One Computer Associates Plaza
Islandia, NY 11788-7000
By: /s/ Bonnie L. Roberman By: /s/ Abraham Pomanski
--------------------------- -------------------------------------
Title: Senior Vice President
ATTEST: WINK COMMUNICATIONS, INC., Subtenant
2061 Challenger Drive
Alameda, CA 94501
By: /s/ Eric E. Del Sesto By: /s/ Gary L. Hammer
--------------------------- -------------------------------------
Title: Vice President, Business Development
19
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Parties.....................................................................1
2. Demise of Premises..........................................................1
3. Lease Term and Definitions..................................................1
A. Lease Term............................................................1
B. Definitions...........................................................1
4. Rent........................................................................3
A. Payment of Rent.......................................................3
B. Schedule of Base Monthly Rent.........................................3
C. Rental Abatement......................................................3
D. Late Charge...........................................................3
E. Additional Rent.......................................................3
F. Operating Expenses....................................................4
G. Place of Payment......................................................6
5. Security Deposit............................................................6
6. Use of Premises.............................................................6
7. Taxes and Assessments.......................................................6
A. Tenant's Property.....................................................6
B. Payment of Property Taxes.............................................6
C. Property Taxes Defined................................................7
D. Assessments...........................................................7
E. Other Taxes...........................................................7
F. Tenant's Right to Contest.............................................7
G. Reduction in Property Taxes...........................................8
8. Insurance...................................................................8
A. Waiver and Indemnity..................................................8
B. Tenant's Liability Insurance..........................................8
C. Landlord's Liability Insurance........................................8
D. Fire and All Risk Insurance...........................................9
E. Release of Landlord...................................................9
F. Mutual Waiver of Subrogation.........................................10
9. Utilities..................................................................10
10. Repairs and Maintenance....................................................10
A. Tenant's Responsibilities............................................10
B. Landlord's Responsibilities..........................................11
C. Warranties...........................................................11
D. Condition on Delivery................................................11
E. Limitation on Repair Obligation of Landlord..........................11
11. Outside Areas..............................................................11
12. Amortization of Certain Improvements as Additional Rent....................12
13. Alterations................................................................12
A. Trade Fixtures.......................................................12
B. Alterations..........................................................12
C. Lien Waiver..........................................................13
D. Legally Required Alterations.........................................14
14. Intentionally Omitted......................................................14
15. Default....................................................................14
A. Events of Tenant's Default...........................................14
B. Remedies.............................................................15
16. Destruction................................................................16
A. Landlord's Duty to Restore...........................................16
B. Landlord's Right to Terminate........................................16
C. Tenant's Right to Terminate..........................................17
D. Abatement of Rent....................................................17
17. Condemnation...............................................................18
A. Definition of Terms..................................................18
B. Rights...............................................................18
C. Total Taking.........................................................18
D. Partial Taking.......................................................18
</TABLE>
<PAGE> 23
<TABLE>
<S> <C> <C>
E. Temporary Taking.....................................................18
18. Mechanics' Liens...........................................................18
19. Inspection of the Premises.................................................19
20. Compliance with Laws.......................................................19
A. Obligation of Tenant.................................................19
B. Right to Contest.....................................................19
21. Subordination..............................................................19
22. Holding Over...............................................................20
23. Notices....................................................................20
24. Attorneys' Fees............................................................20
25. Nonassignment..............................................................20
A. Consent Required.....................................................20
B. Notice Required......................................................22
C. Landlord's Right to Share in Net Subrent Profit......................22
D. Exempt Transfers.....................................................23
26. Successors.................................................................23
</TABLE>
-i-
<PAGE> 24
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
27. Lender Protection..........................................................23
28. Estopel Certificates and Financial Statements..............................23
29. Surrender of Lease Not Merger..............................................23
30. Waiver.....................................................................23
31. General....................................................................23
A. Captions.............................................................23
B. Landlord Defined.....................................................23
C. Time.................................................................24
D. Severability Governing Law...........................................24
E. Joint and Several Liability..........................................25
F. Exhibits.............................................................25
G. Miscellaneous........................................................25
H. Survival.............................................................25
32. Signs......................................................................25
33. Interest on Past Due Obligation............................................25
34. Surrender of the Premises..................................................25
35. Authority..................................................................26
36. Options to Extend..........................................................26
37. Hazardous Material.........................................................27
A. Definitions..........................................................27
B. Use Restriction......................................................27
C. Compliance...........................................................28
D. Assignment and Subletting............................................29
E. Notice...............................................................29
F. Surrender............................................................29
G. Landlord's Obligations...............................................30
38. Approvals..................................................................30
39. Reasonable Expenditures....................................................30
40. Right to Perform Other Party's Covenants...................................30
41. CPI Adjustment.............................................................30
42. Integration and Amendments.................................................29
43. Memorandum of Lease........................................................30
44. Non-Discrimination.........................................................30
45. Brokerage Commissions......................................................31
</TABLE>
EXHIBITS
EXHIBIT A - Diagram(s) of Premises
EXHIBIT B - [omitted]
EXHIBIT C - Diagram of Marina Village Project
EXHIBIT D - Existing Hazardous Material Condition
-ii-
<PAGE> 25
MARINA VILLAGE
LEASE
-----------------------
ASK COMPUTER SYSTEMS, INC.
1001 MARINA VILLAGE PARKWAY
-----------------------
As of the Commencement Date (as hereinafter defined) this Lease shall replace
and supersede that certain Lease dated October 1, 1987 ("Previous Lease") by and
between ASK COMPUTER SYSTEMS, INC., as successor-in-interest to RELATIONAL
TECHNOLOGY, INC., as Tenant, and ALAMEDA REAL ESTATE INVESTMENTS, as Landlord,
with respect to the Premises (as hereinafter defined), except that the Previous
Lease shall continue to govern the rights and obligations of the parties
accruing prior to that date with respect to the Premises.
A. The right to use in common with other tenants of the Building, the
Common Areas within the Building and the Outside Areas adjacent to the
Building and located on the Parcel (as such terms are hereinafter
defined);
C. All interior improvements (the "Tenant Improvement") previously
constructed in the Premises by Landlord for Tenant; and
3. Lease Term and Definitions.
B. Definitions. As used herein, the following terms shall have the
following meanings:
(i) The term "Affiliate" shall mean, with respect to either Landlord
or Tenant, a person or entity that directly or indirectly,
through one or more intermediaries, controls, is controlled by,
or is under common control with Landlord (or either of its
constituent partners, or the shareholders or partners of such
constituent partners) or Tenant and any officer.
1
<PAGE> 26
director, trustee, stockholder or partner of any such person or
entity. For purposes of this definition, the term "control" means
the ownership of fifty percent (50%) or more of the beneficial
interest or voting power of the appropriate entity (e.g.,
partnership, corporation, trust, or unincorporated association).
(ii) The term "Agent" shall mean, with respect to either Landlord or
Tenant, its respective agents, employees, contractors (and their
subcontractors), and invitees (and in the case of Tenant, its
subtenants).
(iii) The term "Agreed Interest Rate" shall mean the "prime" or
reference rate announced from time to time by the Bank of
America, NT & SA, or its successor, for short-term commercial
loans plus two percent (2%) per annum, but in no event to exceed
the maximum interest rate permitted by law.
(iv) The term "Alterations" shall mean all improvements, additions,
alterations and fixtures installed in the Premises by Tenant at
its expense which are not Trade Fixtures.
(v) The term "Common Area" shall mean those portions of the building
not leased to Tenant or other tenants or available for lease or
exclusive use to other tenants, whether or not those areas are
actually subject to an existing lease, such as hallways, lobby,
common restrooms, utility rooms, etc.
(vi) The term "Consumer Price Index" shall mean the Consumer Price
Index, for All Urban Consumers, Subgroup "All Items", for the San
Francisco-Oakland-San Jose Metropolitan Area (Base Year 1982-84 =
100), which is currently being published monthly by the United
States Department of Labor, Bureau of Labor Statistics. If,
however, this Consumer Price Index is changed so that the base
year is altered from that used as of the Commencement Date, then
the Consumer Price Index shall be converted in accordance with
the conversion factor published by the United States Department
of Labor, Bureau of Labor Statistics, to obtain the same results
that would have been obtained had the base year not been changed.
If no conversion factor is available or if the Consumer Price
Index is otherwise changed, revised or discontinued for any
reason, there shall be substituted in lieu thereof and the term
"Consumer Price Index" shall thereafter refer to the most nearly
comparable official price index of the United States Government
to obtain substantially the same result as would have been
obtained had the original Consumer Price Index not been changed,
revised or discontinued, which alternative index shall be
selected by Landlord and shall be subject to Tenant's prior
written approval.
(vii) The term "Effective Date" shall mean the date first set forth
above also used for reference purposes as of the date of this
Lease.
(viii) The term "Institutional Lender" shall mean any commercial bank,
savings and loan association, life insurance company, pension
fund, or other entity regularly engaged in the business of
lending where the primary security is real property whose
activities are regulated by the state or federal government, and
which institution is then in compliance with all regulations by
which it is governed.
(ix) The term "Law" shall mean any judicial decision, statute,
constitution, ordinance, resolution, regulation, rule,
administrative order, or other requirement of any municipal,
county, state, federal or other governmental agency or authority
having jurisdiction over the parties to this Lease or the
Premises.
(x) The term "Lender" shall mean any beneficiary, mortgagee, secured
party or other holder of any deed of trust, mortgage or other
written security device or agreement encumbering the Premises.
(xi) The term "Outside Area" shall mean all access roads, driveways,
parking
<PAGE> 27
areas, loading docks and ramps, sidewalks, landscape areas,
exterior lighting and other facilities located on the Parcel
outside the exterior walls of the Building.
(xii) The term "Project" shall mean all real property within the West
End Community Improvement Project Area which is commonly referred
to as Marina Village, Alameda, California, and more specifically
outlined on Exhibit C attached hereto.
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<PAGE> 28
(xiii) The term "Rentable Area" shall mean rentable square footage of
the Premises as determined by the Building Owners and Managers
Association (BOMA) measurement standards for multi-story
buildings, measuring to the "glass line" outside boundary,
excluding major vertical penetrations, such as stair wells,
elevators and mechanical shafts, exterior decks, atria and
courtyards.
(xv) The term "Trade Fixtures" shall mean anything installed in or
affixed to the Premises by Tenant at its expense for purposes of
trade, manufacture, ornament or domestic use (except replacement
of similar work or material originally installed by Landlord)
which can be removed without injury to the Premises (e.g.,
demountable partitions, business and production equipment and
systems, furniture and furnishings) unless such thing has, by the
manner in which it is affixed, become an integral part of the
Premises.
3
<PAGE> 29
(4) If requested by Tenant, Landlord shall make available to Tenant,
within 45 days of Tenant's notice of request, which notice shall be given
no later than 90 days following Tenant's receipt of Landlord's statement,
actual bills and invoices, or copies thereof, supporting Landlord's
statement of estimated or actual Operating Expenses for such calendar
year, together with Landlord's calculations of Operating Expenses and
Tenant's Percentage Share. If Tenant disputes such statement, then Tenant
shall not withhold payment but shall, within 10 days after reviewing such
bills and invoices, send notice to Landlord objecting to such statement.
If such notice is sent, the parties recognize the unavailability of
Landlord's books and records because of the confidential nature thereof
and hence agree that either party may refer the decision of the issues
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<PAGE> 30
raised to a reputable independent firm of certified public accountants
selected by Landlord and approved by Tenant, which approval shall not be
unreasonably withheld or delayed, which accountants shall have the right
to audit Landlord's records pertaining to Operating Expenses. Any
adjustment to any previous payment of Operating Expenses shall be paid by
Landlord or Tenant, as the case may be, within 30 days after such
accountants render their decision. If the accountants find that the
Landlord's statement has overstated the total Operating Expenses by 5% or
more, then Landlord shall bear the cost of all fees and expenses of the
accountants. Otherwise, the Tenant shall bear the cost of all fees and
expenses of the accountants.
5. Security Deposit. No security or similar deposit shall at any time be due
from Tenant under this Lease.
7. Taxes and Assessments.
A. Tenant's Property. Tenant shall pay before delinquency any and all
taxes and assessments, license fees and public charges levied, assessed or
imposed upon or against Tenant's Trade Fixtures, equipment, furnishings,
furniture, appliances and personal property installed or located on or
within the Premises. Tenant shall use all reasonable efforts to cause said
Trade Fixtures, equipment, furnishings, furniture, appliances and personal
property to be assessed and billed separately from the real property of
Landlord. If any of Tenant's said personal property shall be assessed with
Landlord's real property, Tenant shall pay Landlord the taxes attributable
to Tenant within ten (10) days after receipt of a written statement from
Landlord setting forth the taxes applicable to Tenant's personal property.
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<PAGE> 31
Lease Term and any overpayment of taxes by Tenant shall be credited against
sums otherwise due hereunder or shall be paid by Landlord to Tenant in cash if
attributable to any period after the termination date of this Lease; provided,
however, that if there exists an uncured Event of Tenant's Default at any time
that Landlord is obligated to reimburse overpayments to Tenant pursuant to this
sentence, Landlord may apply the amount so held by it to cure such uncured
default. Upon written request, Landlord shall supply to Tenant all tax bills
and other correspondence from any governmental agency relating to any Property
Tax that Tenant is obligated to pay, and Tenant shall have the right to inspect
and copy Landlord's books and records at Tenant's expense upon reasonable
notice to the extent such books and records relate to a determination of the
amount of Property Taxes due or being contested by Landlord or Tenant.
C. Property Taxes Defined. For the purpose of this Lease, "Property Taxes"
means and includes all taxes, assessments (including, but not limited to,
assessments for public improvements or benefits), taxes based on vehicles
utilizing parking areas, taxes based or measured by the rent paid, payable or
received under this Lease, taxes on the value, use or occupancy of the
Premises, and all other governmental impositions and charges of every kind and
nature whatsoever, whether or not customary or within the contemplation of the
parties hereto and regardless of whether the same shall be extraordinary or
ordinary, general or special, unforeseen or foreseen, or similar or dissimilar
to any of the foregoing which, at any time during the Lease Term, shall be
applicable to the Premises, or assessed, levied or imposed upon the Premises, or
become due and payable and a lien or charge upon the Premises, or any part
thereof, under or by virtue of any present or future Laws whatsoever. There
shall be credited against Property Taxes all amounts received by Landlord from
tax increment reimbursements from the West end Community Improvement District
related to improvements to real property on the tax parcel to which such
Property Taxes relate. The term "Property Taxes" shall not include (i) any
federal, state or local net income, estate, transfer, excise, capital stock or
inheritance tax imposed on Landlord, or (ii) any tax, assessment or other
governmental levy or any increase therein occasioned by or relating to any
"change in ownership" (as defined in Sections 60-65 of the California Revenue
and Taxation Code and the regulations thereunder) during the initial term of
the Lease, and in such event Tenant also shall not receive the benefit on any
increase in tax increment, if any, resulting from such change of ownership or
transfer.
D. Assessments. With respect to any Property Tax that may be payable in
installments or by an alternative means at the election of Landlord, Tenant
shall be obligated to pay no more than that amount which would have been
payable had Landlord elected to pay such Property Tax in installments over the
maximum term allowable.
E. Other Taxes. Tenant shall pay, as Additional Rent, or reimburse Landlord
for, any tax based upon, allocable to, or measured by the area of the Premises
or the rental payable by Tenant under this Lease, including, without
limitation, any gross receipts tax levied by any state, local or federal
government with respect to the receipt of such rental; any tax upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy of the Premises or any portion thereof;
any privilege tax, business and occupation tax, sales and/or use tax, water
tax, sewer tax, employee tax, occupational license tax imposed upon Landlord or
Tenant with respect to the Premises; any tax upon this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises; provided, however, that Tenant shall not be obligated
to pay any federal, state or local net income, estate, transfer, excise,
capital stock or inheritance tax imposed on Landlord or imposed as a result of
the sale or conveyance of Landlord's interest in the Premises and/or this Lease.
F. Tenant's Right to Contest. Tenant shall have the right, by appropriate
proceedings, to protest or contest any assessment, reassessment or allocation
or Property Taxes or any change therein or any application of any Law to the
Premises or Tenant's use thereof. Landlord shall notify Tenant in writing of
any change in Property Taxes within sufficient time to allow Tenant to review
and, if it so desires, to contest or protest such change. In the contest or
proceedings, Tenant may act in its own name and/or the name of Landlord and
Landlord will, at Tenant's request and expense, cooperate with Tenant in any
way Tenant may reasonably require in connection with such contest. If Tenant
does not pay Tenant's Percentage Share of the Property Taxes when due which are
the subject of such protest or contest, Tenant shall post a bond in lieu
thereof and, with respect to any contest of Property Taxes or Laws, shall hold
Landlord and the Premises harmless from any damage arising out of the
proceedings or contest and shall pay any judgment that may be rendered for
which Tenant would otherwise be liable under this Lease without such contest or
protest. In any event, Tenant agrees to pay Tenant's Percentage Share of the
Property Taxes prior to the foreclosure of any tax lien. Any contest conducted
by Tenant under this Paragraph shall be at Tenant's expense and if interest or
late charges become payable as a result of such contest a protest, Tenant shall
pay the same.
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<PAGE> 32
G. Reduction in Property Taxes. Within a reasonable period following the
Commencement Date, Landlord shall apply for and use reasonable efforts to
obtain a reduction in Property Taxes from the County Assessors Office,
based on a finding that the current assessed valuation of the Premises
exceeds the current fair market value thereof.
8. Insurance.
A. Waiver and Indemnity. As this Lease does not involve the public
interest and insurance is available to Tenant which will protect it
against such claims, damage, injury or death, Tenant hereby claims against
Landlord for damage to any property or injury to or death of any person
in, upon or about the Premises or the Building arising at any time and
from any cause; provided, that the foregoing waiver shall not apply to
(i) damage to the property or persons other than Tenant; or (ii) death or
injury to any person resulting from the negligence or willful misconduct
of Landlord or its Agents. Tenants shall hold Landlord harmless from and
defend Landlord against all claims (except to the extent such arises from
the negligence or willful misconduct of Landlord or its Agents) (i) for
damage to any property or injury to or death of any person arising from
the use of the Premises by Tenant, or (ii) arising from the negligence or
willful misconduct of Tenant, its employees, agents, or contractors in,
upon or about those portions of the Project or the Building other than the
Premises. Landlord shall hold harmless from and defend Tenant against all
claims (except such as arise from the negligence from events occurring in
the Common Areas and Outside Areas. The foregoing indemnity obligation of
Landlord and Tenant shall include attorney's fees, investigation costs,
and all other costs and expenses incurred by the other party from the
first notice that any claim or demand is to be made or may be made. The
provisions of this Paragraph 8 shall survive the expiration or termination
of this Lease with respect to any damage, injury, or death occurring prior
to such termination, its provisions shall only apply after the later of
the Commencement Date or the date that Tenant or its Agents has actually
entered into occupancy of the Premises.
B. Tenant's Liability Insurance. Tenant shall obtain and maintain during
the term of this Lease comprehensive general liability insurance with
combined single limit for personal injury and property damage in a form
and with carriers acceptable to Landlord in an amount not less than
$1,000,000, and employer's liability and workers' compensation insurance
as required by Law. Tenant shall maintain excess or umbrella liability
insurance with limits not less than $4,000,000 having the general
liability coverage desired above as underlying. Tenant's comprehensive
general liability and excess/umbrella insurance policy shall be endorsed
to provide that (i) it may not be canceled or altered in such a manner as
adversely to affect the coverage afforded thereby without 30 days' prior
written notice to Landlord, (ii) Landlord is named as additional insured,
(iii) the insurer acknowledges acceptance of the mutual waiver of claims
by Landlord and Tenant pursuant to subparagraph (F) below, and (iv) such
insurance is primary with respect to Landlord and that any other insurance
maintained by Landlord is excess and noncontributing with such insurance.
If, in the reasonable opinion of Landlord's insurance adviser, based on a
substantial increase in recovered liability claims generally, the
specified amounts of coverage are no longer adequate, such coverage shall
be appropriately increased but, in no event shall such required coverage
exceed the level of coverage customarily carried by similar businesses in
Alameda County. Prior to the Term Commencement, Tenant shall deliver to
Landlord a duplicate of such policy or a certificate thereof to Landlord
for retention by it, with endorsements, and at lease 30 days prior to the
expiration of such policy or any renewal thereof, Tenant shall deliver to
Landlord a replacement or renewal binder, followed by a duplicate policy
or certificate within a reasonable time thereafter. If Tenant fails to
obtain such insurance or to furnish Landlord any such duplicate policy or
certificate as herein required, Landlord may, at its election, without
notice to Tenant and without any obligation to do so, procure and maintain
such coverage and Tenant shall reimburse Landlord on demand as Additional
Rent for any premium so paid by Landlord.
C. Landlord's Liability Insurance. Landlord shall maintain a policy or
policies of comprehensive general liability insurance insuring Landlord
(and such others as are designated by Landlord) against liability for
personal injury, bodily injury, death and damage to property occurring or
resulting form an occurrence in, on or about the Premises in an amount not
less than that required of Tenant, endorsed to provide coverage for the
obligations of Landlord under Paragraph 8.A, provided if Landlord elects
to carry a higher level of coverage such amount of excess coverage must be
reasonable. The cost of such liability insurance which Landlord elects to
maintain shall be Additional Rent, and Tenant shall pay to Landlord the
cost of such insurance as a part of Operating Expenses.
D. Fire and All Risk Insurance. Landlord shall obtain and keep in force
during the Lease Term a policy or policies of insurance covering loss or
damage to the Building in the amount of the full replacement cost thereof
and the Tenant
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<PAGE> 33
Improvements to the extent paid for by Landlord providing protection
against those perils included within the classification of "all risk"
insurance, plus a policy of rental income insurance in the amount of
twelve (12) months of Base Monthly Rent and revenues received from the
Building together with such additional coverages (such as earthquake and
flood insurance) which Landlord may reasonably elect to maintain from time
to time or which Landlord's Lender may require Landlord to maintain from
time to time so long as such Lender is an Institutional Lender whose loan
is secured by a deed of trust encumbering the Premises. Tenant shall have
no interest in nor any right to the proceeds of any insurance procured by
Landlord on the Building and Tenant Improvements. Tenant shall pay to
Landlord, as Additional Rent, Tenant's Percentage Share of the cost of
such insurance procured and maintained by Landlord as part of its
Operating Expense payment. Tenant's liability for the cost of such
insurance shall be prorated as of the commencement and termination of the
Lease Term. Tenant acknowledges that such insurance procured by Landlord
shall contain a commercially reasonable deductible approved by Landlord
and Tenant which reduces Tenant's cost for such insurance and, in the
event of loss or damage which is not caused by Landlord or its Agents,
Tenant shall be required to pay to Landlord the amount of such deductible.
Notwithstanding anything contained herein, the following shall apply:
(i) In the event Tenant becomes liable to pay "deductibles" with respect
to any loss or losses the aggregate amount of which exceeds for any
twelve (12) month period during the Lease Term an amount equal to
one installment of the Base Monthly Rent then payable, the amount of
such excess shall not be payable by Tenant currently but instead
shall be amortized over the useful life of the improvements
constructed with such deductible amount, together with interest at
the Agreed Interest Rate, and payable as Additional Rent in
accordance with the procedure set forth in Paragraphs 12A. and B.
(ii) Tenant shall not be obligated to pay the cost of earthquake
insurance to the extent that it exceeds a commercially reasonable
rate for earthquake insurance; provided, however, that in the event
an Institutional Lender which holds at least 30 loans secured by
office/industrial buildings in Northern California and is holding a
loan that is secured by a deed of trust encumbering the Premises
requires that earthquake insurance be maintained, and it is the
general policy of such Lender to require that earthquake insurance
be maintained on substantially all properties owned, managed or
encumbered by such Lender in the same or comparable seismic zone as
the Premises in California, then in that event Tenant shall pay the
entire cost of earthquake insurance even if it exceeds a
commercially reasonable rate; provided, however, if such
Institutional Lender does not hold loans on a minimum of 30 office
or industrial buildings in Northern California then Tenant shall not
be obligated to pay the cost of such earthquake insurance to the
extent the annual cost thereof exceeds Thirty-Six Cents ($0.36) per
One Hundred Dollars ($100) of replacement cost. If the cost of
earthquake insurance exceeds a commercially reasonable rate, Tenant
shall nonetheless continue to pay an amount equal to a commercially
reasonable rate for such earthquake insurance so long as such
insurance is carried by Landlord, subject to the limit contained in
preceding sentence, and Landlord shall pay the remainder of the cost
of earthquake insurance. For purposes hereof, a "commercially
reasonable rate" for earthquake insurance shall mean any rate that
is within the range of the then-current cost of earthquake coverage
which is then being paid by "Prime Owners" (defined below) of office
buildings in the San Francisco Bay Area containing more than 50,000
square feet that were built after 1976 and which is customarily
being reimbursed or paid by tenants occupying, under triple net
office leases, such buildings. The term "Prime Owners" shall be
defined to mean any entity or individual whose office or commercial
real property holdings in the San Francisco Bay Area exceed Fifty
Million Dollars ($50,000,000) in fair market value who fit into any
one of the following categories: (a) institutional investors such as
pension funds, insurance companies, and syndications where
partnership interests were offered pursuant to a registered public
offering; (b) office developers and their affiliated partnerships
who individually have owned or
<PAGE> 34
developed more than 250,000 square feet of office buildings in the
San Francisco Bay Area; and (c) office corporations who own office
facilities they occupy.
E. Release of Landlord. Tenant acknowledges that the insurance to be
maintained by Landlord on the Premises pursuant to Paragraph 8.D
above will not insure any of Tenant's property. Accordingly, Tenant,
at Tenant's own expense, shall maintain in full force and effect on
all of its Trade Fixtures, equipment, leasehold improvements and
personal property in the Premises, a policy of "all risk" coverage
insurance to the extent of at least ninety percent (90%) of their
insurable value.
F. Mutual Waiver of Subrogation. Tenant and Landlord hereby mutually
waive their respective rights for recovery against each other for
any loss of or damage to the property of either party, where such
loss or damage is insured by any insurance
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<PAGE> 35
policy required to be maintained by this Lease or otherwise in force
at the time of such loss or damage (except such waiver shall not
apply to any loss to the extent it is within the "deductible amount"
of such policy). Each party shall obtain any special endorsements,
if required by the insurer, whereby the insurer waives its right of
subrogation against the other party hereto. The provisions of this
Paragraph 8.F shall not apply in those instances in which waiver of
subrogation would cause either party's insurance coverage to be
voided or otherwise made uncollectible or is not available at
reasonable cost.
10
<PAGE> 36
(iii) No less frequently than annually, Landlord shall cause to be
made an inspection of the Building roof membrane and roof
system by an inspection service approved by Tenant which
inspection shall be done in accordance with the roofing
contractor's specifications and the roof vendor's recommended
specifications. Landlord shall deliver to Tenant a written
report prepared by the party making such inspections promptly
after the conclusion of each such inspection. Landlord shall
perform such maintenance and repair work as is recommended by
such inspectors to the extent such work is reasonably
necessary to keep the roof membrane and roof system in good
order, condition and repair. The costs of the inspection and
any resulting repairs of the Building roof membrane (to the
extent not capital expenditures subject to subparagraph
10.B.(i)) shall be considered Operating Expenses reimbursable
by Tenant under Paragraph 4.G and the costs related to the
structural roof system shall be borne exclusively by Landlord
without right of reimbursement from Tenant.
C. Warranties. Landlord shall assign to Tenant for the term of this
Lease the benefit of all warranties available to Landlord which
would reduce the cost of performing the obligations of Tenant
pursuant to this Lease. Landlord shall cooperate with Tenant in the
enforcement of such warranties.
D. Condition on Delivery. As of the Effective Date, Tenant is in
possession of the Premises and has accepted the Premises.
E. Limitation on Repair Obligation of Landlord. Landlord shall have
no maintenance or repair obligations whatsoever with respect to the
Premises except as expressly provided in Paragraphs 10, 13.D, 16 and
17. Tenant hereby expressly waives the provisions of Subsection 1 of
1932 and Sections 1941 and 1942 of the Civil Code of California and
all rights to make repairs at the expense of Landlord as provided in
Section 1942 of said Civil Code.
11. Outside Areas. Tenant and its Agents shall have the non-exclusive right to
use the Outside Areas in common with other occupants of the Project, which
shall include Tenant's right to not less than three and one-half (3.5)
spaces for automobile parking for each one thousand (1,000) square feet of
Rentable Area in the Premises. This right shall terminate upon the
expiration or earlier termination of this Lease. Landlord may make
non-material changes to the shape, size, location, amount and extent of
the Outside Areas provided that no such change shall reduce the parking
rights granted to Tenant
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<PAGE> 37
hereunder and shall not in any case unreasonably interfere with the use of
the Premises by Tenant. Unless required by Law or any governmental agency,
Landlord shall obtain Tenant's prior consent to any material modifications
or changes to the Outside Areas. Tenant shall not abandon any inoperative
vehicles or equipment on any portion of the Outside Areas. Tenant shall
make no Alterations to the Outside Areas without the consent of Landlord.
In no event shall Tenant be charged by Landlord for use of parking spaces
in the Outside Areas except to the extent required by Law or any
governmental agency and any revenue received by Landlord with respect to
Tenant's use of such parking spaces, if not paid to a governmental entity,
shall be reimbursed to Tenant, less costs attributable to Landlord's
collection thereof.
12. Amortization of Certain Improvements as Additional Rent. Tenant shall pay
Additional Rent in the amount described in this paragraph in the event
Landlord is required by this Lease to do any of the following: (i) pay the
deductible amount in excess of the limit paid by Tenant pursuant to
Paragraph 8.D and on account of damage caused by any peril to the
Premises; (ii) make replacements to the Premises or to the Building when
required pursuant to Paragraph 10.B(i); or (iii) make improvements
required to be constructed in order to comply with any Law not in effect
or applicable to the Premises as of the Effective Date, which improvements
are not the responsibility of Tenant pursuant to Paragraph 13.D. The
amount of Additional Rent Tenant is to pay with respect to the amounts
spent by Landlord pursuant to the foregoing sentence shall be determined
as follows:
A. All costs paid by Landlord to construct such improvements or make such
restoration (including financing costs but excluding reimbursements
received from insurers or other third parties and any management fee to
Landlord) shall be amortized over the useful life of such improvements or
restoration (determined in accordance with generally accepted accounting
principles) and payable by Tenant, together with interest at the Agreed
Interest Rate, in equal monthly installments. Landlord shall inform Tenant
of the monthly amortization payment required so to amortize such costs and
shall also provide Tenant with the information upon which such
determination is made.
B. As Additional Rent, Tenant shall pay an amount equal to Tenant's share
of such monthly amortization payment for each month after such improvement
or restoration is completed until the first to occur of (i) the expiration
of the Lease Term (which shall not include the period of any subsequent
option to extend where the Base Monthly Rent is determined based upon the
fair market rental value of the Premises), or (ii) the end of the term of
the useful life over which such costs were amortized. The amount of such
Additional Rent that Tenant is to pay shall be due at the same time the
Base Monthly Rent is due.
13. Alterations.
A. Trade Fixtures. Throughout the Lease Term, Tenant shall provide,
install and maintain in good condition all Trade Fixtures required in the
conduct of its business in the Premises. All Trade Fixtures shall remain
Tenant's property.
B. Alterations. The following provisions govern Alterations constructed by
Tenant:
(i) Tenant shall not construct any Alterations or otherwise alter the
Premises without Landlord's prior approval if (a) such action
results in the demolition, removal or material alteration of
existing improvements or future Renovation Improvements (including
partitions, wall and floor coverings, ceilings, lighting fixtures or
other utility installations), and (b) the cost of such construction
or alteration exceeds One Hundred Thousand Dollars ($100,000) per
work of improvement (as such amount is adjusted pursuant to
<PAGE> 38
Paragraph 41) or if the cost of Alterations done, under
construction, or for which approval is sought during any calendar
quarter exceeds One Hundred Thousand Dollars ($100,000) (as such
amount is adjusted pursuant to Paragraph 41). With respect to any
Alterations which must be approved by Landlord pursuant to the
immediately preceding sentence, Tenant shall not commence
construction of such Alterations until Landlord shall have the first
approved the plans and specifications therefor, which approval shall
be deemed given if not denied in writing within ten (10) working
days after Landlord shall have received Tenant's request for such
approval. In no event shall Tenant make any Alterations to the
Premises which could affect the structural integrity or the exterior
design of the Building. Notwithstanding anything contained herein,
Tenant shall have the right to reconfigure demountable walls and
partitions without Landlord's prior consent.
(ii) All Alterations requiring Landlord's approval shall be installed by
Tenant in substantial compliance with the approved plans and
specifications therefor. All construction undertaken by Tenant shall
be done in accordance with all Laws
12
<PAGE> 39
and in a good and workmanlike manner using materials of good
quality. Tenant shall not commence construction of any Alterations
until (a) all required governmental approvals and permits shall have
been obtained, and (b) all requirements regarding insurance imposed
by this Lease have been satisfied.
(iii) Landlord shall cause to be made available to Tenant all information
maintained by Landlord or Landlord's architect which relates to the
plans for the Building, including any "as-built" plans for the
Building (and mechanical platforms on the Building roof) and/or
Outside Areas, so that Tenant can incorporate such information into
Tenant's files relating to plans for the Tenant Improvements and for
Alterations. At all times during the Lease Term, (a) Tenant shall
maintain and keep updated "as-built" plans for all Alterations
constructed by Tenant which may or may not have required a building
permit or other governmental approval, and (b) Tenant shall provide
to Landlord copies of all such "as-built" plans and any and all
other drawings relating to Tenant's Alterations in the Premises.
(iv) All Alterations shall remain the property of Tenant during the Lease
Term. Tenant shall have the right to remove any Alterations so long
as it repairs all damage caused by the installation thereof and
returns the Premises to the condition existing prior to the
installation of such Alterations. At the expiration or sooner
termination of the Lease Term, all Alterations that Tenant does not
elect to remove shall be surrendered to Landlord as a part of the
realty and shall then become Landlord's property, and Landlord shall
have no obligation to reimburse Tenant for all or any portion of the
value or cost thereof. Notwithstanding anything contained herein
(but subject to the restrictions set forth in Paragraphs 13.B(iv)(a)
and (b)), if Landlord so requires, at the expiration or earlier
termination of the Lease Term, Tenant shall remove any Alterations
designated for removal by Landlord, including those Alterations for
which Landlord's consent was not initially required, and shall
restore the Premises to the condition existing prior to the
installation of such Alterations only to the extent necessary to
return the Premises to a condition that has substantially the same
value to subsequent tenants as existed on the Commencement Date,
ordinary wear and tear excepted. The following provisions shall
qualify the general rule set forth in the immediately preceding
sentence:
(a) Tenant shall remove and restore all damage caused by the
removal of any specialized Alterations specifically related to
the operation of Tenant's business in the Premises. To the
extent Alterations made by Tenant results in a reduction in
the capacity of HVAC, mechanical, electrical or plumbing
systems, Tenant shall restore HVAC, mechanical, electrical and
plumbing systems so that the capacity thereof is substantially
the same as existed as of the Commencement Date, ordinary wear
and tear excepted. If restroom "cores" and fixtures have been
changed, such "cores" shall be moved to their original
location and such "cores" and fixtures shall be restored to
substantially the same condition as existed as of the
Commencement Date, ordinary wear and tear excepted. If Tenant
has made any Alterations to the structural parts of the
Building (i.e., foundations, load-bearing walls, and
structural roof system, but excluding roof membrane) or the
floor slab, such structural parts of the Building shall be
returned to the condition existing prior to the making of such
Alterations by Tenant (including the filling of any pits,
wells or trenches). If Tenant has made any Alterations to the
roof membrane, the roof membrane shall be returned to the
condition existing prior to the making of such Alterations by
Tenant, except that Tenant shall not be obligated to restore
any penetration of the roof membrane that has been made with
the written approval of Landlord. The percentage of dropped
ceiling for each area of the Building (office, research and
development, etc.) shall be substantially the same as
<PAGE> 40
existed as of the Commencement Date. Any Alterations made by
Tenant to the fire sprinkler system shall be restored to
substantially the same condition as existed as of the
Commencement Date, ordinary wear and tear excepted.
(b) Tenant shall only be required to remove Alterations for which
either of the following is true, and only if such removal is
otherwise required by all of the preceding provisions of this
Paragraph 13.B(iv): (i) such Alterations were approved in
writing by Landlord and, at the time such approval was given
by Landlord, Landlord informed Tenant in writing that Landlord
would require that such Alterations be removed at the
termination of the Lease Term; or (ii) such Alterations were
installed with Landlord's consent.
(C) Lien Waiver. Landlord, within thirty (30) days after request from
Tenant, shall execute and deliver any document reasonably required by any
supplier, lessor or lender in connection with the installation in the
Premises of Tenant's personal property or Tenant's Trade Fixtures pursuant
to which Landlord waives any rights it may have with respect to such
personal property and Trade Fixtures from the Premises before the
expiration of the Lease Term or within five (5) days after
13
<PAGE> 41
property, and such case, proceeding or other action (a) results in the
entry of an order for relief against in which is not fully stayed within
thirty (30) business days after the entry thereof or (b) remains
undismissed for a period of sixty (60) days; or
(ix) Tenant shall fail to provide financial statements or estoppel
certificates to Landlord in accordance with Paragraph 28 within two
(2) business days after giving of notice by Landlord of Tenant's
delinquency in delivery of such statements.
B. Remedies. Upon any event of Tenant's Default, Landlord shall have the
following remedies, in addition to all other rights and remedies provided
by Law or in equity, to which Landlord may resort cumulatively or in the
alternative:
(i) Recovery of Rent. Landlord shall be entitled to keep this Lease in
full force and effect (whether or not Tenant shall have abandoned
the Premises) and to enforce all of its rights and remedies under
this Lease, including the right to recover rent and other sums as
they become due, plus interest at the Agreed Interest Rate from the
due date of each installment of rent or other sum until paid.
(ii) Termination. Landlord may terminate this Lease by giving Tenant
written notice of termination. On the giving of the notice all of
Tenant's rights in the Premises shall terminate. Upon the giving of
the notice of termination, Tenant shall surrender and vacate the
Premises in the condition required by Paragraph 34, and Landlord may
re-enter and take possession of the Premises and all the remaining
improvements or property and eject Tenant of any of Tenant's
subtenants, assignees or other person or persons claiming any right
under or through Tenant or eject some and not others or eject none.
This Lease may also be terminated by a judgment specifically
providing for termination. Any termination under this Paragraph
15.B(ii) shall not release Tenant from the payment of any sum then
due Landlord or from any claim for damages or rent previously
accrued or then accruing against Tenant or relating to events
accruing prior to such termination. In no event shall any one or
more of the following actions by Landlord constitute a termination
of this Lease:
(a) maintenance and preservation of the Premises;
(b) efforts to relet the Premises;
(c) appointment of a receiver in order to protect Landlord's
interest hereunder;
(d) consent to any subletting of the Premises or assignment of
this Lease by Tenant, whether pursuant to provisions hereof
concerning subletting and assignment or otherwise; or
(e) any other action by Landlord or Landlord's Agents intended to
mitigate the adverse effects from any breach of this Lease by
Tenant.
(iii) Damages. In the event this Lease is terminated pursuant to Paragraph
15.B or otherwise, Landlord shall be entitled to damages in the
following sums:
(a) the worth at the time of award of the unpaid rent which has
been earned at the time of termination; plus
(b) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination
until the time of award
<PAGE> 42
exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(c) the wroth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; and
(d) any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom,
including, without limitation, the following: (i) expenses for
clearing, repairing or restoring damage to the Premises for
which Tenant is responsible; (ii) real estate broker's fees,
advertising costs and
15
<PAGE> 43
other expenses of reletting the Premises fairly allocable to
the remainder of the Lease Term; (iii) costs of carrying the
Premises such as Property Taxes and insurance premiums
thereon, utilities and security precautions until the Premises
are released (but only to the extent not included in
calculating damages pursuant to Paragraphs 15.B(iii)(a), (b)
and (c)); (iv) expenses in retaking possession of the
Premises; (v) reasonable attorneys' fees and court costs; and
(vi) any unamortized real estate brokerage commission paid in
connection with this Lease.
The "worth at the time of award" of the amounts referred to in Paragraphs
15.B(iii)(a) and (b) shall be computed by allowing interest at the Agreed
Interest Rate. The "worth at the time of award" of the amounts referred to
in Paragraph 15.B(iii)(c) shall be computed by discounting such amount at
the discount rate of the Federal Reserve Board of San Francisco at the
time of award plus one percent (1%). The term "rent" as used in this
Paragraph shall include all sums required to be paid by Tenant to Landlord
pursuant to the terms of this Lease.
16
<PAGE> 44
Page 17
<PAGE> 45
18. Mechanics' Liens. Tenant shall (i) pay for all labor and services
performed for materials used by or furnished to Tenant or any contractor
employed by Tenant with respect to the Premises, and (ii) indemnify,
defend and hold Landlord and the Premises harmless and free from and shall
promptly cause to be removed any liens, claims, demands, encumbrances or
judgments created or suffered by reason of any labor or services performed
for, materials used or furnished to Tenant
18
<PAGE> 46
or any contractor employed by Tenant with respect to the Premises, (iii)
give notice to Landlord in writing five (5) business days prior to
employing any laborer or contractor to perform services related to, or
receiving materials for use upon the Premises, and (iv) permit Landlord to
post a notice of nonresponsibility in accordance with the statutory
requirements of California Civil Code Section 3094 or any amendment
thereof. In the event Tenant is required to post an improvement bond with
a public agency in connection with the above, Tenant agrees to include
Landlord as an additional obligee. Nothing herein shall prohibit Tenant
from contesting any claim for labor, services or materials, provided
Tenant complies with the provisions of this Paragraph 18.
19. Inspection of the Premises. Tenant shall permit Landlord and its Agents to
enter the Premises at any reasonable time for the purpose of inspecting
the same, performing Landlord's maintenance and repair responsibilities,
making alterations or improvements to the Premises or to the Building,
posting notices of nonresponsibility for alterations, additions or
repairs, and/ if Tenant has not effectively exercised its option to extend
the Lease Term and such extension option has expired, at any time within
eighteen (18) months prior to expiration of this Lease, to place upon the
Premises ordinary "For Lease" or "For Sale" signs, and, to show the
Premises and Building to prospective tenant and brokers, provided that
with respect to any such entry, other than in the case of an emergency,
Landlord shall have given Tenant at least twenty-four (24) hours prior
written notice of intent to enter the Premises, shall be accompanied by a
representative of Tenant (if Tenant requests and provides such
representative), shall comply with any security procedures of Tenant while
therein, and at all times shall use commercially reasonable efforts to
minimize interference with Tenant's use of the Premises.
20. Compliance with Laws.
A. Obligation of Tenant. Tenant shall, at its own cost, comply with all
Laws now in force or which may hereafter be in force pertaining to the use
and occupancy of the Premises by Tenant and its Agents. The judgment of
any court of competent jurisdiction or the admission of Tenant in any
action or proceeding against Tenant, whether Landlord be a party thereto
or not, that Tenant has violated any such Laws in the use and occupancy of
the Premises shall be conclusive of the (act that such violation by Tenant
has occurred.
B. Right to Contest. Tenant shall have the right to contest or otherwise
review by appropriate legal or administrative proceedings the application
of any Law or insurance underwriters requirement to the use by Tenant of
the Premises. If Tenant desires to so contest any such Law or requirement,
Tenant shall give Landlord written notice of its intention to do so and
may conduct such contest or other reviews so long as it pays all costs,
and compliance therewith maybe held in abeyance pending completion of such
proceedings. Tenant shall protect and indemnify Landlord against any and
all expenses or damages resulting from such contest or other proceeding.
21. (i) The Lender must consent in writing to this Lease and agree
in writing that, so long as there does not then exist any
Event of Tenant's Default, in the event of foreclosure of the
mortgage or deed of trust the Lender shall recognize the
tenancy of Tenant on the terms contained herein and this Lease
shall remain in full force and effect.
(ii) If the instrument effecting subordination provides that upon
foreclosure of the mortgage or deed of trust the Lender (or
any successor in interest) is not liable for the full and
complete performance of all of the obligations of the Landlord
under this Lease (e.g., the completion
<PAGE> 47
of improvements to be constructed by the Landlord), then such
agreement shall provide that if a foreclosure of such mortgage
or deed of trust does occur and the Lender (or its
19
<PAGE> 48
successor in interest) at any time thereafter relies upon such
provision to avoid performance of any obligation of the
Landlord contained in this Lease thus causing a material
interference with Tenant's use of the Premises, then in that
limited circumstance Tenant shall have the following rights:
(i) Tenant may terminate this Lease; or (ii) Tenant may
perform the obligation that such Lender (or successor in
interest) has elected not to perform and deduct the cost
thereof (with interest at the Agreed Interest Rate from date
of expenditure until reimbursement) from the payments of the
Base Monthly Rent until Tenant has been fully reimbursed for
the cost of such performance.
(iii) With respect to any Lender having a security interest in the
Premises as of the Commencement Date, such Lender shall
execute a non-disturbance agreement in accordance with the
aforementioned terms within ninety (90) days after the
Commencement Date. If such non-disturbance agreement is not
executed within such ninety (90) day period then Tenant shall
have the option at any time prior to the execution by the
Lender of such non-disturbance agreement, but shall not be
obligated to do so, to terminate this Lease whereupon the
Previous Lease shall be reinstated and Tenant shall pay to
Landlord the amount by which (i) all sums which would
otherwise have been payable by Tenant under the Previous Lease
during the period commencing April 1, 1992 and continuing
through the date of such termination, exceeds (ii) all amounts
actually paid by Tenant during the same period.
22. Holding Over. This Lease shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after expiration
shall not constitute a renewal or extension or give Tenant any rights in
or to the Premises except as expressly provided in this Lease. Any holding
over after the expiration with the consent of Landlord shall be construed
to be a tenancy from month to month, at one hundred twenty-five percent
(125%) of the Base Monthly Rent for the last month of the Lease Term, and
shall otherwise be on the terms and conditions herein specified insofar as
applicable.
24. Attorneys' Fees. In the event either party shall bring any action or legal
proceeding for damages for any alleged breach of any provision of this
Lease, to recover rent or possession of the Premises, to terminate this
Lease, or to enforce, protect or establish any term or covenant of this
Lease or right or remedy of either party, the prevailing party shall be
entitled to recover as a part of such action or proceeding reasonable
attorneys' fees and court costs, including attorneys' fees and costs for
appeal, as may be fixed by the court or jury. The term "prevailing party"
shall mean the party who received substantially the relief requested,
whether by settlement, dismissal, summary judgment, judgment or otherwise.
25. Nonassignment.
B. Notice Required. If Tenant desires to assign its interest in this Lease
or sublet the Premises or transfer any interest of Tenant therein, or
permit the use of the Premises by another party (hereinafter collectively
referred to as a "Transfer"),
21
<PAGE> 49
Tenant shall give Landlord at least fifteen (15) days prior written notice
of the proposed Transfer and of the terms of such proposed Transfer,
including, but not limited to, the name and legal composition of the
proposed transferee, a financial statement of the proposed transferee, the
nature of the proposed transferee's business to be carried on in the
Premises, the payment to be made or other consideration to be given on
account of the Transfer, and such other pertinent information as may be
requested by Landlord, all in sufficient detail to enable Landlord to
evaluate the proposed Transfer and the prospective transferee.
C. Landlord's Right to Share in Net Subrent Profit. If Landlord consents to a
Transfer proposed by Tenant, Tenant may enter into such Transfer, and if
Tenant does so, the following shall apply to such Transfer (but not to any
Transfer described by Paragraph 25.D):
(i) If Tenant assigns its interest in this Lease, then Tenant shall pay
to Landlord fifty percent (50%) of all consideration received by
Tenant over and above (a) the assignee's agreement to assume the
obligations of Tenant under this Lease, and (b) all "Permitted
Transfer Costs" (as defined in Paragraph 25.C(v)). In the case of
assignment, the amount of consideration owed to Landlord shall be
paid to Landlord on the same basis, whether periodic or in lump sum,
that such consideration is paid to Tenant by the assignee.
(ii) If Tenant sublets any part of the Premises, then with respect to the
space so subleased, Tenant shall pay to Landlord fifty percent (50%)
of the positive difference, if any, between (a) all rent and other
consideration paid by the subtenant to Tenant, less (b) all
Permitted Transfer Costs and all payments of the Base Monthly Rent
and Additional Rent fairly allocable to that part of the Premises
affected by such sublease. Such amount shall be paid to Landlord on
the same basis, whether periodic or in lump sum, that such rent and
other consideration is paid to Tenant by its subtenant. In
calculating Landlord's share of any periodic payments, all such
costs permitted to be deducted from the gross consideration received
by Tenant that have been paid by Tenant shall be first recovered by
Tenant.
(iii) Tenant's obligations under this Paragraph 25.C. shall survive any
Transfer. At the time Tenant makes any payment to Landlord required
by this Paragraph 25.C., Tenant shall deliver an itemized statement
of the method by which the amount to which Landlord is entitled was
calculated, certified by Tenant as true and correct. Landlord shall
have the right at reasonable intervals to inspect Tenant's books and
records relating to the payments due hereunder. Upon request
therefor, Tenant shall deliver to Landlord copies of all bills,
invoices or other documents upon which its calculations are based.
(iv) As used in this Paragraph 25.C, the term "consideration" shall mean
any consideration of any kind received by Tenant as a result of the
Transfer if such consideration is paid or given in exchange for
Tenant's interest in this Lease or in the Premises.
(v) As used herein, the term "Permitted Transfer Costs" shall mean the
following: (a) all reasonable leasing commissions paid to third
parties not affiliated with Tenant in order to obtain the Transfer
in question; (b) all reasonable attorneys' fees incurred by Tenant
with respect to the Transfer in question; (c) the cost of
Alterations that must be made by Tenant in order to obtain the
Transfer in question; (d) the amount of the Base Monthly Rent and
all Additional Rent paid by Tenant with respect to that part of the
Premises affected by the Transfer in question for that period of
time during which such part of the Premises was vacant and actively
being marketed by sublease or assignment so long as at the
commencement of such vacancy previous notice of such vacancy was
delivered to Landlord and Landlord was able to inspect and verify
same; and (c) any of the foregoing types of costs paid or incurred
by Tenant with respect to prior Transfers which Tenant did not
recoup (after first paying the Base Monthly Rent and Additional Rent
fairly allocable to
<PAGE> 50
the space affected by such prior Transfers) from rent and other
consideration paid by the subtenants or assignees that were parties
to such prior Transfers.
(vi) In the event Tenant shall assign the Lease or sublet the Premises or
request the consent of Landlord to any assignment or subletting or
if Tenant shall request the consent of Landlord for any act that
Tenant proposes to do then Tenant shall pay Landlord's reasonable
attorney's fees incurred in connection therewith up to One Thousand
Dollars ($1,000) per event, as such amount is adjusted pursuant to
Paragraph 41.
22
<PAGE> 51
EXHIBIT B
(IMAGE NOT SHOWN)
<PAGE> 52
<TABLE>
<CAPTION>
AMORTIZATION SCHEDULE MONTHLY PAYMENTS
<S> <C> <C>
PRINCIPAL AMOUNT $126,467.00
INT RATE/YR (WHOLE NUMBERS) 9
PAYMENT AMOUNT $ 3,147.14
NUMBER OF PAYMENTS 48
STARTING DATE.......................... YEAR 1996
MONTH 2
DAY 1
</TABLE>
<TABLE>
<CAPTION>
================================================================================
# DATE ANN. INT. PAYMENT INTEREST PRINCIPAL BALANCE
================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 Feb-96 $3,147.14 $948.50 $2,198.64 $124,268.36
2 Mar-96 $3,147.14 $932.01 $2,215.13 $122,053.24
3 Apr-96 $3,147.14 $915.40 $2,231.74 $119,821.49
4 May-96 $3,147.14 $898.66 $2,248.48 $117,573.02
5 Jun-96 $3,147.14 $881.80 $2,265.34 $115,307.67
6 Jul-96 $3,147.14 $864.81 $2,282.33 $113,025.34
7 Aug-96 $3,147.14 $847.69 $2,299.45 $110,725.89
8 Sep-96 $3,147.14 $830.44 $2,316.70 $108,409.20
9 Oct-96 $3,147.14 $813.07 $2,334.07 $106,075.12
10 Nov-96 $3,147.14 $795.56 $2,351.58 $103,723.55
11 Dec-96 $3,147.14 $777.93 $2,369.21 $101,354.33
12 Jan-97 $3,147.14 $760.16 $2,386.98 $ 98,967.35
13 Feb-97 $3,147.14 $742.26 $2,404.88 $ 96,562.47
14 Mar-97 $3,147.14 $724.22 $2,422.92 $ 94,139.55
15 Apr-97 $3,147.14 $706.05 $2,441.09 $ 91,698.45
16 May-97 $3,147.14 $687.74 $2,459.40 $ 89,239.05
17 Jun-97 $3,147.14 $669.29 $2,477.85 $ 86,761.20
18 Jul-97 $3,147.14 $650.71 $2,496.43 $ 84,264.77
19 Aug-97 $3,147.14 $631.99 $2,515.15 $ 81,749.62
20 Sep-97 $3,147.14 $613.12 $2,534.02 $ 79,215.60
21 Oct-97 $3,147.14 $594.12 $2,553.02 $ 76,662.58
22 Nov-97 $3,147.14 $574.97 $2,572.17 $ 74,090.41
23 Dec-97 $3,147.14 $555.68 $2,591.46 $ 71,498.94
24 Jan-98 $3,147.14 $536.24 $2,610.90 $ 68,888.05
25 Feb-98 $3,147.14 $516.66 $2,630.48 $ 66,257.57
26 Mar-98 $3,147.14 $496.93 $2,650.21 $ 63,607.36
27 Apr-98 $3,147.14 $477.06 $2,670.08 $ 60,937.27
28 May-98 $3,147.14 $457.03 $2,690.11 $ 58,247.16
29 Jun-98 $3,147.14 $436.85 $2,710.29 $ 55,536.88
30 Jul-98 $3,147.14 $416.53 $2,730.61 $ 52,806.26
31 Aug-98 $3,147.14 $396.05 $2,751.09 $ 50,055.17
32 Sep-98 $3,147.14 $375.41 $2,771.73 $ 47,283.44
33 Oct-98 $3,147.14 $354.63 $2,792.51 $ 44,490.93
34 Nov-98 $3,147.14 $333.68 $2,813.46 $ 41,677.47
35 Dec-98 $3,147.14 $312.58 $2,834.56 $ 38,842.91
36 Jan-99 $3,147.14 $291.32 $2,855.82 $ 35,987.10
37 Feb-99 $3,147.14 $269.90 $2,877.24 $ 33,109.86
38 Mar-99 $3,147.14 $248.32 $2,898.82 $ 30,211.04
</TABLE>
EXHIBIT C
PAGE 1 OF 2
<PAGE> 53
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
39 Apr-99 $3,147.14 $226.58 $2,920.56 $ 27,290.49
40 May-99 $3,147.14 $204.68 $2,942.46 $ 24,348.02
41 Jun-99 $3,147.14 $182.61 $2,964.53 $ 21,383.49
42 Jul-99 $3,147.14 $160.38 $2,986.76 $ 18,396.73
43 Aug-99 $3,147.14 $137.98 $3,009.16 $ 15,387.57
44 Sep-99 $3,147.14 $115.41 $3,031.73 $ 12,355.83
45 Oct-99 $3,147.14 $ 92.67 $3,054.47 $ 9,301.36
46 Nov-99 $3,147.14 $ 69.76 $3,077.38 $ 6,223.98
47 Dec-99 $3,147.14 $ 46.68 $3,100.46 $ 3,123.52
48 Jan-00 $3,146.95 $ 23.43 $3,123.52 ($0.00)
- - --------------------------------------------------------------------------------
$151,062.53 $24,595.53 $126,467.00
</TABLE>
EXHIBIT C
PAGE 2 OF 2
<PAGE> 54
26. Successors. This Lease shall be binding on the parties hereto and on
respective heirs, successors and assigns (to the extent the Lease is
assignable).
27. Lender Protection. In the event of any default on the part of Landlord,
Tenant give notice by registered or certified mail to any Lender whose
address shall have been furnished it, and shall offer such Lender a
reasonable opportunity to cure the default, including time to obtain
possession of the Premises by power of sale or judicial foreclosure, if
such should prove necessary to effect a cure.
28. Estoppel Certificates and Financial Statements. At all times during the
Lease Term, each party agrees, following any request by the other party,
promptly to execute and deliver to the requesting party an estoppel
certificate (i) certifying that this Lease is unmodified and in full force
and effect or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect,
(ii) stating the date to which the rent and other charges are paid in
advance, if any, (iii) acknowledging that there are not, to the certifying
party's knowledge, any uncured defaults on the part of any party hereunder
or, if there are uncured defaults, specifying the nature of such defaults,
and (iv) certifying such other information about the Lease as may be
reasonably required by the requesting party. A failure to deliver an
estoppel certificate within ten (10) days after delivery of a request
therefor shall be a conclusive admission that, as of the date of request
for such statement, (a) this Lease is unmodified except as may be
represented by the requesting party in said request and is in full force
and effect, (b) there are no uncured defaults in the requesting party's
performance, and (c) no rent has been paid in advance for more than thirty
(30) days. At any time during the Lease Term, Tenant shall, upon ten (10)
days prior written notice from Landlord, provide Tenant's most recent
financial statement and financial statements covering the twenty-four (24)
month period prior to the date of such most recent financial statement to
Landlord, any existing Lender or to any potential Lender or buyer of the
Premises. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of
Tenant, shall be audited by an independent certified public accountant.
Failure to deliver such statements within ten (10) days after receipt of
written notice from Landlord of delinquency in delivery of such statement
shall be an Event of Tenant's Default under Paragraph 15. Landlord shall
use reasonable efforts to keep confidential all financial statements
delivered to it by Tenant pursuant to this paragraph and shall cause any
potential Lender or buyer of the Premises to whom such statements are
delivered also to agree to use reasonable efforts to keep such statements
confidential.
29. Surrender of Lease Not Merger. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing
subleases or subtenants or operate as an assignment to Landlord of any or
all such subleases or subtenants.
30. Waiver. The waiver by Landlord or Tenant of any breach of any term,
covenant or condition or any subsequent breach of the same or any other
term, covenant or condition herein contained shall not be deemed to be a
waiver of such term, covenant or condition or any subsequent breach of the
same or any other term, covenant or condition herein contained.
31. General.
A. Captions. The captions and paragraph headings used in this Lease are
for the purposes of convenience only. They shall not be construed to limit
or extend the
<PAGE> 55
meaning of any part of this Lease.
23
<PAGE> 56
B. Transfers by Landlord; Limitation on Tenant's Recourse for Landlord
Default: Landlord and its successors in interest shall have the right to
transfer their interest in this Lease and the Premises at any time and to
any personal or entity. In the event of any such transfer, the Landlord
originally named herein (and, in the case of any subsequent transfer, the
transferor) from the date of such transfer shall be relieved of all
liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer except for those relating
to any funds in which Tenant has an interest that are in the hands of
Landlord or the then transferor at the time of such transfer which are not
turned over the transferee; provided, however, that the foregoing release
shall not be effective unless the transferee shall have executed an
assumption agreement by which it agrees to perform all of the obligations
of the Landlord under this Lease which accrue after the date of such
transfer or which are then in default. The release of a transferring
Landlord of its obligations under Paragraph 37.G concerning Hazardous
Materials shall further be conditioned upon the transferee having, at the
time of transfer of title to the Premises, either (i) a net worth
determined in accordance with generally accepted accounting principles of
at least $5,000,000 )as such amount is adjusted pursuant to Paragraph 41)
which net worth is also not less than twenty-five percent (25%) of the
value of all assets of such transferee, or (ii) a net worth determined in
accordance with generally accepted accounting principles of at least
$15,000,000 (as adjusted pursuant to Paragraph 41). In addition, if
Landlord voluntarily transfers fee title to the Premises prior to
completion of the renovation improvements required under Paragraph 2.D.,
then Landlord or the transferor shall not be relieved of its obligations
to complete the Renovation Improvements in accordance with the Lease
unless Landlord shall upon such transfer deposit into an escrow under the
control of Landlord's transferee and Tenant, as security for the
performance of all obligations under the Improvement Agreement, an amount
equal to Landlord's reasonable estimate of the costs which will then be
required to complete such renovation improvements, or shall deliver to
Tenant a surety bond in such amount as security for the obligation of
Landlord's transferee with respect to the completion of the renovation
improvements which bond shall be in form, and be issued by such surety
company, as is reasonably acceptable to Tenant. The obligations of
Landlord under this Lease do not constitute personal obligations of the
partners, directors, officers, shareholders, or trustees of Landlord, or
of the partners, directors, officers, shareholders or trustees of
Landlord's partners ("Beneficial Owners") except with respect to Landlord
and its general partners (but not the partners of its general partners) as
provided below. For the realization of any claims against Landlord arising
under this Lease or proceeds therefrom (e.g. condemnation proceeds,
insurance proceeds, or rent) (the "Building Assets") for the satisfaction
of such obligations and not against the other assets of Landlord or its
Beneficial Owners. Notwithstanding the foregoing, the following shall
apply only with respect to claims by Tenant directly resulting from any
and all defaults by Landlord of its obligations to complete the renovation
improvements and/or Paragraph 37.G concerning Hazardous Materials
("Special Defaults"): (i) for Special Defaults, Tenant shall first seek
recourse against the Building Assets but not to exceed $5,000,000 (as
adjusted pursuant to Paragraph 41) for each claim and in the aggregate;
(ii) to the extent Tenant is unable to recover all amounts to which it is
entitled for Special Defaults from recourse against Building Assets,
Landlord and its general partners (but not any partners or Beneficial
Owners of such general partners) shall be liable to pay the short fall in
Tenant's recovery to the extent necessary to provide Tenant with an
aggregate total recovery from Building Assets and such additional payments
by Landlord and its general partners of the lesser of $5,000,000 (as that
amount is adjusted pursuant to Paragraph 41 hereof) or the aggregate
amount Tenant is entitled to recover from Landlord for Special Defaults
under the following three sentences; and (iii) the obligation of Landlord
and its general partners to make the additional contribution described in
clause (ii) immediately preceding (the "Special Contribution Obligation")
shall be limited as provided in the following three sentences. The parties
acknowledge that concurrently with the execution of this Lease, Landlord
and Tenant are executing other leases and option agreements (which, if
options are exercised, will lead to the execution of additional leases)
covering facilities in the Project (the "Other
<PAGE> 57
Leases"), and that each of the Other Leases contains a provision
substantially the same as that contained in the immediately preceding
sentence. Notwithstanding anything contained herein, in no event shall
Landlord and its general partners be required to pay more than $10,000,000
(as such amount is adjusted pursuant to Paragraph 41 hereof) in discharge
of the Special Contribution Obligations described herein or in the Other
Leases. In no event shall Landlord be liable for consequential damages,
such as lost revenues or lost profits, which may result from Landlord's
breach of its obligations to complete the Renovation Improvements set
forth in the Improvement Agreement.
C. Time. Time is of the essence for the performance of each term, covenant
and condition of this Lease.
D. Severability; Governing Law. In case any one or more of the provisions
contained herein, except for the payment of rent, shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provision of this Lease, but his Lease shall be construed as if such
invalid, illegal
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or unenforceable provision had not been contained herein. This Lease shall
be construed and enforced in accordance with the laws of the State of
California.
E. Joint and Several Liability. If Tenant is more than one person or
entity, each such person or entity shall be jointly and severally liable
for the obligations of Tenant hereunder.
F. Exhibits. All exhibits attached hereto and referred to herein are
incorporated herein by this reference.
G. Miscellaneous. Any executed copy of this Lease shall be deemed an
original for all purposes. As used herein, "party" shall mean Landlord or
Tenant, as the context implies. The language in all parts of this Lease
shall in all cases be construed as a whole according to its fair meaning,
and not strictly for or against Landlord or Tenant. when the context of
this Lease requires, the neuter gender includes the masculine, the
feminine, a partnership or corporation or joint venture, and the singular
includes the plural. The terms "shall", "will", and "agree" are mandatory.
The term "may" is permissive. When a party is required to do something by
this Lease, it shall do so at its sole cost and expense without right of
reimbursement from the other party unless specific provision is made
therefor. When a party is obligated not to perform any act, that party is
also obligated to restrain any others within its control from performing
said act, including agents, contractors and employees. The use herein of
the word "including," when following any general statement, term or matter
shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not non-limiting language (such as
"without limitation" or "but not limited to," or word of similar import)
is used with reference thereto, but rather shall be deemed to refer to all
other items or matters that could reasonably fall within the broadest
possible scope of such general statement, term or matter.
H. Survival. The following provisions of this Lease shall survive the
expiration or earlier termination of this Lease (but not if such early
termination results from the exercise by Tenant of any right of recission
of this Lease as set forth in Paragraph 3.A. above: 4.F.(3) (payment of
Percentage Share of Operating Expenses); 7.B. (payment of Percentage Share
of Property Taxes); 8.A. (Waiver and Indemnity); 9. (Utilities); 13.B.(iv)
(removal of alterations); 22 (Holding Over); 31.B. (Transfers by Landlord;
Limitation on Tenant's Recourse); 34 (Surrender); 37.F. (surrender; and
37.G. (Landlord's Obligations).
32. Signs. Tenant shall be entitled to install signs identifying its business
within the Project and exterior signs on the Building as described and in
accordance with an overall signage program to be approved by Landlord and
Tenant and subject to any Laws; provided, however, Landlord has previously
agreed to (i) allow Tenant its own separate identity signage from that of
the Project, and (ii) include in Tenant's signage program major entry to
Tenant's campus within the Project, secondary identity signage at
secondary entrances and directional signage to all of Tenant's buildings
within the Project. The cost of all exterior signage shall be paid by
Landlord. At the termination of this Lease, Tenant shall remove any signs
which it has placed on the Premises and shall repair any damage caused by
the installation or removal of such signs.
33. Interest on Past Due Obligations. Any amount due to Landlord or Tenant not
paid when due shall bear interest from the due date until paid at the
Agreed Interest Rate. Payment of such interest shall not excuse or cure
any default by Tenant under this Lease.
<PAGE> 59
34. Surrender of the Premises. On the last day of the Lease Term, or on sooner
termination of this Lease, Tenant shall surrender the Premises to Landlord
in their condition existing as of the Commencement Date, ordinary wear and
tear excepted, with all originally painted interior walls washed and other
interior walls cleaned, all damaged ceiling tiles and lighting lenses
replaced, all carpets shampooed and cleaned, the air conditioning and
heating equipment serviced and repaired by a reputable and licensed
service firm, all floors cleaned and waxed, all to the reasonable
satisfaction of Landlord, subject to the limitations on Tenant's
obligation to remove Alterations and restore the Premises to its prior
condition set forth in Paragraph 13. Nothing contained in this Paragraph
34 shall require Tenant to repair the effects of any condemnation, damage
or destruction or any other condition which Tenant is not required to
remedy under this Lease. Tenant shall remove all of Tenant's personal
property and Trade Fixtures from the Premises, and all property not so
removed shall be deemed abandoned by Tenant. Tenant, at its sole cost,
shall repair any damage to the Premises caused by the removal of Tenant's
Trade Fixtures, personal property, machinery and equipment, which repair
shall include the
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patching and filling of holes and repair of structural damage. If the
Premises are not so surrendered at the termination of this Lease, Tenant
shall indemnify Landlord against loss or liability resulting from delay by
Tenant in so surrendering the Premises, including, without limitations,
any claims made by any succeeding tenant or losses to Landlord due to lost
opportunities to lease to succeeding tenants.
35. Authority. The undersigned parties hereby warrant that they have proper
authority and are empowered to execute this Lease on behalf of Landlord
and Tenant, respectively.
36. Options to Extend.
A. Tenant shall have three (3) options to extend the Lease Term, each for
a period of five (5) years (each of which is referred to herein as an
"Option Term"). Each option may be exercised only by written notice given
to Landlord not earlier than twenty-four (24) months and not later than
eighteen (18) months prior to the expiration of the then existing Lease
Term. Tenant may not exercise any of such options at any time that there
exists an Event of Tenant's Default involving those events described in
Paragraph 15.A(iv), (vi) or (vii) or there exists an Event of Tenant's
Default that is capable of being cured but has not been cured by Tenant.
In all respects, the terms. covenants and conditions of this Lease shall
remain unchanged during each Option Term, except that the Base Monthly
Rent payable during each Option Term shall be increased in accordance with
Paragraph 36.B, Landlord shall have no obligation to fund additional
tenant improvements in the Premises or pay Tenant's brokerage commission,
if any, and there shall be no further option to extend the Lease Term at
the end of the third Option Term.
B. The Base Monthly Rent payable during each Option Term shall be ninety
percent (90%) of the "Fair Market Rent for the Premises" (as defined in
Paragraph 36.D) as of the first day of the Option Term in question. Base
Monthly Rent during an Option Term may be subject to an adjustment or
adjustments at such times, in such amount or using such formula, as may be
established in connection with determining the Fair Market Rent for the
Premises.
C. Property following exercise of each option to extend, the parties shall
meet and endeavor to agree upon the Fair Market Rent of the Premises. If
within fifteen (15) days after exercise of any of the options, the parties
cannot agree upon the Fair Market Rent for the Premises as of the first
day of the Option Term in question, the parties shall submit the matter to
binding appraisal in accordance with the following procedure; Within
thirty (30) days after exercise of the option, the parties shall either
(i) jointly appoint an appraiser for this purpose or (ii) failing this
joint action, separately designate a disinterested appraiser. No person
shall be appointed or designated an appraiser unless he has at least five
(5) years experience in appraising major commercial property in Alameda
County and is a member of a recognized society of real estate appraisers.
If within thirty (30) days after the appointment the two appraisers reach
agreement on the Fair Market Rent for the Premises as of the first day of
the Option Term in question, that value shall be binding and conclusive
upon the parties. If the two appraisers thus appointed cannot reach
agreement on the question presented within thirty (30) days after their
appointment, then the appraisers thus appointed shall appoint a third
disinterested appraiser have like qualifications. If within thirty (30)
days after the appointment of the third appraiser a majority of the
appraisers agree on the Fair Market Rent of the Premises as of the first
day of the Option Term in question, that value shall be binding and
conclusive upon the parties. If within thirty (30) days after the
appointment of the third appraiser a majority of the appraisers cannot
reach agreement on the question presented, then the three appraisers shall
each submit their independent appraisal to the parties, the appraisal
farthest from the median of the three appraisals shall be disregarded, and
the average of the remaining two appraisals shall be deemed to be the Fair
Market Rent of the Premises as of the first day of the Option Term in
question and
<PAGE> 61
shall be binding and conclusive upon the parties. Each party shall pay the
fees and expenses of the appraiser appointed by it and shall share equally
the fees and expenses of the third appraiser. If the two appraisers
appointed by the parties cannot agree on the appointment of the third
appraiser, they or either or them shall give notice of such failure to
agree to the parties and if the parties fail to agree upon the selection
of such third appraiser within ten (10) days after the appraisers
appointed by the parties give such notice, then either of the parties,
upon notice to the other party, may request such appointment by the
American Arbitration Association or, on its failure, refusal or inability
to act, may apply for such appointment to the presiding judge of the
Superior Court of Alameda County, California.
D. For purposes of this Paragraph, the term "Fair Market Rent for the
Premises" shall mean the going market rental and any adjustment or
adjustments to such time(s) and in such amount or using such formula as is
prevailing at the time of the commencement of the Option Term in question,
for comparably equipped space in buildings containing
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between 50,000 and 250,000 square feet, located within a five (5) mile
radius of the Premises, and in a condition comparable to the then
condition of the Premises, taking into account all alga uses for which the
Premises could be used without material alteration thereto and the value
of all the improvements in the Premises made by Landlord (but adjusting
for the age and then condition of such improvements) for a tenant
proposing to sign a lease for a similar term and having financial
qualifications similar to Tenant and using as a guide equivalent space in
the size range specified above of similar age, construction, quality, use
and location. There shall be excluded from any determination of "Fair
Market Rent of the Premises" the rental value attributable to any
improvements constructed by Tenant with its own funds and all Trade
Fixtures and personal property of Tenant located in the Premises. Any
determination of "Fair Market Rent of the Premises" shall take into
account rental concessions then prevailing in the market (e.g., "free
rent," lease assumptions, payment of moving expenses, etc.).
E. If the Base Monthly Rent for any Option Term is established by appraisal
conducted pursuant to Paragraph 36.C hereof and if Tenant does not, in its
sole discretion, approve the Fair Market Rent for the Premises established
for the Option Term in question as so established by appraisal, then
Tenant may rescind its exercise of the option in question by giving
Landlord written notice of such election to rescind within fifteen (15)
days after the Fair Market Rent for the Premises for the Option Term in
question is so established by appraisal. If Tenant so timely rescinds its
exercise of the option in question, then (i) the Lease shall expire on the
later to occur of either five hundred forty (540) days after Tenant's
notice of rescission is delivered to Landlord or on the date the Lease
would otherwise have expired absent such exercise of the option in
question by Tenant; (ii) if the Lease Term is extended as a result of
Tenant's rescission, then the Base Monthly Rent for the extended period
shall be that in effect prior to the delivery of Tenant's notice of
rescission; and (iii) Tenant shall pay all costs incurred by Landlord in
participating in any appraisal to establish the Fair Market Rent for the
Premises for the Option Term in question.
37. Hazardous Material.
A. Definitions. As used herein, the term "Hazardous Material" shall mean
any substance or material which has been determined by any state, federal
or local governmental authority to be capable of posing a risk of injury
to health, safety or property including all of those materials and
substances designated as hazardous or toxic by the Environmental
Protection Agency, the California Water Quality Control Board, the
Department of Labor, the California Department of Industrial Relations,
the Department of Transportation, the Department of Agriculture, the
Consumer Product Safety Commission, the Department of Health and Human
Services, the Food and Drug Administration or any other governmental
agency now or hereafter authorized to regulate materials and substances in
the environment. Without limiting the generality of the foregoing, the
term "Hazardous Material" shall include asbestos, PCB's, petroleum
products and all materials and substances listed under Article 11, or
defined as hazardous or extremely hazardous pursuant to Article 1 of Title
22 of the California Code of Regulations, Division 4, Chapter 30, as the
same shall be amended from time to time.
B. Use Restriction. Tenant shall not cause or allow anyone else to cause,
any Hazardous Materials (other than commercially reasonable quantities of
cleaning and office supplies for Tenant's use) to be used, generated,
stored, released or disposed of (collectively, "Use") on or about the
Premises, the Building or the Outside Areas without the prior written
consent of Landlord, which consent may be withheld in the sole discretion
of Landlord unless all of the conditions set forth in subparagraphs (i)
through (iii) below are met, in which event such consent shall not
unreasonably be withheld. In the event of any breach of Tenant which
<PAGE> 63
constitutes an Event of Tenant's Default of the covenants or conditions
set forth in this Paragraph B, in addition to all of its other remedies
under this Lease, Landlord may revoke any consent previously given with
respect to the Use of Hazardous Materials.
(i) The proposed Hazardous Material does not include freon, TCE,
hydrocarbons or nay hydrocarbon-based compounds or any Hazardous
Material that has been detected at any time at levels exceeding
"action levels" of any governmental agency in the soil or
groundwater of the Premises, and the Use does not involve: (1)
outside or underground storage; (2) storage of any quantities in
excess of those requiring the establishment of a Business Plan under
the provisions of Health & Safety Code Section 25503.5; (3) the
proposed Use does not involve manufacturing of commercial quantities
of any Hazardous Materials; or (4) above-ground or inside storage
unless Tenant has made appropriate provisions for leak protection,
leak detection and leak containment and such provisions are
compatible with Building systems.
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(ii) The tangible net worth of Tenant at the time it requests consent to
such Use is at least equal to $5,000,000 (as increased in accordance
with the percentage increase in the Consumer Price Index from the
Effective Date through the month prior to Tenant's request).
"Tangible net worth" shall mean, at any date, the sum of the capital
stock and additional paid-in capital stock and additional paid-in
capital plus retained earnings (or minus accumulated deficit) of
Tenant and its subsidiaries, on a consolidated basis, minus all
intangible assets of Tenant and its subsidiaries, including, without
limitation: (a) goodwill, trademarks, patents, patent application,
brand names, copyrights, franchises and deferred charges (including
unamortized debt discount and software development and other
research and development costs), determined in accordance with
generally acceptable accounting principles; (b) treasury stock; (c)
cash held in a sinking or other similar fund established for the
purpose of redemption or other retirement of capital stock; (d) to
the extent not already deducted from total assets, reserves for
depreciation, depletion, obsolescence or amortization of properties
and other reserves or appropriations of retained earnings which have
been or should be established in connection with business conducted
by the relevant corporation; (e) purchased intangibles; and (f) any
revaluation or other write-up in book value of assets subsequent to
the fiscal year of Tenant last ended at the date of this Lease. Such
tangible net worth shall be as reported by an independent certified
public accountant according to generally accepted accounting
principles.
(iii) Tenant, and/or any subtenant on whose behalf Tenant requests such
consent has not previously been cited or charged by any governmental
authority for improper use, storage or discharge of any Hazardous
Material and is not, and has not previously been involved, either as
a potentially responsible party, or otherwise, in any remediation or
clean-up of a release of Hazardous Material; provided, however, if
Tenant's proposed subtenant is an entity whose shares are publicly
traded, the subtenant explicitly assumes in writing the obligations
of Tenant under this Paragraph 37 with respect to those Hazardous
Materials used by such subtenant, on a joint and several basis, and
the net worth of such proposed subtenant, as determined in
accordance with generally acceptable account principles, is at least
$50,000,000, then this subparagraph (iii) shall not be applicable.
Upon seeking Landlord's consent, Tenant shall provide a complete list of
all Hazardous Materials proposed to be permitted on the Premises, the
maximum quantities to be used during any one-month period and a
description of the means which will be used to handle, store and remove
such materials from the Premises, Tenant shall obtain Landlord's consent
before using any additional Hazardous Materials on the Premises not
included in Tenant's most recent list, and shall provide written
certification to Landlord at least once during any twelve month period of
the term, and at any time within five business days of Landlord's request,
but not more often than four times during each twelve month period of the
continued accuracy of Tenant's prior disclosures with respect to the
Hazardous Materials then being used on the Premises. Tenant at its sole
cost shall strictly comply with all Laws relating to the Use by Tenant or
its Agents of Hazardous Materials. Landlord and its Agents may, from time
to time, and without prior notice to Tenant, inspect the Premises for the
purposes of confirming the presence of Hazardous Materials thereon and the
means and methods then being used to handle and dispose of such materials,
but Landlord shall not have an obligation so to do. The costs of
inspections by Landlord's consultants shall be paid by Tenant as an
Operating Expense, and if, as a result of any such inspection, or
otherwise, Landlord determines that any certification by Tenant is
inaccurate, then, promptly following Landlord's request, Tenant shall
cause the proper legal removal from the Premises of Hazardous Materials
not previously disclosed and opposed by Landlord, and shall cease all use
or processes for which Landlord has not previously given its consent. If
the Use of Hazardous Materials on the Premises caused by Tenant or its
Agents results in contamination of the Premises or any soil or groundwater
in, under or about the Premises, Tenant, at its expense, shall promptly
take all actions necessary to remediate such contamination and otherwise
to comply with the
<PAGE> 65
requirement of any governmental agency or other authority having
jurisdiction over the Premises. Tenant shall defend, hold harmless and
indemnify Landlord and its Agents and employees with respect to (i) all
claims, damages (including consequential damages such as those which may
result from Landlord's inability to obtain financing for the Building),
costs (including attorneys' fees) and liabilities arising out of or in
connection with the Use of any Hazardous Material in or about the Premises
by Tenant or its Agents, and (ii) any disposal or release of any Hazardous
Material on or under the Building emanating from those portions of the
Premises which Tenant has exclusive control occurring after the date
possession of the Premises, or the portion where such Material is disposed
or released, is delivered to Tenant and prior to the termination of this
Lease, and that is not the result of the negligence or willful misconduct
of Landlord or its Agents. In the event of any dispute between Landlord
and Tenant concerning Tenant's indemnification and defense obligations
under this Paragraph 37.B. for so long as Tenant uses the Premises solely
for general office purposes, Landlord shall have the burden of showing by
the preponderance of the evidence that the Use of any Hazardous Material
was caused buy Tenant or its Agents. If the Premises has been used
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other than general office purposes by Tenant or its Agents, then Tenant
shall bear the burden of showing by the same burden of proof that neither
it nor any of its Agents caused the contamination of the Premises or any
such soil or groundwater or such claims, damages or liabilities.
C. Compliance. Tenant, at its sole cost, shall strictly comply with all Laws
relating to the Use by Tenant of Hazardous Materials. If the presence of
Hazardous Materials on the Premises caused by Tenant or its Agents results
in contamination of the Premises or any soil or groundwater in, under or
about the Premises, Tenant, at its expense, shall promptly take all
actions necessary to remediate such contamination and otherwise to comply
with the requirements of any governmental agency or other authority having
jurisdiction over the Premises. Tenant shall not suffer any lien to be
recorded against the Premises as a consequence of the disposal of a
Hazardous Material on the Premises by Tenant or its Agents, including any
so-called state, federal or local "super fund" lien related to the
"clean-up" of a Hazardous Material in or about the Premises. Tenant shall
promptly, following Tenant's becoming aware of the same, notify Landlord
of any injury, test, investigation or enforcement proceeding by or against
Tenant or the Premises concerning a Hazardous Material. If Landlord
reasonably believes that Tenant has violated the provisions of this
Paragraph 37 and, if following notice by Landlord to Tenant, Tenant has
failed to correct such violation in a timely manner, Landlord shall have
the right to appoint a consultant to conduct an investigation to determine
whether Hazardous Materials are being used, stored and disposed of in an
appropriate manner. If Tenant has violated any Law or covenant in this
Lease regarding the Use of Hazardous Materials on or about the Premises,
Tenant shall reimburse Landlord for the cost of such investigation.
Tenant, at its expense, shall comply with all reasonable recommendations
of the consultant required to conform Tenant's Use of Hazardous Materials
to the requirements of applicable Law or to fulfill the obligations of
Tenant hereunder.
D. Assignment and Subletting. In evaluating a proposed Transfer and the
prospective transferee in accordance with Paragraph 25, Landlord may take
into account the proposed transferee's history of compliance with Laws
regulating Hazardous Materials.
E. Notice. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Premises, and (ii) any contamination of the Premises by Hazardous
Materials which constitutes a violation of any Law regulating Hazardous
Materials. At any time during the Lease Term, Tenant shall, within five
(5) days after written request therefor received from Landlord, disclose
in writing all Hazardous Materials that are being used by Tenant on the
Premises, the Use of which requires Tenant to make written reports to any
governmental agency under any Law regulating Hazardous Materials which
disclosure by Tenant shall state the nature of such Use.
F. Surrender. Upon the expiration or earlier termination of the Lease,
Tenant, at its sole cost, shall remove all Hazardous Materials from the
Premises and from the groundwater under the Premises which Tenant
introduced to the Premises to the extent required by Law or to that level
that a prudent owner would do on its own account (taking into account
cost, legal requirements, anticipated changes in legal requirements and
potential threat to groundwater), with disputes settled by binding
arbitration under the Commercial Rules of the American Arbitration
Association. Tenant shall indemnify and hold Landlord harmless from all
claims, liabilities, expenses (including attorneys' fees and investigation
costs) penalties, fines, response costs and damages resulting from
Tenant's failure to surrender the Premises as required by this Paragraph,
including, without limitation, any claims or damages in connection with
the condition of the Premises, including damages occasioned by the
inability to relet the Premises or a reduction in the fair market
<PAGE> 67
and/or rental value of the Premises by reason of the existence of any
Hazardous Materials disposed of by Tenant in or around the Premises. Upon
the expiration or earlier termination of the Lease, Landlord, at its
option, may through outside consultants, perform an exit environmental
site assessment of the Premises, the cost of which would be paid by Tenant
if (i) Tenant has not increased the intensity of use of Hazardous
Materials over the Lease Term but there is contamination at the Premises
caused by Tenant, or (ii) Tenant (or a subtenant) has increased the
intensity of use of Hazardous Materials over the Lease Term at the
Premises. The foregoing notwithstanding, Tenant's payment of such
assessment shall be limited to $10,000, as adjusted pursuant to Paragraph
41, unless such assessment indicates that Tenant has caused such
contamination.
G. Landlord's Obligations. Landlord represents and warrants that, without
independent investigation, it has no knowledge of any Hazardous Materials
present in, on or under the Premises other than as described in those
reports described in Exhibit "D" (the "Existing Hazardous Material
Condition"). Landlord, at its sole cost, shall comply with all Laws
(including the federal law known as "CERCLA" and its California
counterpart) which impose liability or responsibility upon either
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Landlord or Tenant to investigate, remediate or otherwise take any action
with respect to the following: (i) the Existing Hazardous Material
Condition; and (ii) compliance with all Laws regulating Hazardous
Materials affecting the Premises to the extent that Landlord is legally
obligated to do so by such Laws and such compliance is not made the
responsibility of Tenant pursuant to Paragraph 37.B, 37.C, and 37.F.
Landlord shall indemnify, defend and hold Tenant and its Agents harmless
from and against all liabilities, claims, penalties, fines, response
costs, and other expenses (including reasonable attorneys' fees) which
result from Landlord's failure to perform the obligation stated in the
immediately preceding sentence.
38. Approvals. Whenever this Lease requires an approval, consent, designation,
determination or judgment by either Landlord or Tenant, such approval,
consent, designation, determination or judgment shall not be unreasonably
withheld or delayed.
39. Reasonable Expenditures. Any expenditure by a party provided or required
under the Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be limited to the fair
market value of the goods and services involved, shall be reasonably
incurred, and shall be substantiated by documentary evidence available for
inspection and review by the other party or its representative during
normal business hours.
40. Right to Perform Other Party's Covenants. If either party shall at any
time fail to make any payment or perform any other act on its part to be
made or performed under this Lease, and such failure shall continue for
thirty (30) days following notice to the other party and, in the case of
Landlord, to Landlord's Lender(s), of such failure (unless the nature of
the obligation is such that it cannot be completed within thirty (30)
days, in which event the defaulting party need only commence performance
within the thirty (30) day period and thereafter diligently complete the
same), the other party may, but shall not be obligated to and without
waiving or releasing such party from any obligation of such party under
this Lease, make such payment or perform such other act to the extent the
other party may deem desirable, and in connection therewith pay expenses
and employ counsel. Notwithstanding the above, in the event such failure
to perform shall create any unsafe or other emergency condition, the other
party may take such actions as it deems reasonably necessary for
protection of person and property in and about the Premises and shall
promptly thereafter notify the other party of such actions. All sums so
paid by the other party and all penalties, interest and costs in
connection therewith shall be due and payable by the defaulting party on
the next day after any such payment by the other party, together with
interest at the Agreed Interest Rate from such date to the date of payment
thereof by the defaulting party to the other party. All such sums owed by
Tenant to Landlord under this Paragraph 40 shall be deemed Additional
Rent.
41. CPI Adjustment. Where provisions of this Lease specify dollar amounts and
state that they are to be adjusted pursuant to this Paragraph (e.g.,
Paragraph 13.B(i) and 31.B), at the time such provisions are applied
during the Lease Term the amount in question shall be adjusted to that
amount which is equal to the product obtained by multiplying (i) the
amount originally specified in the provision in question as of the
Effective Date, by (ii) a fraction the numerator of which is the Consumer
Price Index published immediately preceding the date upon which such
provision is to be applied and the denominator of which is the Consumer
Price Index published immediately preceding the Effective Date.
42. Integration and Amendments. Except as expressly provided herein, Tenant
<PAGE> 69
acknowledges that neither the Landlord nor Landlord's Agent has made any
representation or warranty as to the suitability of the Premises to the
conduct of Tenant's business. Any agreement, warranties or representations
not expressly contained herein shall in no way bind either Landlord or
Tenant, and Landlord and Tenant expressly waive all claims for damages by
reason of any statement, representation, warranty, promise or agreement,
if any, not contained in this Lease. This Lease, together with all
Exhibits hereto, constitutes the entire understanding between the parties
regarding Tenant's lease of the Premises and no addition to, or
modification of, any term or provision of this Lease shall be effective
until set forth in writing signed by both Landlord and Tenant.
43. Memorandum of Lease. Concurrently with the execution hereof, the parties
shall execute, acknowledge and record a Memorandum of Lease referencing
Tenant's options to extend the term in a form approved by Landlord and
Tenant.
44. Non-Discrimination. Tenant covenants for itself, its heirs, executors,
administrators, and assigns, and all persons claiming under or through it,
and this Lease is made and accepted upon it subject to the condition that
there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, creed, religion, sex, marital
status, national origins, or ancestry in the leasing, subleasing,
transferring, use, occupancy, tenure, or enjoyment of
30
<PAGE> 70
the Premises herein leased nor shall the Tenant itself, or any person
claiming under or through it, establish or permit any such practice or
practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenant, subtenants,
vendees in the Premises.
45. Brokerage Commissions. Each party hereto represents and warrants to the
other that it has not had any dealings with any real estate brokers,
leasing agents or salesmen, other than Cooper/Brandy Commercial Real
Estate and Steven L. Meckfessel (collectively "Brokers"), or incurred any
obligations for the payment of real estate brokerage commissions or
finder's fees which would be earned or due and payable by reason of the
execution of this Lease other than to Brokers. Landlord shall pay any
applicable commission to Brokers in accordance with separate agreement
between Landlord and Brokers.
IN WITNESS WHEREOF, the parties have executed this Lease on the dates set forth
below.
TENANT: LANDLORD:
ASK COMPUTER SYSTEMS, INC. ALAMEDA REAL ESTATE INVESTMENTS,
a Delaware corporation a California limited partnership
By: /s/ Scott Neely By: Vintage Properties - Alameda Commercial
Its: VP & General Counsel a California corporation
Managing General Partner
By: __________________________ By: /s/ Joseph R. Seiger
Its: __________________________ Its: President
Date of Execution Date of Execution
by Tenant: June 26, 1992 By Landlord: 6/26/92
31
<PAGE> 71
EXHIBIT A
----------------
1001 MARINA VILLAGE PARKWAY
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PAGE 1 OF 4
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EXHIBIT A
----------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
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EXHIBIT A
----------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
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PAGE 3 OF 4
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EXHIBIT A
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1001 MARINA VILLAGE PARKWAY
(CONTINUED)
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PAGE 4 OF 4
<PAGE> 75
EXHIBIT B
----------------
EXHIBIT "B" INTENTIONALLY OMITTED.
PAGE 1 OF 1
<PAGE> 76
EXHIBIT C
----------------
OUTLINE OF PROJECT
(IMAGE NOT SHOWN)
PAGE 1 OF 1
<PAGE> 77
LEASE
BY AND BETWEEN
ALAMEDA REAL ESTATE INVESTMENTS,
a California limited partnership
AND
ASK COMPUTER SYSTEMS, INC.,
a California corporation
1001 Marina Village Parkway
Alameda, California
EXHIBIT A
<PAGE> 78
EXHIBIT D
----------------
EXISTING HAZARDOUS MATERIAL CONDITION
ENVIRONMENTAL-REPORTS;
A. "Preliminary Site Environmental Review, Portions of Marina Village,
Alameda, California" prepared by Woodward Clyde Consultants, March 1987.
B. "Toxic Hazardous Assessment Marina Village Development, Alameda,
California" prepared by Applied Geosciences, Inc., December 1987.
C. 'Toxic Hazard Assessment, Phase 11 Field Investigation, Marina Village
Development, Alameda, California" prepared by Applied Geosciences, Inc.,
February 1, 1988.
Incorporated into the above Toxic Hazardous Assessment for Select Portions
of the Marina Village Development, Alameda, California - Draft Report"
prepared by Applied Geosciences Inc., February 26, 1988.
D. "Investigation of Field Area South of Powerhouse, Marina Village, April
25, 1988" prepared by Levine-Fricke.
E. "Removal of Petroleum Affected Soils from the Field Area South of the
Powerhouse, Alameda Marina Village, Alameda, California" prepared by
Levine-Fricke, October 5, 1988.
F. "Investigation of Northwest Area, Marina Village, Alameda, California"
prepared by Levine-Fricke, October 6, 1988.
G. "Phase I Environmental Assessment Report, Vintage Properties/Alameda
Commercial, Alameda, California", prepared by Levine-Fricke, February 16,
1989.
H. "Continued Monitoring and Proposed Remedial Measure in Northwest Study
Area dated June 26, 1989", prepared by Levine-Fricke (Primary Report).
Supplemental to Primary Report: "Continued Soil and GTuvurid-Water
Investigation of Parcel 5 and Implementation of a Ground-Water Monitoring
Program and Proposed Remedial 'Measures in the Northwest Study Area,
Marina Village, Alameda, California" prepared by Levine-Fricke, June 6,
1989.
I. "Results of Soil Investigation, Parcel 2, Northwest Study Area", prepared
by Levine-Fricke, dated November 27, 1989.
J. "Results of 3rd Round of Ground Water Sampling, Northwest Area" prepared
by Levine Fricke, April 13, 1990.
PAGE 1 OF 1
<PAGE> 79
AMENDMENT NO. 1
TO
MARINA VILLAGE OFFICE LEASE
(1001 MARINA VILLAGE PARKWAY)
THIS AMENDMENT NO. 1 is made and entered into as of July 31, 1993, by and
between THE ASK GROUP, INC., a Delaware corporation, as successor-in-interest to
ASK Computer Systems, Inc., ("Tenant") and ALAMEDA REAL ESTATE INVESTMENTS, a
California limited partnership ("Landlord").
Landlord and Tenant have entered into that certain Marina Village Lease dated
June 25, 1992 (the "Lease") with respect to certain premises located within 1001
Marina Village Parkway, Alameda, California. Unless otherwise defined, all
capitalized terms used on this Amendment shall have the same meanings as set
forth in the Lease. Landlord and Tenant desire to amend the Lease as hereinafter
provided and, accordingly, Landlord and Tenant hereby agree as follows:
1. Amendment of Paragraph 2.B. Paragraph 2.B. of the Lease is hereby amended
as of August 1, 1993 to read as follows:
B. Approximately 67,581 square feet of Rentable Area (as defined in
Paragraph 3.B. (xii)) as shown on Exhibit A-1 hereto, subject to
adjustment under Paragraph 2.D., and located within that building
(the "Building") known as 1001 Marina Village Parkway, constructed
on a portion of that certain real property described as Lot 2 of
Parcel May 5434 recorded February 23, 1989 in Map Book 182, Pages
56-59, Alameda County Records (the "Parcel").
2. Amendment of Paragraph 2.D. Paragraph 2.D. is hereby amended as of
August 1, 1993 to read as follows:
D. Landlord and Tenant acknowledge and agree that approximately 4,247
square feet of Rentable Area known as Suite 401 in the Building
which was previously leased to another tenant is being delivered by
Landlord to Tenant as of July 1, 1993 as evidenced by the terms of
Amendment No. 1 to the Lease. Tenant has elected to defer Landlord's
obligation to construct certain renovation improvements within such
space known as Suite 401 (as specified below) until a later date
within the Lease Term. Landlord and Tenant agree that
notwithstanding anything to the contrary in this Lease, Tenant's
obligation to pay Base Monthly Rent, Operating Expenses and property
Taxes allocable to such space known as Suite 401 shall be abated
during the construction of renovation improvements until two weeks
after the date of such future delivery of the space known as Suite
401 to Tenant.
At such time as Landlord delivers possession to Tenant all or any
portion of the approximately 5,660 square feet of space remaining in
the Building currently leased to other tenants, the space delivered
to Tenant shall, by means of an amendment to this Lease, be added to
and become a part of the Premises, and the Base Monthly Rent and
Tenant's Percentage Share (as such terms are hereinafter defined)
shall be increased to reflect the addition of such space to the
Premises. Notwithstanding anything to the contrary in this Lease,
Tenant's obligation to pay Base Monthly Rent, Operating Expenses,
Property Taxes allocable to the portion of the Premises so delivered
shall not commence until two weeks after the date of delivery. Prior
to delivery of such space, or any portion thereof, Landlord shall
construct certain renovation improvements within the space in
accordance with a mutually agreed upon space plan, with Landlord's
standard office finishes and in a manner similar to the Premises.
<PAGE> 80
3. Amendment of Paragraph 3.B. (xiv). Paragraph 3.B.(xiv) of the Lease is
hereby amended to read as follows:
(xiv) The term "Tenant's Percentage Share" shall mean the Rentable Area of
the Premises divided by the total Rentable Area of the Building,
which shall be deemed to be 92.27% as of August 1, 1993, subject to
further adjustment under
subparagraph 2.D. above.
3. Ratification. Landlord and Tenant hereby ratify and confirm all of the
terms of the Lease as modified by paragraphs 1 through 3 above.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the
date first above written.
TENANT: LANDLORD:
THE ASK GROUP, INC. ALAMEDA REAL ESTATE INVESTMENTS
a Delaware corporation a California limited partnership
By: /s/ Richard C. Yonker By: /s/ Joseph E. McVeigh
Vice President Vice President
Finance & Information Services
The ASK Group
<PAGE> 81
EXHIBIT A-1
---------------
1001 MARINA VILLAGE PARKWAY
(IMAGE NOT SHOWN)
PAGE 1 OF 4
<PAGE> 82
EXHIBIT A-1
---------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
(IMAGE NOT SHOWN)
PAGE 2 OF 4
<PAGE> 83
EXHIBIT A-1
---------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
(IMAGE NOT SHOWN)
PAGE 3 OF 4
<PAGE> 84
EXHIBIT A-1
---------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
(IMAGE NOT SHOWN)
PAGE 4 OF 4
<PAGE> 85
AMENDMENT NO. 2
TO
MARINA VILLAGE OFFICE LEASE
(1001 MARINA VILLAGE PARKWAY)
THIS AMENDMENT NO. 2 is made and entered into as of November 30, 1993 by and
between THE ASK GROUP, INC., a Delaware corporation, as successor-in-interest to
ASK Computer Systems, Inc., ("Tenant") and ALAMEDA REAL ESTATE INVESTMENTS, a
California limited partnership ("Landlord").
Landlord and Tenant have entered into that certain Marina Village Lease dated
June 25, 1992, as amended, (the "Lease") with respect to certain premises
located within 1001 Marina Village Parkway, Alameda, California. Unless
otherwise defined, all capitalized terms used on this Amendment shall have the
same meanings as set forth in the Lease. Landlord and Tenant desire to amend the
Lease as hereinafter provided and, accordingly, Landlord and Tenant hereby agree
as follows:
1. Amendment of Paragraph 2.B. Paragraph 2.B. of the Lease is hereby amended
as of December 1, 1993 to read as follows:
B. Approximately 71,440 square feet of Rentable Area (as defined in
Paragraph 3.B.(xii)) as shown on Exhibit A-2 hereto, subject to
adjustment under Paragraph 2.D., and located within that building
(the "Building") known as 1001 Marina Village Parkway, constructed
on a portion of that certain real property described as Lot 2 of
Parcel May 5434 recorded February 23, 1989 in Map Book 182, Pages
56-59, Alameda County Records (the "Parcel").
2. Amendment of Paragraph 2.D. Paragraph 2.D. is hereby amended as of
December 1, 1993 to read as follows:
D. Landlord and Tenant acknowledge and agree that approximately 4,247
square feet of Rentable Area known as Suite 401 and approximately
3,859 square feet of Rentable Area known as Suite 400, each of which
was previously leased to another tenant, have been or are being
delivered from Landlord to Tenant as of August 1, 1993 and December
1, 1993, respectively. Tenant has elected to defer Landlord's
obligations to construct certain renovation improvements with each
such space known as Suite 401 and Suite 400 (as specified below)
until a later date within the Lease Term. Landlord and Tenant agree
that notwithstanding anything to the contrary in this Lease,
Tenant's obligations to pay Base Monthly Rent, Operating Expenses
and Property Taxes allocable to such spaces known as Suite 401 and
Suite 400 shall be abated during the construction of Landlord's
renovation improvements and until two weeks after the date of such
future delivery of each space to Tenant.
At such time as Landlord delivers possession to Tenant all or any
portion of the approximately 1,801 square feet of space remaining in
the Building currently leased to a third party tenant (Transamerica
Financial), such space delivered to Tenant shall, by means of an
amendment to this Lease, be added to and become a part of the
Premises, and the Base Monthly Rent and Tenant's Percentage Share
(as such terms are hereinafter defined) shall be increased to
reflect the addition of such space to the Premises. Notwithstanding
anything to the contrary in this Lease, Tenant's obligations to pay
Base Monthly Rent, Operating Expenses, Property Taxes allocable to
the portion of the Premises so delivered shall not commence until
two weeks after the date of delivery. Prior to delivery of such
space, or any portion thereof, Landlord shall construct certain
renovation improvements within the space or
<PAGE> 86
portion to be delivered in accordance with a mutually agreed upon
space plan, with Landlord's standard office finishes and in a manner
similar to the Premises.
3. Amendment of Paragraph 3.B. (xiv). Paragraph 3.B.(xiv) of the Lease is
hereby amended to read as follows:
(xiv) The term "Tenant's Percentage Share" shall mean the Rentable Area of
the Premises divided by the total Rentable Area of the Building,
which shall be deemed to be 97.54% as of December 1, 1993, subject
to further adjustment under subparagraph 2.D. above.
4. Ratification. Landlord and Tenant hereby ratify and confirm all of the
terms of the Lease as modified by paragraphs 1 through 3 above.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the
date first above written.
TENANT: LANDLORD:
ASK COMPUTER SYSTEMS, INC. ALAMEDA REAL ESTATE INVESTMENTS,
a Delaware corporation a California limited partnership
By: Vintage Properties - Alameda Commercial
a California corporation
Managing General Partner
By: /s/ SCOTT C. NEELY By: /s/ JOSEPH R. SEIGER
Its: SCOTT C. NEELY Its: President
VICE PRESIDENT &
GENERAL COUNSEL
THE ASK GROUP, INC.
<PAGE> 87
EXHIBIT A-2
1001 MARINA VILLAGE PARKWAY
[FLOOR PLAN MARINA VILLAGE]
<PAGE> 88
EXHIBIT A-2
-------------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
(IMAGE NOT SHOWN)
PAGE 2 OF 4
<PAGE> 89
EXHIBIT A-2
-------------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
(IMAGE NOT SHOWN)
PAGE 3 OF 4
<PAGE> 90
EXHIBIT A-2
-------------------
1001 MARINA VILLAGE PARKWAY
(CONTINUED)
(IMAGE NOT SHOWN)
PAGE 4 OF 4
<PAGE> 91
The following language is hereby added to paragraph 10.B of the Lease, to read
as follows:
B. In addition, Landlord shall, subject to reimbursement for the cost thereof as
an Operating Expense, keep and maintain in good order, condition and repair
those portions of the Premises and the Common Areas consisting of windows,
window frames, plate glass, glazing, skylights, truck doors, doors and all door
hardware, partitions and all plumbing, electrical, gas, water, telephone and
other cabling, lighting, heating, air conditioning and ventilation facilities,
equipment and systems within the Premises and within the Building serving the
Premises.
A new subparagraph B. (iv) is hereby added to Section 10 of the Lease, to read
as follows:
(iv) Landlord shall provide customary property management services for the
Premises, including arranging for janitorial service, elevator
maintenance, lighting replacement, restroom supplies, window washing with
reasonable frequency and security guards and services during the times and
in the manner that such services are customarily furnished in comparable
office buildings in the Oakland/Alameda area. In addition, Landlord shall
serve as Tenant's representative in arranging directly with Tenant's
subtenants in responding to requests for repairs and services customarily
provided by Landlords of similar premises. All direct out-of-pocket costs
incurred by Landlord in connection with the furnishing of services and
supplies in accordance with this paragraph, but excluding any additional
administrative costs or management fees, shall be reimbursed by Tenant to
Landlord as Operating Expenses. As part of Landlord's property management
services for the Premises and in the event all or any portion of the
Premises are effectively subleased by Tenant to a subtenant, then Landlord
shall bill each such subtenant based on its proportionate share of the
Operating Expenses pursuant to the terms of its sublease. All monies
collected by Landlord from subtenant(s) shall be transferred, on a monthly
basis and in a manner mutually agreed upon, to Tenant. Landlord shall
provide detailed billings to Tenant and any subtenants of such subtenants
share of Operating Expenses, with supporting backup documentation, as
necessary. At Tenant's option, Landlord shall also collect monthly base
rent from Tenant's subtenant(s) as set forth in its sublease and transfer
same, on a monthly basis, to Tenant.
4. Substitution of Computer Associates International, Inc., As Tenant. In
consideration of the execution and delivery of this Amendment by Landlord,
CAI as the sole shareholder of ASK, is hereby substituted for ASK, as the
Tenant under the Lease.
5. Effective Date of Amendment. The effective date of the terms of the Lease
shall be January 1, 1995.
6. Ratification. Landlord and Tenant hereby ratify and confirm all of the
terms of the Lease as modified in paragraph 1 through 4 above. All other
terms and conditions of the Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 3 as of the
date first set forth above.
ASK: LANDLORD:
THE ASK GROUP, INC., ALAMEDA REAL ESTATE INVESTMENTS,
a Delaware corporation a California limited partnership
By: Vintage Properties-Alameda
Commercial
a California corporation, Managing
By: /s/ Scott Neely General Partner
<PAGE> 92
Title: Vice Pres. By: /s/ Joseph R. Seiger
CAI: Title: President
COMPUTER ASSOCIATES INTERNATIONAL, INC.
a Delaware corporation
By: /s/ Abraham Pomanski
Title: Sr. Vice President
<PAGE> 93
(IMAGE NOT SHOWN)
EXHIBIT B
<PAGE> 94
AMORTIZATION SCHEDULE MONTHLY PAYMENTS
PRINCIPAL AMOUNT $126,467.00
INT RATE/YR (WHOLE NUMBERS) 9
PAYMENT AMOUNT $ 3,147.14
NUMBER OF PAYMENTS 48
STARTING DATE.......................... YEAR 1996
MONTH 2
DAY 1
<TABLE>
<CAPTION>
================================================================================
# DATE ANN. INT. PAYMENT INTEREST PRINCIPAL BALANCE
================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 Feb-96 $3,147.14 $948.50 $2,198.64 $124,268.36
2 Mar-96 $3,147.14 $932.01 $2,215.13 $122,053.24
3 Apr-96 $3,147.14 $915.40 $2,231.74 $119,821.49
4 May-96 $3,147.14 $898.66 $2,248.48 $117,573.02
5 Jun-96 $3,147.14 $881.80 $2,265.34 $115,307.67
6 Jul-96 $3,147.14 $864.81 $2,282.33 $113,025.34
7 Aug-96 $3,147.14 $847.69 $2,299.45 $110,725.89
8 Sep-96 $3,147.14 $830.44 $2,316.70 $108,409.20
9 Oct-96 $3,147.14 $813.07 $2,334.07 $106,075.12
10 Nov-96 $3,147.14 $795.56 $2,351.58 $103,723.55
11 Dec-96 $3,147.14 $777.93 $2,369.21 $101,354.33
12 Jan-97 $3,147.14 $760.16 $2,386.98 $ 98,967.35
13 Feb-97 $3,147.14 $742.26 $2,404.88 $ 96,562.47
14 Mar-97 $3,147.14 $724.22 $2,422.92 $ 94,139.55
15 Apr-97 $3,147.14 $706.05 $2,441.09 $ 91,698.45
16 May-97 $3,147.14 $687.74 $2,459.40 $ 89,239.05
17 Jun-97 $3,147.14 $669.29 $2,477.85 $ 86,761.20
18 Jul-97 $3,147.14 $650.71 $2,496.43 $ 84,264.77
19 Aug-97 $3,147.14 $631.99 $2,515.15 $ 81,749.62
20 Sep-97 $3,147.14 $613.12 $2,534.02 $ 79,215.60
21 Oct-97 $3,147.14 $594.12 $2,553.02 $ 76,662.58
22 Nov-97 $3,147.14 $574.97 $2,572.17 $ 74,090.41
23 Dec-97 $3,147.14 $555.68 $2,591.46 $ 71,498.94
24 Jan-98 $3,147.14 $536.24 $2,610.90 $ 68,888.05
25 Feb-98 $3,147.14 $516.66 $2,630.48 $ 66,257.57
26 Mar-98 $3,147.14 $496.93 $2,650.21 $ 63,607.36
27 Apr-98 $3,147.14 $477.06 $2,670.08 $ 60,937.27
28 May-98 $3,147.14 $457.03 $2,690.11 $ 58,247.16
29 Jun-98 $3,147.14 $436.85 $2,710.29 $ 55,536.88
30 Jul-98 $3,147.14 $416.53 $2,730.61 $ 52,806.26
31 Aug-98 $3,147.14 $396.05 $2,751.09 $ 50,055.17
32 Sep-98 $3,147.14 $375.41 $2,771.73 $ 47,283.44
33 Oct-98 $3,147.14 $354.63 $2,792.51 $ 44,490.93
34 Nov-98 $3,147.14 $333.68 $2,813.46 $ 41,677.47
35 Dec-98 $3,147.14 $312.58 $2,834.56 $ 38,842.91
36 Jan-99 $3,147.14 $291.32 $2,855.82 $ 35,987.10
37 Feb-99 $3,147.14 $269.90 $2,877.24 $ 33,109.86
38 Mar-99 $3,147.14 $248.32 $2,898.82 $ 30,211.04
</TABLE>
EXHIBIT C
PAGE 1 OF 2
<PAGE> 95
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
39 Apr-99 $3,147.14 $226.58 $2,920.56 $ 27,290.49
40 May-99 $3,147.14 $204.68 $2,942.46 $ 24,348.02
41 Jun-99 $3,147.14 $182.61 $2,964.53 $ 21,383.49
42 Jul-99 $3,147.14 $160.38 $2,986.76 $ 18,396.73
43 Aug-99 $3,147.14 $137.98 $3,009.16 $ 15,387.57
44 Sep-99 $3,147.14 $115.41 $3,031.73 $ 12,355.83
45 Oct-99 $3,147.14 $ 92.67 $3,054.47 $ 9,301.36
46 Nov-99 $3,147.14 $ 69.76 $3,077.38 $ 6,223.98
47 Dec-99 $3,147.14 $ 46.68 $3,100.46 $ 3,123.52
48 Jan-00 $3,146.95 $ 23.43 $3,123.52 ($0.00)
- - --------------------------------------------------------------------------------
$151,062.53 $24,595.53 $126,467.00
</TABLE>
EXHIBIT C
PAGE 2 OF 2
<PAGE> 96
FIRST AMENDMENT TO SUBLEASE AGREEMENT
THIS FIRST AMENDMENT (the "First Amendment") entered into this day of
March, 1996, between COMPUTER ASSOCIATES INTERNATIONAL, IN-C. (hereinafter
called "Sublandlord") and WINK COMMUNICATIONS, INC. (hereinafter called
"Subtenant") hereby amends and modifies the Sublease Agreement entered into
between Sublandlord and Subtenant dated November 28, 1995, (hereinafter called
the "Sublease"). Capitalized terms used herein shall have the same meaning
assigned to such terms in the Sublease, unless otherwise defined herein.
W I T N E S S E T H
WHEREAS, Subtenant wishes to expand the Premises to include the entire second
floor of the Building; and
WHEREAS, Sublandlord wishes to sublet the entire second floor of the Building to
Subtenant in addition to the existing Premises.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows, which shall become
effective as of April 1, 1996 (the "Effective Date"):
1. Subsection 1.1 (j) of the Sublease is hereby amended to read as
follows:
(j) Premises: 17,377 Rentable Square Feet comprising the entire
first floor and 20,247 Rentable Square Feet comprising the
entire second floor.
2. Subsection 1.1(m) of the Sublease is hereby amended to add the
following as Base Rent for the 2nd floor, which is to be paid in addition to the
Base Rent set forth in the Sublease:
(m) Base Rent:
<TABLE>
<CAPTION>
Annual Rent
Per Rentable
Yearly Periods Square Foot Monthly Base Rent Annual Base Rent
- - -------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
4/1/96-7/31/96 $11.02 $ 18,593.49 N/A
4/1/96-1/31/97 $15.45 $ 26,068.01 N/A
2/1/97-1/31/98 $18.60 $ 31,382.85 $376,594.20
2/1/98-1/31/99 $19.20 $ 32,395.20 $388,742.40
2/1/99-1/31/00 $19.80 $ 33,407.55 $400,890.60
</TABLE>
<PAGE> 97
3. Subsection 1.1(p) of the Sublease is amended by deleting 1124.32%" therein
and replacing that with "51.37%."
4. Subsection 1.1(s) of the Sublease is amended to read as follows:
(s) Brokers: For Sublandlord: BT commercial
For Subtenant: Charles Campagnet
Commercial Real Estate
5. In consideration of this expansion, Subtenant agrees to pay to Sublandlord an
additional security deposit in the amount of $33,407.55 to be held by
Sublandlord with the originally deposited security deposit in accordance with
the terms of the Sublease.
6. The additional space is provided to Subtenant "AS IS" and any and all
alterations or tenant improvements shall be at Subtenant's sole cost and
expense, and shall be subject to prior approval of Sublandlord.
7. Subtenant shall have access to the additional space prior to the Effective
Date hereof for the sole purpose of preparing the space for occupancy, provided
that Subtenant provides Sublandlord with a certificate of insurance naming
Sublandlord as an additional insured, and provided that Overlandlord's approval
to this First Amendment is obtained prior to such access.
8. Provided Subtenant has first obtained the consent of Overlandlord and
Sublandlord, as well as required governmental approvals, Subtenant may install
an approved sign on the exterior of the Building at Subtenant's cost and
expense. Subtenant shall be responsible for all costs of maintenance for the
sign and costs of removal at expiration of the Sublease Term.
9. Subtenant may install an 18" digital broadcast satellite dish on top of the
roof in the Building and wire same to the Premises; provided that (i) Subtenant
has first obtained the consent of Overlandlord and any required governmental
approvals, (ii) Subtenant shall be responsible for- all costs of installation,
maintenance and repair, as well as removal of the dish upon expiration of the
Sublease Term, and (iii) Subtenant shall be responsible for any damage caused to
the roof or to others as a result of the installation of the dish, and Subtenant
shall indemnify and hold Landlord harmless from any claims or losses resulting
therefrom.
10. Subtenant may pull the cabling through the existing building conduit as
required, provided that (i) Subtenant first obtains Overlandlord's consent, (ii)
this act does not interfere with nor disturb any existing or future tenants in
the Building, and (iii) Subtenant properly marks the cabling so that it can be
identified easily.
<PAGE> 98
11. The Sublease, as amended by this First Amendment, contains the entire
agreement between the parties hereto and there are no agreements, warranties, or
representations which are not set forth therein or herein. This First Amendment
may not be modified or amended except by an instrument in writing duly executed
by or on behalf of the parties hereto.
This Amendment is contingent upon SSB Realty Inc's (another subtenant of
Sublandlord) rejection of its right of First Offer far the additional space. In
the event that SSB Realty accepts the Right of First Offer, Sublandlord agrees
to provide Subtenant with temporary space, for a period not to exceed two (2)
months, at the same rent per square foot as set forth herein, and under the same
terms and conditions hereof.
COMPUTER ASSOCIATES
INTERNATIONAL, INC. WINK COMMUNICATIONS, INC.
/s/ Abraham Pomanski /s/ Gary L. Hammer
(SIGNATURE) (SIGNATURE)
Abraham Pomanski Gary L. Hammer
(NAME) (NAME)
Sr Vice President VP, Business Development
(TITLE) (TITLE)
CONSENT OF OVERLANDLORD:
/s/ JOSEPH R. SEIGER
- - -------------------------------
ALAMEDA REAL ESTATE INVESTMENTS
<PAGE> 1
EXHIBIT 10.32
================================================================================
LOAN AGREEMENT
Dated as of September 18, 1996
between
WINK COMMUNICATIONS, INC.
as Borrower,
and
VENTURE LENDING & LEASING, INC.,
as Lender
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 - DEFINITIONS.........................................................1
ARTICLE 2 - THE COMMITMENT AND LOANS............................................4
2.1 The Commitment...................................................4
2.2 Limitation on Loans..............................................4
2.3 Notes Evidencing Loans; Repayment................................4
2.4 Procedures for Borrowing.........................................5
2.5 Interest.........................................................5
2.6 Interest Rate Calculation........................................5
2.7 Default Interest.................................................5
2.8 Lender's Records.................................................5
2.9 Security.........................................................6
2.10 Issuance of Warrant to Lender....................................6
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES......................................6
3.1 Due Organization.................................................6
3.2 Authorization, Validity and Enforceability.......................6
3.3 Compliance with Applicable Laws..................................6
3.4 Copyrights, Patents, Trademarks and Licenses.....................7
3.5 No Conflict......................................................7
3.6 No Litigation, Claims or Proceedings.............................7
3.7 Correctness of Financial Statements..............................7
3.8 No Subsidiaries..................................................7
3.9 Environmental Matters............................................7
3.10 No Event of Default..............................................7
3.11 Full Disclosure..................................................7
ARTICLE 4 - CONDITIONS PRECEDENT................................................8
4.1 Conditions to First Loan.........................................8
4.2 Conditions to All Loans..........................................9
ARTICLE 5 - AFFIRMATIVE COVENANTS...............................................9
5.1 Notice to Lender.................................................9
5.2 Financial Statements.............................................9
5.3 Managerial Assistance from Lender...............................10
5.4 Existence.......................................................11
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
5.5 Accounting Records..............................................11
5.6 Compliance With Laws............................................11
5.7 Taxes and Other Liabilities.....................................11
5.8 Use of Proceeds.................................................11
ARTICLE 6 - NEGATIVE COVENANTS.................................................11
6.1 Dividends.......................................................12
6.2 Changes/Mergers.................................................12
6.3 Sales of Assets.................................................12
ARTICLE 7 - EVENTS OF DEFAULT..................................................12
7.1 Events of Default...............................................12
ARTICLE 8 - GENERAL PROVISIONS.................................................13
8.1 Notices.........................................................13
8.2 Binding Effect..................................................13
8.3 No Waiver.......................................................14
8.4 Rights Cumulative...............................................14
8.5 Unenforceable Provisions........................................14
8.6 Accounting Terms................................................14
8.7 Indemnification; Exculpation....................................14
8.8 Reimbursement...................................................14
8.9 Execution in Counterparts.......................................15
8.10 Entire Agreement................................................15
8.11 Governing Law and Jurisdiction..................................15
8.12 Waiver of Jury Trial............................................16
</TABLE>
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<PAGE> 4
LIST OF EXHIBITS
Exhibit "A" Form of Note
Exhibit "B" Form of Borrowing Request
Exhibit "C" Security Agreement (Equipment)
Exhibit "D" Form of Warrant
<PAGE> 5
LOAN AGREEMENT
This LOAN AGREEMENT is entered into as of September 18, 1996, between
WINK COMMUNICATIONS, INC., a California corporation ("Borrower"), and VENTURE
LENDING & LEASING, INC., a Maryland corporation ("VLLI" or "Lender").
WHEREAS, Lender has agreed to make available to Borrower a loan facility
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
The definitions appearing in this Agreement or any supplement or
addendum to this Agreement, shall be applicable to both the singular and plural
forms of the defined terms:
"Additional Interest" means, with respect to each Loan, an amount of
interest payable thereon, in addition to Basic Interest, payable on the Maturity
Date of such Loan in an amount equal to ten percent (10%) of the original
principal amount of such Loan.
"Affiliate" means any Person which directly or indirectly controls, is
controlled by, or is under common control with, Borrower. "Control," "controlled
by" and "under common control with" means direct or indirect possession of the
power to direct or cause the direction of management or policies (whether
through ownership of voting securities, by contract or otherwise).
"Agreement" means this Loan Agreement as it may be amended or
supplemented from time to time.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section101, et seq.), as amended.
"Basic Interest" means the fixed rate of interest payable on the
outstanding balance of each Loan at the applicable Designated Rate.
"Borrowing Date" means the Business Day on which the proceeds of a Loan
are disbursed by Lender.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City or San Francisco are authorized or
required by law to close.
"Closing Date" means the date of this Agreement.
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<PAGE> 6
"Collateral" has the meaning ascribed thereto in the Security Agreement.
"Commitment" means the obligation of Lender to make Loans to Borrower in
an aggregate, original principal amount not exceeding One Million Five Hundred
Thousand Dollars ($1,500,000.00).
"Default" means an event which with the giving of notice, passage of
time, or both would constitute an Event of Default.
"Default Rate" is defined in Section 2.7.
"Designated Rate" means a fixed rate of interest per annum at eleven and
38/100 percent (11.38%) applicable to a Loan.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authorities, in each case
relating to environmental, health, or safety matters.
"Equipment" means all of Debtor's specific equipment identified and
described on Schedule 1 attached to the Security Agreement and incorporated
herein by reference (as such Schedule may be amended or supplemented from time
to time) all replacements, parts, accessions and additions thereto, and all
proceeds thereof arising from the sale, lease, rental or other use or
disposition thereof, including all rights to payment with respect to insurance
or condemnation, returned premiums, or any cause of action relating to any of
the foregoing.
"Event of Default" means any event described in Article 7.
"GAAP" means generally accepted accounting principles and practices
consistent with those principles and practices promulgated or adopted by the
Financial Accounting Standards Board and the Board of the American Institute of
Certified Public Accountants, their respective predecessors and successors. Each
accounting term used but not otherwise expressly defined herein shall have the
meaning given it by GAAP.
"Indebtedness" of any Person means at any date, without duplication and
without regard to whether matured or unmatured, absolute or contingent: (i) all
obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds; debentures, notes, or other similar instruments;
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business; (iv) all obligations of such Person as lessee under capital
leases; (v) all obligations of such Person to reimburse or prepay any bank or
other Person in respect of amounts paid under a letter of credit, banker's
acceptance, or similar instrument, whether drawn or undrawn; (vi) all
obligations of such Person to purchase securities which arise out of or in
connection with the sale of the same or substantially similar securities; (vii)
all obligations of such Person in connection with any agreement
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<PAGE> 7
to purchase, redeem, exchange or otherwise acquire for value any capital stock
of such Person or any warrants, rights or options to acquire such capital stock,
now or hereafter outstanding, except to the extent that such obligations remain
performable solely at the option of such Person; (viii) all obligations to
repurchase assets previously sold (including any obligation to repurchase any
accounts or chattel paper under any factoring, receivables purchase, or similar
arrangement); (ix) obligations of such Person under interest rate swap, cap,
collar or similar hedging arrangements; and (x) all obligations of others of any
type described in clause (i) through clause (ix) above guaranteed by such
Person.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other governmental authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors, undertaken under U.S. Federal, state or foreign law, including
the Bankruptcy Code.
"Lien" means any voluntary or involuntary security interest, mortgage,
pledge, claim, charge, encumbrance, title retention agreement, or third party
interest, covering all or any part of the property of Borrower or any other
Person.
"Loan" means an extension of credit by Lender under Section 2 of this
Agreement.
"Loan Commencement Date" means January 1, 1997, July 1, 1997 and October
1, 1997.
"Loan Documents" means, individually and collectively, this Agreement,
each Note, the Security Agreement and any other security or pledge agreement(s),
and all other contracts, instruments, addenda and documents executed in
connection with this Agreement or the extensions of credit which are the subject
of this Agreement.
"Material Adverse Effect" or "Material Adverse Change" means (a) a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, or condition (financial or otherwise) of Borrower; (b) a
material impairment of the ability of Borrower to perform under any Loan
Document and to avoid any Event of Default; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against Borrower
of any Loan Document.
"Maturity Date" means, with regard to each Note, the date on which
payment of all outstanding principal and accrued interest, including Additional
Interest, is due, whether at stated maturity or by acceleration.
"Note" means a promissory note substantially in the form of Exhibit "A"
hereto, executed by Borrower evidencing each Loan.
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<PAGE> 8
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by Borrower to
Lender, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising.
"Person" means any individual or entity.
"Qualified Public Offering" means the closing of a firmly underwritten
public offering of Borrower's common stock with aggregate proceeds of not less
than $10,000,000.00 (prior to underwriting expenses and commissions).
"Related Person" means any Affiliate of Borrower, or any officer,
employee, director or shareholder of Borrower or any Affiliate.
"Security Agreement" means the Security Agreement substantially in the
form of Exhibit "C" hereto, executed by Borrower.
"Termination Date" means the earlier of: (a) the date Lender may
terminate making loans or extending the credit pursuant to the rights of Lender
under Article 7, or (b) September 30, 1997.
"UCC" means the Uniform Commercial Code as enacted in the applicable
jurisdiction, in effect on the Closing Date and as amended from time to time.
ARTICLE 2 - THE COMMITMENT AND LOANS
2.1 The Commitment. Subject to the terms and conditions of this
Agreement, Lender agrees to make term loans to Borrower from time to time from
the Closing Date and to, but not including, the Termination Date in an aggregate
principal amount not exceeding the Commitment for purposes of financing
Borrower's acquisition of Equipment. The Commitment is not a revolving credit
commitment, and Borrower shall not have the right to repay and reborrow
hereunder.
2.2 Limitation on Loans. Each Loan shall be in an amount not to exceed
one hundred percent (100%) of the amount paid or payable by Borrower to a
non-affiliated manufacturer, vendor or dealer for an item of Equipment as shown
on an invoice therefor (excluding any commissions and any portion of the payment
which relates to the servicing of the equipment). Each Loan requested by
Borrower to be made on a single Business Day shall be for a principal amount of
Fifty Thousand Dollars ($50,000.00) or a multiple thereof, except to the extent
the remaining Commitment is a lesser amount.
2.3 Notes Evidencing Loans; Repayment. Each Loan shall be evidenced by a
separate Note payable to the order of Lender substantially in the form of
Exhibit "A" to this Agreement, in the total principal amount of the Loan. Each
Note shall be payable as follows: Principal and Basic Interest shall be paid in
forty two (42) equal and successive monthly payments, in advance,
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<PAGE> 9
beginning on the next earliest Loan Commencement Date following Borrowing Date
and continuing on the first Business Day of each month thereafter. Borrower
shall pay interest on the Loan, monthly in advance, from the Borrowing Date to
the Loan Commencement Date. The Additional Interest on each Loan shall be paid
on the first Business Day of the forty third (43rd) full month after the
Borrowing Date of such Loan. The payment of amortization installments of
principal of and interest on a Loan in advance results in a higher effective
rate of interest than the stated Designated Rate applicable to such Loan.
2.4 Procedures for Borrowing.
(a) Borrower shall give Lender at least five (5) Business Days'
prior to a proposed Borrowing Date written notice of any request for borrowing
hereunder (a "Borrowing Request"). Each Borrowing Request shall be in
substantially the form of Exhibit "B" hereto, shall be executed by the chief
financial officer of Borrower, and shall state how much is requested, and shall
be accompanied by copies of invoices for the Equipment to be financed and such
additional information and documentation as Lender may deem reasonably necessary
to determine whether the proposed borrowing will comply with the limitations in
Section 2.2. To the Borrower's best knowledge after due inquiry of its senior
officers, the Borrowing Request shall also certify that all Equipment to be
financed thereby is owned by Borrower free and clear of all Liens, excluding
liens in ordinary course and mechanics and other inchoate liens, except in favor
of Lender.
(b) No later than 1:00 p.m. Pacific Standard Time on the
Borrowing Date, if Borrower has satisfied the conditions precedent in Article 4,
Lender shall make the Loan available to Borrower in immediately available funds.
2.5 Interest. Basic Interest on the outstanding principal balance of the
each Loan shall accrue daily from the Borrowing Date until the Maturity Date at
the Designated Rate. On the Maturity Date of a Loan, Borrower shall pay the
Additional Interest thereon.
2.6 Interest Rate Calculation. Basic Interest, along with charges and
fees under this Agreement and any Loan Document, shall be calculated for actual
days elapsed on the basis of a 360-day year, which results in higher interest,
charge or fee payments than if a 365-day year were used. In no event shall
Borrower be obligated to pay Lender interest , charges or fees at a rate in
excess of the highest rate permitted by applicable law from time to time in
effect.
2.7 Default Interest. Any unpaid payments of principal or interest with
respect to any Loan shall bear interest from their respective maturities,
whether scheduled or accelerated, at the Designated Rate for such Loan plus five
percent (5.00%) per annum, until paid in full, whether before or after judgment
(the "Default Rate"). Borrower shall pay such interest on demand.
2.8 Lender's Records. Principal, Basic Interest, Additional Interest and
all other sums owed under any Loan Document shall be evidenced by entries in
records maintained by Lender for such purpose. Each payment on and any other
credits with respect to principal, Basic Interest,
-5-
<PAGE> 10
Additional Interest and all other sums outstanding under any Loan Document shall
be evidenced by entries in such records. Absent manifest error, Lender's records
shall be conclusive evidence thereof.
2.9 Security. As security for all obligations to Lender, Borrower shall
grant concurrently to Lender, or ensure that Lender is concurrently granted,
perfected security interests of first priority (assuming all reasonable and
proper actions by Lender to effect such perfection and priority) in all of the
Equipment and other Collateral pursuant to the Security Agreement, subject only
to Liens disclosed to and approved by Lender prior to the Closing Date to this
Agreement.
2.10 Issuance of Warrant to Lender. As additional consideration for the
making of the Loans under this Agreement, upon the making of, and as a condition
to, the initial Loan, Lender shall be entitled to receive a warrant to purchase
a number of shares of preferred stock of Borrower ("Warrant Shares") with an
aggregate initial exercise price of $70,000 determined on the basis of a per
share exercise price of $4.00. The warrant issued under this Agreement shall be
in substantially the form attached hereto as Exhibit "D"; shall be transferable
by Lender, subject to compliance with applicable securities laws; shall expire
not earlier than September 30, 2002; and shall include piggy-back registration
rights, "net issuance" provisions, and anti-dilution as set forth in Exhibit D.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that as of the Closing Date and each
Borrowing Date:
3.1 Due Organization. Borrower is a corporation duly organized and
validly existing in good standing under the laws of California, and is duly
qualified to conduct business and is in good standing in each other jurisdiction
in which its business is conducted or its properties are located except where
failure would not have a Material Adverse Effect.
3.2 Authorization, Validity and Enforceability. The execution, delivery
and performance of all Loan Documents executed by Borrower are within Borrower's
powers, have been duly authorized, and are not in conflict with Borrower's
articles [certificate] of incorporation or by-laws, or the terms of any charter
or other organizational document of Borrower, as amended from time to time; and
all such Loan Documents constitute valid and binding obligations of Borrower,
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency and similar laws affecting the enforcement of creditors'
rights in general, and subject to general principles of equity).
3.3 Compliance with Applicable Laws. Borrower has complied with all
licensing, permit and fictitious name requirements necessary to lawfully conduct
the business in which it is engaged, and to any sales, leases or the furnishing
of services by Borrower, including without limitation those requiring consumer
or other disclosures, the noncompliance with which would have a Material Adverse
Effect.
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<PAGE> 11
3.4 Copyrights, Patents, Trademarks and Licenses.
(a) Borrower owns or is licensed or otherwise has the right to
use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of its business, without, to its knowledge, conflict
with the rights of any other Person except where there is no Material Adverse
Effect.
(b) To its knowledge, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by Borrower infringes upon any rights held by any
other Person except where there is no Material Adverse Effect.
(c) No claim or litigation regarding any of the foregoing is
pending or overtly threatened, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
3.5 No Conflict. Except where there is no Material Adverse Effect the
execution, delivery, and performance by Borrower of all Loan Documents are not
in conflict with any law, rule, regulation, order or directive, or any material
indenture, agreement, or undertaking to which Borrower is a party or by which
Borrower may be bound or affected.
3.6 No Litigation, Claims or Proceedings. There is no litigation, tax
claim, proceeding or dispute pending, or, to the knowledge of Borrower, overtly
threatened against or affecting Borrower or its property.
3.7 Correctness of Financial Statements. Borrower's financial statements
which have been delivered to Lender fairly and accurately reflect Borrower's
financial condition as of June 30, 1996; and, since that date there has been no
Material Adverse Change.
3.8 No Subsidiaries. Borrower is not a majority owner of or in a control
relationship with any other business entity.
3.9 Environmental Matters. Without review, Borrower believes that
Borrower is in compliance with all Environmental Laws, except to the extent a
failure to be in such compliance could not reasonably be expected to have a
Material Adverse Effect on Borrower's operations, properties or financial
condition.
3.10 No Event of Default. No Default or Event of Default has occurred
and is continuing.
3.11 Full Disclosure. None of the representations or warranties made by
Borrower in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of Borrower
in connection with the Loan Documents when taken as a whole, contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or
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<PAGE> 12
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
ARTICLE 4 - CONDITIONS PRECEDENT
4.1 Conditions to First Loan. The obligation of Lender to make its first
Loan hereunder is, in addition to the conditions precedent specified in Section
4.2, subject to the fulfillment of the following conditions and to the receipt
by Lender of the documents described below, duly executed and in form and
substance reasonably satisfactory to Lender and its counsel:
(a) Resolutions. A certified copy of the resolutions of the Board
of Directors of Borrower authorizing the execution, delivery and performance by
Borrower of the Loan Documents.
(b) Incumbency and Signatures. A certificate of the secretary of
Borrower certifying the names of the officer or officers of Borrower authorized
to sign the Loan Documents, together with a sample of the true signature of each
such officer.
(c) Opinion of Counsel. The opinion of Wilson, Sonsini, Goodrich
and Rosati, counsel of Borrower, together with any opinions, certificates and
other matters on which such opinion relies.
(d) Articles and By-Laws. Certified copies of the Articles of
Incorporation and By-Laws of Borrower, as amended through the Closing Date.
(e) The Agreement. A counterpart of this Agreement with all
schedules completed and attached thereto, and disclosing such information as is
acceptable to Lender.
(f) Security Agreement. A Security Agreement executed by
Borrower, substantially in the form of Exhibit "C", together with filing copies
(or other evidenced of filing reasonably satisfactory to Lender and its counsel)
of such reasonable Uniform Commercial Code financing statements, collateral
assignments and termination statements, with respect to the Collateral (as
defined in such Security Agreement) as Lender shall reasonably request.
(g) Lien Searches. Uniform Commercial Code lien, judgment,
bankruptcy and tax lien searches of Borrower from [the California Secretary of
State], as of a date reasonably satisfactory to Lender and its counsel.
(h) Good Standing Certificate. A Certificate of Good Standing as
of a date acceptable to Lender with respect to Borrower from the [California
Secretary of State].
(i) Warrant. A warrant issued by Borrower to Lender exercisable
for the Warrant Shares, as described in Section 2.11 hereof.
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<PAGE> 13
4.2 Conditions to All Loans. The obligation of Lender to make its
initial Loan and each subsequent Loan is subject to the following further
conditions precedent that:
(a) No Default. No Default or Event of Default has occurred and
is continuing or will result from the making of any such Loan, and the
representations and warranties of Borrower contained in Article 3 of this
Agreement are true and correct as of the Borrowing Date of such Loan.
(b) No Adverse Material Change. No Material Adverse Change shall
have occurred since the date of the most recent financial statements submitted
to Lender.
(c) Note. Borrower shall have delivered an executed Note
evidencing such Loan, in form and substance satisfactory to Lender.
(d) Borrowing Request. Borrower shall have delivered to Lender a
Borrowing request for such Loan.
ARTICLE 5 - AFFIRMATIVE COVENANTS
During the term of this Agreement and until its performance of all
obligations to Lender, Borrower will:
5.1 Notice to Lender. Promptly give written notice to each Lender of:
(a) Any litigation or administrative or regulatory proceeding
affecting Borrower where the amount claimed against Borrower is Fifty Thousand
Dollars ($50,000) or more, or where the granting of the relief requested would
have a Material Adverse Effect.
(b) Any substantial dispute which may exist between Borrower or
any governmental or regulatory authority.
(c) The occurrence of any Event of Default or any event which
with the giving of notice, the passage of time, or both, would constitute an
Event of Default.
(d) Any change in the location of any of Borrower's places of
business at least thirty (30) days in advance of such change, or of the.
establishment of any new, or the discontinuance of any existing, place of
business.
(e) Any other matter which has resulted or might result in a
Material Adverse Change.
5.2 Financial Statements. Deliver to each Lender or cause to be
delivered to Lender, in form and detail satisfactory to Lender the following
financial information, which Borrower warrants shall be accurate and complete in
all material respects:
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<PAGE> 14
(a) Monthly Financial Statements. As soon as available but no
later than thirty (30) days after the end of each month, Borrower's balance
sheet as of the end of such period, and Borrower's income statement for such
period and for that portion of Borrower's financial reporting year ending with
such period, prepared and attested by a responsible financial officer of
Borrower as being complete and correct and fairly presenting Borrower's
financial condition and the results of Borrower's operations. After a Qualified
Public Offering, the foregoing interim financial statements shall be delivered
no later than 45 days after each fiscal quarter and for the quarter-annual
fiscal period then ended.
(b) Year-End Financial Statements. As soon as available but no
later than one hundred twenty (120) days after and as of the end of each
financial reporting year, a complete copy of Borrower's audit report, which
shall include balance sheet, income statement, statement of changes in equity
and statement of cash flows for such year, prepared and certified by an
independent certified public accountant selected by Borrower and reasonably
satisfactory to Lender (the "Accountant"). The Accountant's certification shall
not be qualified or limited due to a restricted or limited examination by the
Accountant of any material portion of Borrower's records or otherwise.
(c) Compliance Certificates. Simultaneously with the delivery of
each set of financial statements referred to in paragraphs (a) and (b) above, a
certificate of the chief financial officer of Borrower stating whether any
Default or Event of Default exists on the date of such certificate, and if so,
setting forth the details thereof and the action which Borrower is taking or
proposes to take with respect thereto.
(d) Government Required Reports; Press Releases. Promptly after
sending, issuing, making available, or filing, copies of all statements released
to any news media for publication, all reports, proxy statements, and financial
statements that Borrower sends or makes available to its stockholders, and, not
later than five (5) days after actual filing or the date such filing was first
due, all registration statements and reports that Borrower files or is required
to file with the Securities and Exchange Commission.
(e) Other Information. Such other statements, lists of property
and accounts, budgets, forecasts, reports, or other information as any Lender
may reasonably from time to time request.
5.3 Managerial Assistance from Lender. Permit Lender, as a "venture
capital operating company" to participate in, and influence the conduct of
management of Borrower through the exercise of "management rights," as outlined
below:
(a) Permit Lender to make available to Borrower, at no cost to
Borrower, "significant managerial assistance", as defined in Section 2(a)(47) of
the Investment Company Act of 1940, as amended, either in the form of: (i)
consulting arrangements with Lender or any of its officers, directors, employees
or affiliates, (ii) Borrower's allowing Lender to provide recommendations of
prospective candidates for election to Borrower's Board of Directors, or
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<PAGE> 15
(iii) Lender, at Borrower's request, seeking the services of third-party
consultants to aid Borrower with respect to its management and operations;
(b) Permit Lender to make available consulting and advisory
services to officers of Borrower regarding Borrower's equipment acquisition and
financing plans, and such other matters affecting the business, financial
condition and prospects of Borrower as Lender shall reasonably deem relevant;
and
(c) If Lender reasonably believes that financial or other
developments affecting Borrower have impaired or are likely to impair Borrower's
ability to perform its obligations under this Agreement, permit Lender
reasonable access to Borrower's management and/or Board of Directors and
opportunity to present lender's views with respect to such developments.
5.4 Existence. Maintain and preserve Borrower's existence, present form
of business, and all rights and privileges necessary or desirable in the normal
course of its business.
5.5 Accounting Records. Maintain adequate books, accounts and records,
and prepare all financial statements in accordance with GAAP, and in compliance
with the regulations of any governmental or regulatory authority having
jurisdiction over Borrower or Borrower's business; and permit employees or
agents of Lender at such reasonable times as Lender may reasonably request upon
reasonable notice, at Lender's expense, to inspect Borrower's properties, and to
examine, and make copies and memoranda of Borrower's books, accounts and
records.
5.6 Compliance With Laws. Comply with all laws (including Environmental
Laws), rules, regulations applicable to, and all orders and directives of any
governmental or regulatory authority having jurisdiction over, Borrower or
Borrower's business, and with all material agreements to which Borrower is a
party except where no Material Adverse Effect.
5.7 Taxes and Other Liabilities. Pay all Borrower's obligations when
due; pay all taxes and other governmental or regulatory assessments before
delinquency or before any penalty attaches thereto, except as may be contested
in good faith by the appropriate procedures and for which Borrower shall
maintain appropriate reserves; and timely file all required tax returns.
5.8 Use of Proceeds. Use the proceeds of Loans only as set forth in
Article 2 of this Agreement; and not directly or indirectly to purchase or carry
any margin stock, as defined from time to time by the Board of Governors of the
Federal Reserve System in Federal Regulation U.
ARTICLE 6 - NEGATIVE COVENANTS
During the term of this Agreement and until the performance of all
obligations to Lender, Borrower will not:
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<PAGE> 16
6.1 Dividends. Except after a Qualified Public Offering, pay any
dividends or purchase, redeem or otherwise acquire or make any other
distribution with respect to any of Borrower's capital stock, except dividends
or other distributions solely of capital stock of Borrower and repurchases of
employee stock.
6.2 Changes/Mergers. Liquidate or dissolve, or enter into any
consolidation, merger, partnership, joint venture or other combination except
for joint ventures, strategic alliances, licensing and similar arrangements
customary in Borrower's industry for businesses in the development stage of
Borrower and which do not require Borrower to assume or otherwise become liable
for the obligations of any third party not directly related to or arising out of
such arrangement or, without the prior written consent of Lender, require
Borrower to transfer ownership of assets to such joint venture or other entity.
6.3 Sales of Assets. Sell, transfer, lease or otherwise dispose of any
of Borrower's assets except for fair consideration and in the ordinary course of
its business; or enter into any sale or leaseback agreement covering any of
Borrower's fixed or capital assets.
ARTICLE 7 - EVENTS OF DEFAULT
7.1 Events of Default. Upon the occurrence and during the continuation
of any Event of Default, the obligation of Lender to make any additional Loan
shall be suspended. The occurrence of any of the following shall terminate any
obligation of Lender to make any additional Loan; and shall, at the option of
Lender (1) make all sums of Basic Interest, principal, Additional Interest and
any other amounts owing under any Loan Documents immediately due and payable
without notice of default, presentment or demand for payment, protest or notice
of nonpayment or dishonor or any other notices or demands, and (2) give Lender
the right to exercise any other right or remedy provided by contract or
applicable law:
(a) Borrower shall fail to make any payment of principal or
interest under this Agreement, or to pay any fees or other charges when due
under any Loan Document, and such failure continues for three (3) Business Days
or more after the same first becomes due.
(b) Any representation or warranty made, or financial statement,
certificate or other document provided, by Borrower when taken as a whole shall
prove to have been false or misleading in any material respect when made or
deemed made herein.
(c) Borrower shall fail to pay its debts generally as they become
due or shall commence any Insolvency Proceeding with respect to itself; an
involuntary Insolvency Proceeding shall be filed against Borrower, or a
custodian, receiver, trustee, assignee for the benefit of creditors, or other
similar official, shall be appointed to take possession, custody or control of
the properties of Borrower, and such involuntary Insolvency Proceeding, petition
or appointment is acquiesced to by Borrower or is not dismissed within sixty
(60) days; or the dissolution or termination of the business of Borrower.
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<PAGE> 17
(d) Borrower shall be in default beyond any applicable period of
grace or cure under any other agreement involving the borrowing of money, the
purchase of property, the advance of credit or any other monetary liability of
any kind to Lender or to any Person which results in the acceleration of payment
of such obligation in an amount in excess of One Hundred Thousand Dollars
($100,000).
(e) Any governmental or regulatory authority shall take any
judicial or administrative action, or any defined benefit pension plan
maintained by Borrower shall have any unfunded liabilities, any of which has a
Material Adverse Effect.
(f) Any sale, transfer or other disposition of all or a
substantial or material part of the assets of Borrower, including without
limitation to any trust or similar entity, shall occur.
(g) Any judgment(s) singly or in the aggregate in excess of One
Hundred Thousand Dollars ($100,000) shall be entered against Borrower which
remain unsatisfied, unvacated or unstayed pending appeal for thirty (30) or more
days after entry thereof.
(h) Any person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission) of fifty percent (50%) or more of the
outstanding shares of voting stock of Borrower.
(i) Borrower shall fail to perform any of its material duties or
obligations under any Loan Document not specifically referenced in this Article
7 in a material respect.
ARTICLE 8 - GENERAL PROVISIONS
8.1 Notices. Any notice given by any party under any Loan Document shall
be in writing and personally delivered, sent by overnight courier, or United
States mail, postage prepaid, or sent by facsimile, to be promptly confirmed in
writing, or other authenticated message, charges prepaid, to the other party's
or parties' addresses shown on the signature pages hereto. Each party may change
the address or facsimile number to which notices, requests and other
communications are to be sent by giving written notice of such change to each
other party. Notice given hand delivery shall be deemed received on the date
delivered; if sent by overnight courier, on the next business day after delivery
to the courier service; if by first class mail, on the third business day after
deposit in the U.S. Mail; and if by telecopy, on the date of transmission.
8.2 Binding Effect. The Loan Documents shall be binding upon and inure
to the benefit of Borrower and Lender and their respective successors and
assigns; provided, however, that Borrower may not assign or transfer Borrower's
rights or obligations under any Loan Document without each Lender's prior
written consent. Lender reserves the right to sell, assign, transfer, negotiate
or grant participations in all or any part of, or any interest in, Lender's
rights and obligations under the Loan Documents. In connection with any of the
foregoing and subject to
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<PAGE> 18
confidentially agreement, Lender may disclose all documents and information
which Lender now or hereafter may have relating to the Loans, Borrower, or its
business.
8.3 No Waiver. Any waiver, consent or approval by Lender of any Event of
Default or breach of any provision, condition, or covenant of any Loan Document
must be in writing and shall be effective only to the extent set forth in
writing. No waiver of any breach or default shall be deemed a waiver of any
later breach or default of the same or any other provision of any Loan Document.
No failure or delay on the part of Lender in exercising any power, right, or
privilege under any Loan Document shall operate as a waiver thereof, and no
single or partial exercise of any such power, right, or privilege shall preclude
any further exercise thereof or the exercise of any other power, right or
privilege. Lender has the right at its sole option to continue to accept
interest and/or principal payments due under the Loan Documents after default,
and such acceptance shall not constitute a waiver of said default or an
extension of the Maturity Date unless Lender agrees otherwise in writing.
8.4 Rights Cumulative. All rights and remedies existing under the Loan
Documents are cumulative to, and not exclusive of, any other rights or remedies
available under contract or applicable law.
8.5 Unenforceable Provisions. Any provision of any Loan Document
executed by Borrower which is prohibited or unenforceable in any jurisdiction,
shall be so only as to such jurisdiction and only to the extent of such
prohibition or unenforceability, but all the remaining provisions of any such
Loan Document shall remain valid and enforceable.
8.6 Accounting Terms. Except as otherwise provided in this Agreement,
accounting terms and financial covenants and information shall be determined and
prepared in accordance with GAAP.
8.7 Indemnification; Exculpation. Borrower shall pay and protect, defend
and indemnify Lender and Lender's employees, officers, directors, shareholders,
affiliates, correspondents, agents and representatives (other than Lender,
collectively "Agents") against, and hold Lender and each such Agent harmless
from, all claims, actions, proceedings, liabilities, damages, losses, expenses
(including, without limitation, attorneys' fees and costs) and other amounts
incurred by Lender and each such Agent, arising from (i) the matters
contemplated by this Agreement or any other Loan Documents or (ii) any
contention that Borrower has failed to comply with any law, rule, regulation,
order or directive applicable to Borrower's business; provided, however, that
this indemnification shall not apply to any of the foregoing incurred solely as
the result of Lender's or any Agent's negligence or willful misconduct. This
indemnification shall survive the payment and satisfaction of all of Borrower's
Obligations to Lender.
8.8 Reimbursement. Provided that an Event of Default has occurred and is
continuing, Borrower shall reimburse Lender for all costs and expenses,
including without limitation reasonable attorneys' fees and disbursements
expended or incurred by Lender in any arbitration, mediation, judicial
reference, legal action or otherwise in connection with (a) the preparation,
negotiation,
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<PAGE> 19
amendment, interpretation and enforcement of the Loan Documents, including
without limitation during any workout, attempted workout, and/or in connection
with the rendering of legal advice as to Lender's rights, remedies and
obligations under the Loan Documents, (b) collecting any sum which becomes due
Lender under any Loan Document, (c) any proceeding for declaratory relief, any
counterclaim to any proceeding, or any appeal, or (d) the protection,
preservation or enforcement of any rights of Lender. For the purposes of this
section, attorneys' fees shall include, without limitation, fees incurred in
connection with the following: (1) contempt proceedings; (2) discovery; (3) any
motion, proceeding or other activity of any kind in connection with an
Insolvency Proceeding; (4) garnishment, levy, and debtor and third party
examinations; and (5) post judgment motions and proceedings of any kind,
including without limitation any activity taken to collect or enforce any
judgment. All of the foregoing costs and expenses shall be payable upon demand
by Lender, and if not paid within forty-five (45) days of presentation of
invoices shall bear interest at the highest applicable Default Rate.
8.9 Execution in Counterparts. This Agreement may be executed in any
number of counterparts which, when taken together, shall constitute but one
agreement.
8.10 Entire Agreement. The Loan Documents are intended by the parties as
the final expression of their agreement and therefore contain the entire
agreement between the parties and supersede all prior understandings or
agreements concerning the subject matter hereof. This Agreement may be amended
only in a writing signed by Borrower and Lender.
8.11 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN, CENTRAL OR SOUTHERN
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
BORROWER AND LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF BORROWER AND LENDER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. BORROWER AND LENDER EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
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<PAGE> 20
8.12 Waiver of Jury Trial. BORROWER AND LENDER EACH WAIVES ITS
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. BORROWER AND LENDER EACH AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEMS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as
of the date set forth in the preamble.
Addresses for Notices: WINK COMMUNICATIONS, INC.
1001 Marina Village Parkway
Alameda, CA 94501 By: /s/ Brian P. Dougherty
Attn: Chanel S. Aquino -------------------------------------
Fax No.: 510-337-2960 Name: Brian P. Dougherty
-----------------------------------
Its: President/CEO
-----------------------------------
Venture Lending & Leasing, Inc. VENTURE LENDING & LEASING, INC.
2010 North First Street, Suite 310
San Jose, CA 95131
Attn: Salvador O. Gutierrez By: /s/ R.W. Swenson
Chief Financial Officer -------------------------------------
Fax No. 408-435-8625 Name: R.W. Swenson
-----------------------------------
Its: CEO
-----------------------------------
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<PAGE> 1
EXHIBIT 10.33
COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, EXCEPT AS
CONTEMPLATED HEREBY. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF ARE
ENTITLED TO THE BENEFITS UNDER A CERTAIN THIRD AMENDED AND RESTATED INVESTOR
RIGHTS AGREEMENT DATED AS OF JUNE 18, 1997, AS IT MAY BE AMENDED FROM TIME TO
TIME.
VOID AFTER JUNE 18, 2009
WINK COMMUNICATIONS, INC.
WARRANT TO PURCHASE 525,000 SHARES OF COMMON STOCK
----------
THIS CERTIFIES THAT, for value received, the sufficiency of which is
hereby acknowledged, General Electric Capital Corporation, or its affiliates
within the meaning of Rule 501(b) under the Securities Act of 1933, as amended
or permitted assigns, (the "HOLDER"), is entitled to subscribe for and purchase
up to 525,000 shares (the "SHARES") (as adjusted pursuant to Section 3 hereof)
of fully paid and nonassessable Common Stock, par value $.001 per share (the
"Common Stock") of Wink Communications, Inc., a California corporation (the
"COMPANY"), at the price of $8.00 per share (the "EXERCISE PRICE") (as adjusted
pursuant to Section 3 hereof), subject to the provisions and upon the terms and
conditions hereinafter set forth. The term "Common Stock" shall mean, unless the
context otherwise requires, the stock and other securities and property at the
time receivable upon the exercise of this Warrant, after giving effect to all
adjustments under Section 3 hereof. Each reference to a number of Shares of
Common Stock herein shall mean such number after giving effect to all
adjustments under Section 3 hereof. The term "Warrant" as used herein shall
include this Warrant and any warrants delivered in substitution or exchange
therefor as provided herein.
1. Exercise; Payment.
<PAGE> 2
(a) Time of Exercise. This Warrant is fully vested and immediately
exercisable for up to 525,000 Shares
This Warrant may be exercised, in whole or in part, at any time or from
time to time from and after June 18, 1997 and before 5:00 p.m., California local
time, on June 18, 2009, on any business day, for the full or any partial number
of Shares for which this Warrant is then exercisable.
(b) Method of Exercise.
(i) Cash Exercise. The purchase rights represented by this
Warrant may be exercised by the Holder, in whole or in part, by the surrender of
this Warrant (with the notice of exercise form attached hereto as Attachment 1
duly executed) at the principal office of the Company at 1001 Marina Village
Parkway, Alameda, California 94501, and by the payment to the Company, by
certified or cashier's check or other check acceptable to the Company, of an
amount equal to the aggregate Exercise Price of the Shares being purchased.
(ii) Net Issue Exercise. In lieu of exercising this Warrant for
cash under clause (i), the Holder may elect to receive Shares equal to the value
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the Holder a number of
shares of the Company's Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares for which this Warrant is then being
exercised (which number shall be at least the lesser of
50,000 Shares or the remaining number of Shares then
exercisable hereunder).
A = the fair market value of one share of the Company's Common Stock.
B = the Exercise Price (as adjusted to the date of such calculation).
(iii) Fair Market Value. For purposes of this Section 1, the fair
market value of the Company's Common Stock shall mean:
(A) The average closing ask prices of the Company's Common
Stock quoted in the Nasdaq National Market Summary or the closing prices quoted
on any exchange on which the Common Stock is listed, whichever is applicable, as
published in the Western Edition of The Wall Street Journal for the ten trading
days prior to the date of determination of fair market value (provided, however,
if this Warrant is exercised in connection with the Company's initial public
offering of its Common Stock pursuant to an effective registration statement
under the
<PAGE> 3
Securities Act of 1933, as amended (the "IPO"), covering the offering of its
Common Stock for the account of the Company, the fair market value shall be
deemed to be the gross price to the public per share in such IPO);
(B) If the Company's Common Stock is not traded
Over-The-Counter or on an exchange, the per share fair market value of the
Common Stock shall be the fair market value price per share as determined in
good faith by the Company's Board of Directors; provided, however, that if such
determination is not reasonably acceptable to the Holder, such determination
shall be made by an investment banking firm mutually acceptable to the Company
and Holder; or, if the Company and the Holder are not able to so mutually agree
upon an investment banking firm, then by an investment banking firm selected by
two investment banking firms, one selected by the Company and the other selected
by the Holder. The Holder shall bear the expense of all such investment banking
firms.
(c) Stock Certificates. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Common Stock issuable upon such exercise shall be treated for all
purposes as the Holder of such shares of record as of the close of business on
such date. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of Common Stock so purchased shall be
delivered to the Holder promptly and, unless this Warrant has been fully
exercised or has expired, a new Warrant representing the shares with respect to
which this Warrant shall not have been exercised shall also be issued to the
Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issuance thereof and
any preemptive or similar rights. The Company shall pay all expenses and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of
certificates representing the Shares, provided that the Company shall not be
responsible to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of the Shares in a name other than the
Holder who surrendered the Warrant in exercise hereof. During the period within
which the rights represented by this Warrant may be exercised, the Company shall
at all times have authorized and reserved for issuance sufficient shares of its
Common Stock to provide for the full exercise of the rights represented by this
Warrant, taking into account the application of Section 3 below.
3. Adjustment of Exercise Price and Number of Shares. Notwithstanding
anything to the contrary in this Warrant:
(a) Adjustments. The Exercise Price per share of this Warrant
shall be subject to adjustment from time to time as follows:
(i) Issuance of Common Stock and Common Stock Equivalents.
If, after the date hereof but prior to an IPO effectuated through a firm
commitment underwriting at a price
<PAGE> 4
per share (prior to underwriter commissions and offering expenses) of not less
than $8.00 per share (as appropriately adjusted for any subsequent stock splits,
stock dividends, reclassifications or recapitalizations) and with gross proceeds
to the Company (prior to underwriter commissions and offering expenses) of not
less than $10,000,000, the Company shall issue (or, pursuant to Subsection
(a)(ii)(3) hereof, shall be deemed to have issued) any Common Stock other than
"Excluded Stock" (as defined below) for a consideration per share less than the
Exercise Price in effect immediately prior to the issuance of such Common Stock
(excluding stock dividends, subdivisions, split-ups, combinations, dividends or
recapitalizations covered by Subsections (a)(iv), (v), (vi) and (vii)), the
Exercise Price in effect immediately after each such issuance shall forthwith be
adjusted to a price equal to the quotient obtained by dividing:
(1) an amount equal to the sum of
(y) the total number of shares of Common
Stock out standing (including any shares of Common Stock issuable upon exercise
of this Warrant, or deemed to have been issued pursuant to Subsections
(a)(ii)(3) and (a)(iii)) immediately prior to such issuance multiplied by the
Exercise Price in effect immediately prior to such issuance, plus
(z) the consideration received by the
Company upon such issuance, by
(2) (y) the total number of shares of Common
Stock outstanding immediately prior to such issuance of Common Stock (including
any shares of Common Stock issuable upon exercise of this Warrant or deemed to
have been issued pursuant to Subsections (a)(ii)(3) and (a)(iii)) plus
(z) the number of shares of Common Stock
actually issued in the transaction which resulted in the adjustment pursuant to
this Subsection (a)(i).
In each such case the Holder, upon the exercise hereof, shall be entitled to
receive, in lieu of the shares of Common Stock theretofore receivable upon the
exercise of this Warrant, a number of shares of Common Stock determined by (i)
dividing the Exercise Price then in effect by the Exercise Price as adjusted as
provided above as a result of such sale and (ii) multiplying the quotient by the
number of shares of Common Stock called for on the face of this Warrant, subject
to Sections 1(a)(ii) and (iii).
(ii) Treatment of Certain Issuances. For the purposes of
any adjustment of the Exercise Price and the number of shares of Common Stock
issuable upon exercise of this Warrant pursuant to Subsection (a)(i), the
following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
after deducting any discounts or commissions paid or incurred by the Company in
connection with the issuance and sale thereof.
<PAGE> 5
(2) In the case of the issuance of Common Stock for
a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as reasonably determined
by the board of directors of the Company, in accordance with generally accepted
accounting treatment.
(3) In the case of the issuance of (x) options to
purchase or rights to subscribe for Common Stock (other than Excluded Stock),
(y) securities by their terms convertible into or exchangeable for Common Stock
(other than Excluded Stock), or (z) options to purchase or rights to subscribe
for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been issued at the time
such options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in Subsections (a)(ii)(1) and
(a)(ii)(2) above), if any, received by the Company upon the issuance of such
options or rights plus the minimum purchase price provided in such options or
rights for the Common Stock covered thereby;
(B) the aggregate maximum number of shares
of Common Stock deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof, shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration received by the
Company for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
additional minimum consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in Subsections (a)(ii)(1) and (a)(ii)(2) above);
(C) on any change in the number of shares of
Common Stock deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or exchangeable securities, or on
any change in the minimum purchase price of such options, rights or securities,
other than a change resulting from the antidilution provisions of such options,
rights or securities, the Exercise Price shall forthwith be readjusted to such
Exercise Price as would have obtained had the adjustment made upon (x) the
issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change or (y) the options or rights related to such
securities not converted or exchanged prior to such change, as the case may be,
been made upon the basis of such change; and
(D) on the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Exercise Price shall forthwith be readjusted to such Exercise
Price as would have obtained had the adjustment made upon the issuance
<PAGE> 6
of such options, rights, convertible or exchangeable securities or options or
rights relate to such convertible or exchangeable securities, as the case may
be, been made upon the basis of the issuance of only the number of shares of
Common Stock actually issued upon the exercise of such options or rights, upon
the conversion or exchange of such convertible or exchangeable securities or
upon the exercise of the options or rights related to such convertible or
exchangeable securities, as the case may be.
(A) Excluded Stock. "Excluded Stock" shall mean:
(1) all shares of Common Stock issued and
outstanding on April 11, 1997;
(2) all shares of Series A Preferred Stock, Series
B Preferred Stock and Series C Preferred Stock of the Company (in each case,
outstanding on the date of this Warrant), and the Common Stock into which such
shares of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock are convertible;
(3) up to 17,500 shares of Series B Preferred Stock
of the Company, 500,000 shares of Common Stock, and 125,000 shares of Common
Stock issuable upon exercise of warrants issued to Venture Lending & Leasing,
Inc., Benchmark Capital Partners, L.P. and Benchmark Founders Fund, L.P., and WC
Investors, LLC, respectively, up to 375,000 shares of Common Stock issuable upon
exercise of warrants issued to NBC Multimedia, Inc. and up to 525,000 shares of
Common Stock issuable upon exercise of this Warrant; and
(4) up to 3,000,000 shares of Common Stock or other
securities issued after February 1, 1995 to employees, officers, directors,
contractors, advisors, consultants, banks, lessors or vendors of the Company;
All outstanding shares of Excluded Stock (including shares issuable upon
conversion of the Company's Series A Preferred Stock , the Series B Preferred
Stock and the Series C Preferred Stock) shall be deemed to be outstanding for
all purposes of the computations of Subsection(a)(i).
(iii) Stock Splits and Stock Dividends. If the number of
shares of Common Stock outstanding at any time after the date hereof is
increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then, on the date such
payment is made or such change is effective, the Exercise Price shall be
proportionately decreased and the number of shares of Common Stock issuable on
exercise of this Warrant shall be increased in proportion to such increase of
outstanding shares. Such adjustment shall become effective at the close of
business on the date the dividend, subdivision or split-up becomes effective.
(iv) Reverse Stock Splits. If the number of shares of
Common Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, then, on the effective
date of such combination, the Exercise Price shall be proportionately increased
and the number of shares of Common Stock issuable on exercise of this
<PAGE> 7
Warrant shall be decreased in proportion to such decrease in outstanding shares.
Such adjustment shall become effective at the close of business on the date the
combination becomes effective.
(v) Certain Dividends. In case the Company shall
declare a dividend upon its Common Stock generally payable otherwise than out of
retained earnings or shall distribute to all holders of its Common Stock shares
of its capital stock (other than Common Stock), stock or other securities of
other persons, evidences of indebtedness issued by the Company or other persons,
assets (excluding cash dividends) or options or rights (excluding options to
purchase and rights to subscribe for Common Stock or other securities of the
Company convertible into or exchangeable for Common Stock), then, in each such
case, the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the date of such dividend or distribution by a
fraction, the numerator of which is the Aggregate Valuation of the Company as of
such date less the fair market value of the cash, securities, indebtedness,
assets or rights so distributed and the denominator of which is the Aggregate
Valuation of the Company. For purposes hereof, "Aggregate Valuation of the
Company" shall mean the Fair Market Value of one share of the Company's Common
Stock, determined in the manner set forth in Section 1(b)(iii), multiplied by
the total number of shares of Common Stock outstanding (including any shares of
Common Stock issuable upon exercise of this Warrant, or deemed to have been
issued pursuant to Subsections 3(a)(ii)(3) and 3(a)(iii)) as of such date.
(vi) Reorganization; Reclassification. In the case, at
any time after the date hereof, of any capital reorganization, or any
reclassification of the stock of the Company (other than as a result of a stock
dividend or subdivision, split-up or combination of shares), the consolidation
or merger of the Company with or into another person (other than a consolidation
or merger in which the Company is the continuing entity and which does not
result in any change in the Common Stock), or a sale or transfer of all or
substantially all of the Company's assets, this Warrant shall, after such
reorganization, reclassification, consolidation, merger or sale, be exercisable
for the kind and aggregate number of shares of stock or other securities or
property of the Company or other entity to which the Holder would have been
entitled if, immediately prior to such reorganization, reclassification,
consolidation, merger or sale, such Holder had exercised this Warrant in full
(subject to all adjustments under this Section 3). The provisions of this clause
(vii) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers or sales.
(vii) All calculations under this Subsection (a) shall be
made to the nearest cent or to the nearest one hundredth (1/100) of a share, as
appropriate.
(b) Minimal Adjustments. No adjustment in the Exercise Price need
be made if such adjustment would result in a change in the Exercise Price of
less than $0.01. Any adjustment of less than $0.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$0.01 or more in the Exercise Price. If, after one or more adjustments to the
Exercise Price pursuant to this Section 3, the Exercise Price cannot be reduced
further without falling below the greater of (i) $0.001 or (ii) the lowest
positive exercise price legally permissible for warrants to acquire shares of
Common Stock, the Company shall make further adjustment to compensate the
holder, consistent with the foregoing principles, as the Board of Directors,
acting in good faith, deems necessary,
<PAGE> 8
including an increase in the number of Shares issuable upon exercise of
outstanding Warrants and/or a cash payment to the Holder.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice by first class mail to the holder of
this Warrant setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the number of Shares which may be purchased and the Exercise
Price therefor after giving effect to such adjustment.
5. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of such fractional
shares the Company shall make a cash payment therefor based upon the Exercise
Price then in effect.
6. Representations of the Company. The Company represents that all
corporate actions on the part of the Company, its officers, directors and
shareholders necessary for the sale and issuance of the Shares and the issuance
of this Warrant pursuant hereto and the performance of the Company's obligations
hereunder were taken prior to and are effective as of the effective date of this
Warrant.
7. Representations and Warranties by the Holder. The Holder represents
and warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended (the "ACT"), except as contemplated hereby. Upon exercise of
this Warrant, the Holder shall, if so requested by the Company, confirm in
writing, in a form reasonably satisfactory to the Company, that the securities
issuable upon exercise of this Warrant are being acquired for investment and not
with a view toward public distribution or resale, except as contemplated hereby.
(b) The Holder understands that the Warrant and the Shares have
not been registered under the Act in reliance upon a specific exemption, which
exemption depends upon, among other things, the bona fide nature of its
investment as expressed in the Warrant Purchase Agreement dated as of the date
hereof (the "Agreement"). In this connection, the Holder understands that, in
the view of the Securities and Exchange Commission ("SEC"), the statutory basis
for such exemption may be unavailable if its representation was predicated
solely upon a present intention to hold the Warrant or the Shares for a period
of one year or any other fixed period in the future. The Holder further
understands that the Warrant and/or the Shares must be held indefinitely and are
not fully transferable unless subsequently registered under the Act or unless an
exemption from registration is otherwise available. The Holder further
understands that the Shares have not been qualified under the California
Securities Law of 1968 (the "CALIFORNIA LAW") by reason of their issuance in a
transaction exempt from the qualification requirements of the California Law
pursuant
<PAGE> 9
to Section 25102(f) thereof, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent expressed above.
(c) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the purchase
of the Shares pursuant to the terms of this Warrant.
8. Restrictive Legend.
The Shares issuable upon exercise of this Warrant (unless
registered under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF, EXCEPT AS CONTEMPLATED HEREBY. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
The Shares issuable upon exercise of this Warrant are entitled to the benefits
under and shall be stamped or imprinted with all legends required by that
certain Third Amended and Restated Investor Rights Agreement, dated as of June
18, 1997.
9. Restrictions Upon Transfer and Removal of Legend.
(a) The Company need not register a transfer of Shares bearing
the restrictive legend set forth in Section 8 hereof, unless the conditions
specified in such legend are satisfied. The Company may also instruct its
transfer agent not to register the transfer of the Shares, unless one of the
conditions specified in the legend referred to in Section 8 hereof is satisfied.
(b) Notwithstanding the provisions of paragraph (a) above, no
opinion of counsel or "no-action" letter shall be necessary for a transfer
without consideration by any Holder (i) to an affiliate of the Holder, (ii) if
such Holder is a partnership, to a partner or retired partner of such
partnership who retires after the date hereof or to the estate of any such
partner or retired partner, (iii) if such Holder is a corporation, to a
shareholder of such corporation, or to any other corporation under common
control, direct or indirect, with such Holder, or (iv) by gift, will or
intestate succession of any individual Holder or individual partner of a Holder,
in whole or in part, to his spouse or siblings, or to the lineal descendants or
ancestors of such Holder or his spouse, if the
<PAGE> 10
transferee agrees in writing to be subject to the terms hereof to the same
extent as if such transferee were the original Holder hereunder. Subject to the
terms hereof, this Warrant and all rights hereunder are transferable, in whole
or in part, on the books of the Company maintained for such purpose at its
principal office referred to above by Holder. Upon any partial transfer, the
Company will issue and deliver to Holder a new Warrant or Warrants with respect
to the portion of the Warrant not so transferred and shall issue to that
transferee a new Warrant or Warrants relating to the portion of this Warrant so
transferred. Each person who is a transferee of all or any portion of this
Warrant in accordance herewith shall be deemed a Holder entitled to all of the
benefits and rights hereunder.
(c) In order to effect any transfer of all or a portion of this
Warrant or the Shares, the transferor shall deliver a completed and duly
executed Notice of Transfer (attached hereto as Attachment 3).
(d) The legend relating to the Act endorsed on this Warrant or
stock certificate and the stop transfer instructions with respect to the Warrant
or the Shares represented by such certificate shall be removed and the Company
shall issue a new Warrant or certificate, as applicable, without such legend to
the Holder of the Warrant or such Shares if the transfer of such Shares is
registered under the Act and a prospectus meeting the requirements of Section 10
of the Act is available, or if such Holder provides to the Company an opinion of
counsel for such Holder of the Warrant or the Shares reasonably satisfactory to
the Company or a no-action letter or interpretive opinion of the staff of the
SEC to the effect that a public sale, transfer or assignment of such Shares may
be made without registration and without compliance with any restriction such as
Rule 144.
(e) In case this Warrant shall be mutilated, lost, stolen, or
destroyed, the Company may, in its discretion, issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen, or destroyed, a new Warrant of
like tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction and indemnification reasonably satisfactory to it. An applicant
for such a substitute Warrant shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
10. Rights of Shareholders. No Holder of this Warrant shall be entitled,
as a Warrant Holder, to vote or receive dividends or be deemed the Holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issuance of stock, reclassification of stock, change of
par value, consolidation, merger, conveyance, or otherwise) or to receive notice
of meetings, or to receive dividends until the Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, each Holder
shall be entitled to the rights and benefits in and shall be
<PAGE> 11
bound by the obligations of that certain Third Amended and Restated Investor
Rights Agreement dated as of June 18, 1997 as set forth therein (as the same may
be modified in accordance therewith).
11. Notices, Etc. All notices and other communications from the Company
to the Holder shall be mailed by first class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company in
writing by the Holder.
12. Governing Law, Headings. This Warrant is being delivered in the
State of California and shall be construed and enforced in accordance with and
governed by the laws of such State. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof.
13. Change. Neither this Warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
14. No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through reorganization, recapitalization, consolidation,
merger, dissolution, issue, sale or repurchase of securities, sale of assets or
any other voluntary action, intentionally avoid or seek to avoid, directly or
indirectly, the observance or performance of any of the terms of this Warrant or
the wrongful denial of any of the benefits or rights (including, without
limitation, protection against dilution) intended to be conferred to the Holder,
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 Holders of the Warrant against impairment.
<PAGE> 12
15. Limitations on Assignment. The right to purchase Shares hereunder
may not be assigned as to any Shares for which this Warrant is not exercisable,
except to any of the affiliates within the meaning of Rule 501(b) of the
Securities Act of 1933, as amended.
Issued this 18th day of June 1997.
WINK COMMUNICATIONS, INC.
By: /s/ Maggie Wilderotter
----------------------------
Maggie Wilderotter
Chief Executive Officer and
President
<PAGE> 13
ATTACHMENT 1
NOTICE OF EXERCISE
TO: WINK COMMUNICATIONS, INC.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: President
1. The undersigned hereby elects to purchase __________ shares of Common Stock
of WINK COMMUNICATIONS, INC. pursuant to the terms of the attached Warrant.
2. Method of Exercise (Please mark the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in
full for the purchase price of the shares being purchased,
together with all applicable transfer taxes, if any.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b)(ii)
of the Warrant.
3. Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:
_________________________________
(Name)
_________________________________
_________________________________
(Address)
4. The undersigned hereby represents and warrants that the aforesaid shares of
Common Stock 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 and all representations and warranties of
the undersigned set forth in Section 7 of the attached Warrant are true and
correct as of the date hereof. In support thereof, the undersigned hereby
delivers an Investment Representation Statement in a form substantially similar
to the form attached to the Warrant as Attachment 2.
________________________________
(Signature)
______________________________ Title: __________________________
(Date)
<PAGE> 14
ATTACHMENT 2
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : _________________________
SELLER : WINK COMMUNICATIONS, INC.
COMPANY : WINK COMMUNICATIONS, INC.
SECURITY : COMMON STOCK ISSUED UPON EXERCISE OF THE STOCK
PURCHASE WARRANT ISSUED ON _____ ___, 1997
AMOUNT : __________ SHARES
DATE : ______________
In connection with the purchase of the above-listed Securities, the Purchaser
represents to the Seller and to the Company the following:
(a) Purchaser 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. Purchaser is
purchasing these Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Purchaser understands that the Securities 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 its
investment intent as expressed herein. In this connection, Purchaser understands
that, in the view of the Securities and Exchange Commission (the "SEC"), the
statutory basis for such exemption may be unavailable if its representation was
predicated solely upon a present intention to hold these Securities for a period
of one year or any other fixed period in the future.
(c) Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, Purchaser
understands that the Company is under no obligation to register the Securities.
In addition, Purchaser understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless the transfer thereof is registered under the Securities Act or
such registration is not required in the opinion of counsel (which may include
counsel for Purchaser) reasonably acceptable to the Company.
(d) Purchaser is familiar with the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired,
<PAGE> 15
directly or indirectly, from the issuer thereof, in a non-public offering
subject to the satisfaction of certain conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than two years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) Purchaser agrees, in connection with the Company's initial public
offering of the Company's securities, that, upon request of the Company or the
underwriters managing any underwritten offering of the Company's Securities, not
to publicly sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company in a public
transaction held by the undersigned (other than those securities included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as may
be requested by the underwriters; provided that the officers and directors of
the Company who own stock of the Company have also agreed to such restrictions.
(f) Purchaser further understands that in the event all of the
applicable requirements of Rule 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 Rule 144 are
not exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 may 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.
PURCHASER
By: ________________________________
Title: ________________________________
Date: ________________________________
<PAGE> 16
ATTACHMENT 3
NOTICE OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________ the right represented by
the attached Warrant to purchase ____________* shares of Common Stock of WINK
COMMUNICATIONS INC., to which the attached Warrant relates, and appoints
______________ Attorney to transfer such right on the books of WINK
COMMUNICATIONS ,INC., with full power of substitution in the premises.
Dated: ____________________
_______________________________________
By:_____________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant)
_______________________________________
(Address)
Signed in the presence of:
- - ----------------------------
* Insert here the number of shares without making any adjustment for additional
shares of Common Stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of the Warrant, may be
deliverable upon exercise.
<PAGE> 1
EXHIBIT 10.34
AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, EXCEPT AS
CONTEMPLATED HEREBY. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF ARE
ENTITLED TO THE BENEFITS UNDER A CERTAIN THIRD AMENDED AND RESTATED INVESTOR
RIGHTS AGREEMENT DATED AS OF JUNE 18, 1997, AS IT MAY BE AMENDED FROM TIME TO
TIME.
VOID AFTER JUNE 18, 2009
WINK COMMUNICATIONS, INC.
AMENDED AND RESTATED WARRANT TO PURCHASE
375,000 SHARES OF COMMON STOCK
----------
THIS CERTIFIES THAT, for value received, the sufficiency of which is hereby
acknowledged, NBC Multimedia, Inc., or its affiliates within the meaning of Rule
501(b) under the Securities Act of 1933, as amended or permitted assigns, (the
"HOLDER"), is entitled to subscribe for and purchase up to 375,000 shares (the
"SHARES") (as adjusted pursuant to Section 3 hereof) of fully paid and
nonassessable Common Stock, par value $.001 per share (the "Common Stock") of
Wink Communications, Inc., a California corporation (the "COMPANY"), at the
price of $8.00 per share (the "EXERCISE PRICE") (as adjusted pursuant to Section
3 hereof), subject to the provisions and upon the terms and conditions
hereinafter set forth. The term "Common Stock" shall mean, unless the context
otherwise requires, the stock and other securities and property at the time
receivable upon the exercise of this Warrant, after giving effect to all
adjustments under Section 3 hereof. Each reference to a number of Shares of
Common Stock herein shall mean such number after giving effect to all
adjustments under Section 3 hereof. The term "Warrant" as used herein shall
include this Warrant and any warrants delivered in substitution or exchange
therefor as provided herein.
<PAGE> 2
1. Exercise; Payment.
(a) Time of Exercise. This Warrant is exercisable as follows:
(i) As of June 18, 1997, this Warrant shall be fully vested and
immediately exercisable for up to 75,000 Shares; and
(ii) As of February 1, 1998, this Warrant shall be fully vested and
immediately exercisable for up to an additional 300,000 shares of Common Stock.
This Warrant may be exercised, in whole or in part, at any time or from
time to time from and after June 18, 1997 and before 5:00 p.m., California local
time, on June 18, 2009, on any business day, for the full or any partial number
of Shares for which this Warrant is then exercisable.
(b) Method of Exercise.
Cash Exercise. The purchase rights represented by this Warrant may be exercised
by the Holder, in whole or in part, by the surrender of this Warrant (with the
notice of exercise form attached hereto as Attachment 1 duly executed) at the
principal office of the Company at 1001 Marina Village Parkway, Alameda,
California 94501, and by the payment to the Company, by certified or cashier's
check or other check acceptable to the Company, of an amount equal to the
aggregate Exercise Price of the Shares being purchased.
(i) Net Issue Exercise. In lieu of exercising this Warrant for
cash under clause (i), the Holder may elect to receive Shares equal to the value
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the Holder a number of
shares of the Company's Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares for which this Warrant is then being
exercised (which number shall be at least the lesser of 50,000
Shares or the remaining number of Shares then exercisable
hereunder).
A = the fair market value of one share of the Company's Common
Stock.
B = the Exercise Price (as adjusted to the date of such
calculation).
(ii) Fair Market Value. For purposes of this Section 1, the fair
market value of the Company's Common Stock shall mean:
2
<PAGE> 3
(A) The average closing ask prices of the Company's Common
Stock quoted in the Nasdaq National Market Summary or the closing prices quoted
on any exchange on which the Common Stock is listed, whichever is applicable, as
published in the Western Edition of The Wall Street Journal for the ten trading
days prior to the date of determination of fair market value (provided, however,
if this Warrant is exercised in connection with the Company's initial public
offering of its Common Stock pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "IPO"), covering the offering
of its Common Stock for the account of the Company, the fair market value shall
be deemed to be the gross price to the public per share in such IPO);
(B) If the Company's Common Stock is not traded
Over-The-Counter or on an exchange, the per share fair market value of the
Common Stock shall be the fair market value price per share as determined in
good faith by the Company's Board of Directors; provided, however, that if such
determination is not reasonably acceptable to the Holder, such determination
shall be made by an investment banking firm mutually acceptable to the Company
and Holder; or, if the Company and the Holder are not able to so mutually agree
upon an investment banking firm, then by an investment banking firm selected by
two investment banking firms, one selected by the Company and the other selected
by the Holder. The Holder shall bear the expense of all such investment banking
firms.
(c) Stock Certificates. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes as
the Holder of such shares of record as of the close of business on such date. In
the event of any exercise of the rights represented by this Warrant,
certificates for the shares of Common Stock so purchased shall be delivered to
the Holder promptly and, unless this Warrant has been fully exercised or has
expired, a new Warrant representing the shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable upon
the exercise of the rights represented by this Warrant will, upon issuance and
receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issuance thereof and
any preemptive or similar rights. The Company shall pay all expenses and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of
certificates representing the Shares, provided that the Company shall not be
responsible to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of the Shares in a name other than the
Holder who surrendered the Warrant in exercise hereof. During the period within
which the rights represented by this Warrant may be exercised, the Company shall
at all times have authorized and reserved for issuance sufficient shares of its
Common Stock to provide for the full exercise of the rights represented by this
Warrant, assuming that this Warrant is exercisable for the full 375,000 Shares
from and after the date of original issuance of this Warrant and taking into
account the application of Section 3 below.
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<PAGE> 4
3. Adjustment of Exercise Price and Number of Shares. Notwithstanding
anything to the contrary in this Warrant:
(a) Adjustments. The Exercise Price per share of this Warrant shall be
subject to adjustment from time to time as follows:
(i) Issuance of Common Stock and Common Stock Equivalents. If, after
the date of original issuance of this Warrant but prior to an IPO effectuated
through a firm commitment underwriting at a price per share (prior to
underwriter commissions and offering expenses) of not less than $8.00 per share
(as appropriately adjusted for any subsequent stock splits, stock dividends,
reclassifications or recapitalizations) and with gross proceeds to the Company
(prior to underwriter commissions and offering expenses) of not less than
$10,000,000, the Company shall issue (or, pursuant to Subsection (a)(ii)(3)
hereof, shall be deemed to have issued) any Common Stock other than "Excluded
Stock" (as defined below) for a consideration per share less than the Exercise
Price in effect immediately prior to the issuance of such Common Stock
(excluding stock dividends, subdivisions, split-ups, combinations, dividends or
recapitalizations covered by Subsections (a)(iv), (v), (vi) and (vii)), the
Exercise Price in effect immediately after each such issuance shall forthwith be
adjusted to a price equal to the quotient obtained by dividing:
(1) an amount equal to the sum of
(y) the total number of shares of Common Stock outstanding
(including any shares of Common Stock issuable upon exercise of this Warrant, or
deemed to have been issued pursuant to Subsections (a)(ii)(3) and (a)(iii))
immediately prior to such issuance multiplied by the Exercise Price in effect
immediately prior to such issuance, plus
(z) the consideration received by the Company upon such
issuance, by
(2) (y) the total number of shares of Common Stock outstanding
immediately prior to such issuance of Common Stock (including any shares of
Common Stock issuable upon exercise of this Warrant or deemed to have been
issued pursuant to Subsections (a)(ii)(3) and (a)(iii)) plus
(z) the number of shares of Common Stock actually issued in
the transaction which resulted in the adjustment pursuant to this Subsection
(a)(i).
In each such case the Holder, upon the exercise hereof, shall be entitled to
receive, in lieu of the shares of Common Stock theretofore receivable upon the
exercise of this Warrant, a number of shares of Common Stock determined by (i)
dividing the Exercise Price then in effect by the Exercise Price as adjusted as
provided above as a result of such sale and (ii) multiplying the quotient by the
number of shares of Common Stock called for on the face of this Warrant, subject
to Sections 1(a)(ii) and (iii).
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<PAGE> 5
(ii) Treatment of Certain Issuances. For the purposes of any
adjustment of the Exercise Price and the number of shares of Common
Stock issuable upon exercise of this Warrant pursuant to Subsection
(a)(i), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor after
deducting any discounts or commissions paid or incurred by the Company in
connection with the issuance and sale thereof.
(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as reasonably determined by
the board of directors of the Company, in accordance with generally accepted
accounting treatment.
(3) In the case of the issuance of (x) options to purchase or
rights to subscribe for Common Stock (other than Excluded Stock), (y) securities
by their terms convertible into or exchangeable for Common Stock (other than
Excluded Stock), or (z) options to purchase or rights to subscribe for such
convertible or exchangeable securities:
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to subscribe for
Common Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in Subsections (a)(ii)(1) and (a)(ii)(2)
above), if any, received by the Company upon the issuance of such options or
rights plus the minimum purchase price provided in such options or rights for
the Common Stock covered thereby;
(B) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities, or upon the exercise of options to purchase or rights
to subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof, shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the consideration received by the Company for any such
securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the additional minimum
consideration, if any, to be received by the Company upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner provided in
Subsections (a)(ii)(1) and (a)(ii)(2) above);
(C) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options or rights or conversion of or
exchange for such convertible or exchangeable securities, or on any change in
the minimum purchase price of such options, rights or securities, other than a
change resulting from the antidilution provisions of such options, rights or
securities, the Exercise Price shall forthwith be readjusted to such Exercise
Price as would have obtained had the adjustment made upon (x) the issuance of
such options, rights or
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<PAGE> 6
securities not exercised, converted or exchanged prior to such change or (y) the
options or rights related to such securities not converted or exchanged prior to
such change, as the case may be, been made upon the basis of such change; and
(D) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration of any
options or rights related to such convertible or exchangeable securities, the
Exercise Price shall forthwith be readjusted to such Exercise Price as would
have obtained had the adjustment made upon the issuance of such options, rights,
convertible or exchangeable securities or options or rights relate to such
convertible or exchangeable securities, as the case may be, been made upon the
basis of the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such convertible or exchangeable securities or upon the exercise of
the options or rights related to such convertible or exchangeable securities, as
the case may be.
(iii) Excluded Stock. "Excluded Stock" shall mean:
(1) all shares of Common Stock issued and outstanding on April
1, 1997;
(2) all shares of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock of the Company (in each case, outstanding on
the date of this Warrant), and the Common Stock into which such shares of Series
A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock are
convertible;
(3) up to 17,500 shares of Series B Preferred Stock of the
Company, 500,000 shares of Common Stock, and 125,000 shares of Common Stock
issuable upon exercise of warrants issued to Venture Lending & Leasing, Inc.,
Benchmark Capital Partners, L.P. and Benchmark Founders Fund, L.P., and WC
Investors, LLC, respectively, up to 525,000 shares of Common Stock issuable upon
exercise of warrants issued to General Electric Capital Corporation and up to
375,000 shares of Common Stock issuable upon exercise of this Warrant; and
(4) up to 5,564,546 shares of Common Stock or other securities
issued after February 1, 1995 to employees, officers, directors, contractors,
advisors, consultants, banks, lessors or vendors of the Company;
All outstanding shares of Excluded Stock (including shares issuable upon
conversion of the Company's Series A Preferred Stock , the Series B Preferred
Stock and the Series C Preferred Stock) shall be deemed to be outstanding for
all purposes of the computations of Subsection(a)(i).
(iv) Stock Splits and Stock Dividends. If the number of shares of
Common Stock outstanding at any time after the date of original issuance of this
Warrant is increased by a stock dividend payable in shares of Common Stock or by
a subdivision or split-up of shares of Common Stock, then, on the date such
payment is made or such change is effective, the Exercise
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<PAGE> 7
Price shall be proportionately decreased and the number of shares of Common
Stock issuable on exercise of this Warrant shall be increased in proportion to
such increase of outstanding shares. Such adjustment shall become effective at
the close of business on the date the dividend, subdivision or split-up becomes
effective.
(v) Reverse Stock Splits. If the number of shares of Common Stock
outstanding at any time after the date of original issuance of this Warrant is
decreased by a combination of the outstanding shares of Common Stock, then, on
the effective date of such combination, the Exercise Price shall be
proportionately increased and the number of shares of Common Stock issuable on
exercise of this Warrant shall be decreased in proportion to such decrease in
outstanding shares. Such adjustment shall become effective at the close of
business on the date the combination becomes effective.
(vi) Certain Dividends. In case the Company shall declare a dividend
upon its Common Stock generally payable otherwise than out of retained earnings
or shall distribute to all holders of its Common Stock shares of its capital
stock (other than Common Stock), stock or other securities of other persons,
evidences of indebtedness issued by the Company or other persons, assets
(excluding cash dividends) or options or rights (excluding options to purchase
and rights to subscribe for Common Stock or other securities of the Company
convertible into or exchangeable for Common Stock), then, in each such case, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the date of such dividend or distribution by a fraction,
the numerator of which is the Aggregate Valuation of the Company as of such date
less the fair market value of the cash, securities, indebtedness, assets or
rights so distributed and the denominator of which is the Aggregate Valuation of
the Company. For purposes hereof, "Aggregate Valuation of the Company" shall
mean the Fair Market Value of one share of the Company's Common Stock,
determined in the manner set forth in Section 1(b)(iii), multiplied by the total
number of shares of Common Stock outstanding (including any shares of Common
Stock issuable upon exercise of this Warrant, or deemed to have been issued
pursuant to Subsections 3(a)(ii)(3) and 3(a)(iii)) as of such date.
(vii) Reorganization; Reclassification. In the case, at any time
after the date of original issuance of this Warrant, of any capital
reorganization, or any reclassification of the stock of the Company (other than
as a result of a stock dividend or subdivision, split-up or combination of
shares), the consolidation or merger of the Company with or into another person
(other than a consolidation or merger in which the Company is the continuing
entity and which does not result in any change in the Common Stock), or a sale
or transfer of all or substantially all of the Company's assets, this Warrant
shall, after such reorganization, reclassification, consolidation, merger or
sale, be exercisable for the kind and aggregate number of shares of stock or
other securities or property of the Company or other entity to which the Holder
would have been entitled if, immediately prior to such reorganization,
reclassification, consolidation, merger or sale, such Holder had exercised this
Warrant in full, assuming that this Warrant is then exercisable for 375,000
Shares (subject to all adjustments under this Section 3.) The provisions of this
clause (vii) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers or sales.
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<PAGE> 8
(viii) All calculations under this Subsection (a) shall be made to
the nearest cent or to the nearest one hundredth (1/100) of a share, as
appropriate.
(b) Minimal Adjustments. No adjustment in the Exercise Price need be
made if such adjustment would result in a change in the Exercise Price of less
than $0.01. Any adjustment of less than $0.01 which is not made shall be carried
forward and shall be made at the time of and together with any subsequent
adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or
more in the Exercise Price. If, after one or more adjustments to the Exercise
Price pursuant to this Section 3, the Exercise Price cannot be reduced further
without falling below the greater of (i) $0.001 or (ii) the lowest positive
exercise price legally permissible for warrants to acquire shares of Common
Stock, the Company shall make further adjustment to compensate the holder,
consistent with the foregoing principles, as the Board of Directors, acting in
good faith, deems necessary, including an increase in the number of Shares
issuable upon exercise of outstanding Warrants and/or a cash payment to the
Holder.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice by first class mail to the holder of
this Warrant setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the number of Shares which may be purchased and the Exercise
Price therefor after giving effect to such adjustment.
5. Fractional Shares. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder. In lieu of such fractional shares the
Company shall make a cash payment therefor based upon the Exercise Price then in
effect.
6. Representations of the Company. The Company represents that all corporate
actions on the part of the Company, its officers, directors and shareholders
necessary for the sale and issuance of the Shares and the issuance of this
Warrant pursuant hereto and the performance of the Company's obligations
hereunder were taken prior to and are effective as of the effective date of this
Warrant.
7. Representations and Warranties by the Holder. The Holder represents and
warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for investment
and not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act of 1933, as
amended (the "ACT"), except as contemplated hereby. Upon exercise of this
Warrant, the Holder shall, if so requested by the Company, confirm in writing,
in a form reasonably satisfactory to the Company, that the securities issuable
upon exercise of this Warrant are being acquired for investment and not with a
view toward public distribution or resale, except as contemplated hereby.
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<PAGE> 9
(b) The Holder understands that the Warrant and the Shares have not been
registered under the Act in reliance upon a specific exemption, which exemption
depends upon, among other things, the bona fide nature of its investment as
expressed in the Warrant Purchase Agreement dated as of the date of original
issuance of this Warrant (the "Agreement"). In this connection, the Holder
understands that, in the view of the Securities and Exchange Commission ("SEC"),
the statutory basis for such exemption may be unavailable if its representation
was predicated solely upon a present intention to hold the Warrant or the Shares
for a period of one year or any other fixed period in the future. The Holder
further understands that the Warrant and/or the Shares must be held indefinitely
and are not fully transferable unless subsequently registered under the Act or
unless an exemption from registration is otherwise available. The Holder further
understands that the Shares have not been qualified under the California
Securities Law of 1968 (the "CALIFORNIA LAW") by reason of their issuance in a
transaction exempt from the qualification requirements of the California Law
pursuant to Section 25102(f) thereof, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent expressed above.
(c) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the purchase of the
Shares pursuant to the terms of this Warrant.
8. Restrictive Legend.
The Shares issuable upon exercise of this Warrant (unless registered
under the Act) shall be stamped or imprinted with a legend in substantially the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF, EXCEPT AS CONTEMPLATED HEREBY. NO SUCH SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED.
The Shares issuable upon exercise of this Warrant are entitled to the benefits
under and shall be stamped or imprinted with all legends required by that
certain Third Amended and Restated Investor Rights Agreement, dated as of June
18, 1997.
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<PAGE> 10
9. Restrictions Upon Transfer and Removal of Legend.
(a) The Company need not register a transfer of Shares bearing the
restrictive legend set forth in Section 8 hereof, unless the conditions
specified in such legend are satisfied. The Company may also instruct its
transfer agent not to register the transfer of the Shares, unless one of the
conditions specified in the legend referred to in Section 8 hereof is satisfied.
(b) Notwithstanding the provisions of paragraph (a) above, no opinion of
counsel or "no-action" letter shall be necessary for a transfer without
consideration by any Holder (i) to an affiliate of the Holder, (ii) if such
Holder is a partnership, to a partner or retired partner of such partnership who
retires after the date of original issuance of this Warrant or to the estate of
any such partner or retired partner, (iii) if such Holder is a corporation, to a
shareholder of such corporation, or to any other corporation under common
control, direct or indirect, with such Holder, or (iv) by gift, will or
intestate succession of any individual Holder or individual partner of a Holder,
in whole or in part, to his spouse or siblings, or to the lineal descendants or
ancestors of such Holder or his spouse, if the transferee agrees in writing to
be subject to the terms hereof to the same extent as if such transferee were the
original Holder hereunder. Subject to the terms hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, on the books of the
Company maintained for such purpose at its principal office referred to above by
Holder. Upon any partial transfer, the Company will issue and deliver to Holder
a new Warrant or Warrants with respect to the portion of the Warrant not so
transferred and shall issue to that transferee a new Warrant or Warrants
relating to the portion of this Warrant so transferred. Each person who is a
transferee of all or any portion of this Warrant in accordance herewith shall be
deemed a Holder entitled to all of the benefits and rights hereunder.
(c) In order to effect any transfer of all or a portion of this Warrant
or the Shares, the transferor shall deliver a completed and duly executed Notice
of Transfer (attached hereto as Attachment 3).
(d) The legend relating to the Act endorsed on this Warrant or stock
certificate and the stop transfer instructions with respect to the Warrant or
the Shares represented by such certificate shall be removed and the Company
shall issue a new Warrant or certificate, as applicable, without such legend to
the Holder of the Warrant or such Shares if the transfer of such Shares is
registered under the Act and a prospectus meeting the requirements of Section 10
of the Act is available, or if such Holder provides to the Company an opinion of
counsel for such Holder of the Warrant or the Shares reasonably satisfactory to
the Company or a no-action letter or interpretive opinion of the staff of the
SEC to the effect that a public sale, transfer or assignment of such Shares may
be made without registration and without compliance with any restriction such as
Rule 144.
(e) In case this Warrant shall be mutilated, lost, stolen, or destroyed,
the Company may, in its discretion, issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen, or destroyed, a new Warrant of
like tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction and
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<PAGE> 11
indemnification reasonably satisfactory to it. An applicant for such a
substitute Warrant shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Company may prescribe.
10. Rights of Shareholders. No Holder of this Warrant shall be entitled, as
a Warrant Holder, to vote or receive dividends or be deemed the Holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends until the Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, each Holder
shall be entitled to the rights and benefits in and shall be bound by the
obligations of that certain Third Amended and Restated Investor Rights Agreement
dated as of June 18, 1997 as set forth therein (as the same may be modified in
accordance therewith).
11. Notices, Etc. All notices and other communications from the Company to
the Holder shall be mailed by first class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing by
the Holder.
12. Governing Law, Headings. This Warrant is being delivered in the State of
California and shall be construed and enforced in accordance with and governed
by the laws of such State. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Change. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
14. No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through reorganization, recapitalization, consolidation,
merger, dissolution, issue, sale or repurchase of securities, sale of assets or
any other voluntary action, intentionally avoid or seek to avoid, directly or
indirectly, the observance or performance of any of the terms of this Warrant or
the wrongful denial of any of the benefits or rights (including, without
limitation, protection against dilution) intended to be conferred to the Holder,
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 Holders of the Warrant against impairment.
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<PAGE> 12
15. Limitations on Assignment. The right to purchase Shares hereunder may
not be assigned as to any Shares for which this Warrant is not exercisable,
except to any of the affiliates within the meaning of Rule 501(b) of the
Securities Act of 1933, as amended of General Electric Capital Corporation,
including, without limitation, NBC or any of its affiliates within the meaning
of Rule 501(b) of the Securities Act of 1933, as amended.
Originally issued June 18, 1997
Amended and Restated February 1, 1998.
WINK COMMUNICATIONS, INC.
By: /s/ Maggie Wilderotter
--------------------------------
Maggie Wilderotter
Chief Executive Officer and
President
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<PAGE> 13
ATTACHMENT 1
NOTICE OF EXERCISE
TO: WINK COMMUNICATIONS, INC.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: President
1. The undersigned hereby elects to purchase __________ shares of Common Stock
of WINK COMMUNICATIONS, INC. pursuant to the terms of the attached Warrant.
2. Method of Exercise (Please mark the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in full
for the purchase price of the shares being purchased,
together with all applicable transfer taxes, if any.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b)(ii)
of the Warrant.
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
4. The undersigned hereby represents and warrants that the aforesaid shares of
Common Stock 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 and all representations and warranties of
the undersigned set forth in Section 7 of the attached Warrant are true and
correct as of the date of original issuance of this Warrant. In support thereof,
the undersigned hereby delivers an Investment Representation Statement in a form
substantially similar to the form attached to the Warrant as Attachment 2.
-----------------------------------
(Signature)
- - ------------------------------ -----------------------------------
(Date) Title:
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<PAGE> 14
ATTACHMENT 2
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : _________________________
SELLER : WINK COMMUNICATIONS, INC.
COMPANY : WINK COMMUNICATIONS, INC.
SECURITY : COMMON STOCK ISSUED UPON EXERCISE OF THE STOCK
PURCHASE WARRANT ISSUED ON ________, 199_
AMOUNT : __________ SHARES
DATE : ______________
In connection with the purchase of the above-listed Securities, the Purchaser
represents to the Seller and to the Company the following:
(a) Purchaser 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. Purchaser is
purchasing these Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Purchaser understands that the Securities 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 its
investment intent as expressed herein. In this connection, Purchaser understands
that, in the view of the Securities and Exchange Commission (the "SEC"), the
statutory basis for such exemption may be unavailable if its representation was
predicated solely upon a present intention to hold these Securities for a period
of one year or any other fixed period in the future.
(c) Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, Purchaser
understands that the Company is under no obligation to register the Securities.
In addition, Purchaser understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless the transfer thereof is registered under the Securities Act or
such registration is not required in the opinion of counsel (which may include
counsel for Purchaser) reasonably acceptable to the Company.
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<PAGE> 15
(d) Purchaser is familiar with the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permits 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.
The Securities may be resold in certain limited circumstances subject to the
provisions of Rule 144, which requires among other things: (1) the availability
of certain public information about the Company, (2) the resale occurring not
less than one year after the party has purchased, and made full payment for,
within the meaning of Rule 144, the securities to be sold; and, in the case of
an affiliate, or of a non-affiliate who has held the securities less than two
years, (3) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934) and the amount of securities
being sold during any three month period not exceeding the specified limitations
stated therein, if applicable.
(e) Purchaser agrees, in connection with the Company's initial public
offering of the Company's securities, that, upon request of the Company or the
underwriters managing any underwritten offering of the Company's Securities, not
to publicly sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company in a public
transaction held by the undersigned (other than those securities included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as may
be requested by the underwriters; provided that the officers and directors of
the Company who own stock of the Company have also agreed to such restrictions.
(f) Purchaser further understands that in the event all of the
applicable requirements of Rule 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 Rule 144 are
not exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 may 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.
PURCHASER
By:
----------------------------------
Title:
-------------------------------
Date:
--------------------------------
2
<PAGE> 16
ATTACHMENT 3
NOTICE OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________ the right represented by the
attached Warrant to purchase ____________* shares of Common Stock of WINK
COMMUNICATIONS INC., to which the attached Warrant relates, and appoints
______________ Attorney to transfer such right on the books of WINK
COMMUNICATIONS, INC., with full power of substitution in the premises.
Dated: ____________________
---------------------------------------
By:
-------------------------------------
(Signature must conform in all respects
to the to name of Holder as specified
on the face of the Warrant)
----------------------------------------
(Address)
Signed in the presence of:
- - ----------------------------
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
3
<PAGE> 1
EXHIBIT 10.35
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE A MAXIMUM OF
17,500 SHARES OF SERIES B PREFERRED STOCK OF
WINK COMMUNICATIONS, INC.
(Void after September 30, 2002)
This certifies that VENTURE LENDING & LEASING, INC., a Maryland
corporation, or assigns (the "Holder"), for value received, is entitled to
purchase from WINK COMMUNICATIONS, INC., a California corporation (the
"Company"), 17,500 fully paid and nonassessable shares of the Company's Series B
Preferred Stock ("Preferred Stock") for cash at a price of $4.00 per share (the
"Stock Purchase Price") at any time or from time to time up to and including
5:00 p.m. (Pacific time) on September 30, 2002 (the "Expiration Date"), upon
surrender to the Company at its principal office at 1001 Marina Village Parkway,
Alameda, CA 94501 (or at such other location as the Company may advise Holder in
writing) of this Warrant properly endorsed with the Form of Subscription
attached hereto duly filled in and signed and upon payment in cash or by check
of the aggregate Stock Purchase Price for the number of shares for which this
Warrant is being exercised determined in accordance with the provisions hereof.
The Stock Purchase Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Section 4 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
(a) Unless an election is made pursuant to clause (b) of this
Section 1, this Warrant shall be exercisable at the option of the Holder, at any
time or from time to time, on or before the Expiration Date for all or any
portion of the shares of Preferred Stock (but not for a fraction of a share)
which may be purchased hereunder for the Stock Purchase Price multiplied by the
number of shares to be purchased. In the event, however, that pursuant to the
Company's Articles of Incorporation, as amended, an event causing automatic
conversion of the Company's Preferred Stock shall have occurred prior to the
exercise of this Warrant, in whole or in part, then this Warrant shall be
exercisable for the number of shares of Common Stock of the Company into which
the Preferred Stock not purchased upon any prior exercise of the Warrant would
have been so converted (and, where the context requires, reference to "Preferred
Stock" shall be deemed to include such Common Stock). The Company agrees that
the shares of Preferred Stock purchased under this Warrant shall be and are
deemed to be issued to the holder hereof as the record owner of such shares
<PAGE> 2
as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares. Subject to the provisions of
Section 2, certificates for the shares of Preferred Stock so purchased, together
with any other securities or property to which the Holder hereof is entitled
upon such exercise, shall be delivered to the Holder hereof by the Company at
the Company's expense within a reasonable time after the rights represented by
this Warrant have been so exercised. Except as provided in clause (b) of this
Section 1, in case of a purchase of less than all the shares which may be
purchased under this Warrant, the Company shall cancel this Warrant and execute
and deliver a new Warrant or Warrants of like tenor for the balance of the
shares purchasable under the Warrant surrendered upon such purchase to the
Holder hereof within a reasonable time. Each stock certificate so delivered
shall be in such denominations of Preferred Stock as may be requested by the
Holder hereof and shall be registered in the name of such Holder or such other
name as shall be designated by such Holder, subject to the limitations contained
in Section 2.
(b) The Holder, in lieu of exercising this Warrant by the payment of
the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at
any time on or before the Expiration Date, to receive that number of shares of
Preferred Stock equal to the quotient of: (i) the difference between (A) the Per
Share Price (as hereinafter defined) of the Preferred Stock, less (B) the Stock
Purchase Price then in effect, multiplied by the number of shares of Preferred
Stock the Holder would otherwise have been entitled to purchase hereunder
pursuant to clause (a) of this Section 1 (or such lesser number of shares as the
Holder may designate in the case of a partial exercise of this Warrant); over
(ii) the Per Share Price.
(c) For purposes of clause (b) of this Section 1, "Per Share Price"
means the product of: (i) the greater of (A) the average of the closing bid and
asked prices of the Company's Common Stock as quoted by NASDAQ or listed on any
exchange, whichever is applicable, as published in the Western Edition of The
Wall Street Journal for the ten (10) trading days prior to the date of the
Holder's election hereunder or, (B) if applicable at the time of or in
connection with the exercise under clause (b) of this Section 1, the gross sales
price of one share of the Company's Common Stock pursuant to a registered public
offering or that amount which shareholders of the Company will receive for each
share of Common Stock pursuant to a merger, reorganization or sale of assets;
and (ii) that number of shares of Common Stock into which each share of
Preferred Stock is convertible. If the Company's Common Stock is not quoted by
NASDAQ or listed on an exchange, the Per Share Price of the Preferred Stock (or
the equivalent number of shares of Common Stock into which such Preferred Stock
is convertible) shall be the price per share which the Company would obtain from
a willing buyer for shares sold by the Company from authorized but unissued
shares as such price shall be agreed upon by the Holder and the Company or, if
agreement cannot be reached within ten (10) business days of the Holder's
election hereunder, as such price shall be determined by a panel of three (3)
appraisers, one (1) to be chosen by the Company, one (1) to be chosen by the
Holder and the third to be chosen by the first two (2) appraisers. If the
appraisers cannot reach agreement within 30 days of the Holder's election
hereunder, then each appraiser shall deliver its appraisal and the appraisal
which is neither the highest nor the lowest shall constitute the Per Share
Price. In the event either party fails to choose an appraiser within 30 days of
the Holder's election hereunder, then the appraisal of the sole appraiser shall
constitute the Per Share Price. Each party shall bear the cost of the appraiser
selected by such party and the cost of the third appraiser
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<PAGE> 3
shall be borne one-half by each party. In the event either party fails to choose
an appraiser, the cost of the sole appraiser shall be borne one-half by each
party.
2. Limitation on Transfer.
(a) The Warrant and the Preferred Stock shall not be transferable
except upon the conditions specified in this Section 2, which conditions are
intended to insure compliance with the provisions of the Securities Act. Each
holder of this Warrant or the Preferred Stock issuable hereunder will cause any
proposed transferee of the Warrant or Preferred Stock to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Section 2.
(b) Each certificate representing (i) this Warrant, (ii) the
Preferred Stock, (iii) shares of the Company's Common Stock issued upon
conversion of the Preferred Stock and (iv) any other securities issued in
respect of the Preferred Stock or Common Stock issued upon conversion of the
Preferred Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of this Section 2 or unless such securities have been registered
under the Securities Act or sold under Rule 144) be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(c) The Holder of this Warrant and each person to whom this Warrant
is subsequently transferred represents and warrants to the Company (by
acceptance of such transfer) that it will not transfer the Warrant (or
securities issuable upon exercise hereof unless a registration statement under
the Securities Act was in effect with respect to such securities at the time of
issuance thereof) except pursuant to (i) an effective registration statement
under the Securities Act, (ii) Rule 144 under the Securities Act (or any other
rule under the Securities Act relating to the disposition of securities), or
(iii) an opinion of counsel, reasonably satisfactory to counsel for the Company,
that an exemption from such registration is available.
3. Shares to be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Preferred Stock which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant, a sufficient number of shares of authorized but unissued
Preferred Stock,
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<PAGE> 4
or other securities and property, when and as required to provide for the
exercise of the rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of Preferred Stock
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Preferred Stock may be listed. The Company will not take any action
which would result in any adjustment of the Stock Purchase Price (as defined in
Section 4 hereof) (i) if the total number of shares of Preferred Stock issuable
after such action upon exercise of all outstanding warrants, together with all
shares of Preferred Stock then outstanding and all shares of Preferred Stock
then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of shares
of Preferred Stock then authorized by the Company's Articles of Incorporation,
or (ii) if the total number of shares of Common Stock issuable after such action
upon the conversion of all such shares of Preferred Stock together with all
shares of Common Stock then outstanding and then issuable upon exercise of all
options and upon the conversion of all convertible securities then outstanding
would exceed the total number of shares of Common Stock then authorized by the
Company's Articles of Incorporation.
4. Adjustment of Stock Purchase Price Number of Shares. The Stock Purchase
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 4. Upon each adjustment of the Stock Purchase
Price, the Holder of this Warrant shall thereafter be entitled to purchase, at
the Stock Purchase Price resulting from such adjustment, the number of shares
obtained by multiplying the Stock Purchase Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Stock Purchase
Price resulting from such adjustment.
4.1 Subdivision or Combination of Stock. In case the Company shall
at any time subdivide its outstanding shares of Preferred Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Preferred Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
4.2 Dividends in Preferred Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the holders of Preferred
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Preferred Stock, or any shares of stock or other
securities whether or not such securities are at any time directly or indirectly
convertible into or exchangeable for Preferred Stock, or any rights or options
to subscribe for, purchase or otherwise acquire any of the foregoing by way of
dividend or other distribution, or
(b) any cash paid or payable otherwise than as a cash
dividend, or
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<PAGE> 5
(c) Preferred Stock or other or additional stock or other
securities or property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate rearrangement,
(other than shares of Preferred Stock issued as a stock split, adjustments in
respect of which shall be covered by the terms of Section 4.1 above), then and
in each such case, the Holder hereof shall, upon the exercise of this Warrant,
be entitled to receive, in addition to the number of shares of Preferred Stock
receivable thereupon, and without payment of any additional consideration
therefore, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) which such Holder would
hold on the date of such exercise had he been the holder of record of such
Preferred Stock as of the date on which holders of Preferred Stock received or
became entitled to receive such shares and/or all other additional stock and
other securities and property.
4.3 Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of Preferred Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Preferred Stock,
then, as a condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provisions shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive (in lieu of the
shares of the Preferred Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby) such shares
of stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Preferred Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In any such case,
appropriate provision shall be made with respect to the rights and interests of
the holder of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Stock Purchase Price and
of the number of shares purchasable and receivable upon the exercise of this
Warrant) shall thereafter be applicable, as nearly as may be possible, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof. The Company will not effect any such consolidation,
merger or sale unless, prior to the consummation thereof, the successor
corporation (if other than the Company) resulting from such consolidation or the
corporation purchasing such assets shall assume by written instrument, executed
and mailed or delivered to the registered Holder hereof at the last address of
such Holder appearing on the books of the Company, the obligation to deliver to
such Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to purchase.
4.4 Sale or Issuance Below Purchase Price. If the Company shall at
any time or from time to time issue or sell any of its Common Stock, Preferred
Stock, options to acquire (or rights to acquire such options), or any other
securities convertible into or exercisable for Common Stock, for a consideration
per share less than the Stock Purchase Price in effect immediately prior to the
time of such issue or sale, the Stock Purchase Price then in effect and then
applicable for any subsequent period or periods shall be adjusted to a price
determined by dividing (i) an amount equal to the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the Stock Purchase Price then in effect and (y) the consideration,
if any,
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<PAGE> 6
received by the Company upon such issue or sale, by (ii) the total number of
shares of Common Stock outstanding immediately after such issue or sale. For
purposes of this Section 4.4, all shares of Common Stock issuable upon the
exercise and/or conversion of all outstanding warrants (including this Warrant),
options and convertible securities shall be deemed to be outstanding. The
foregoing notwithstanding, no adjustment shall be made pursuant to this Section
4.4 on account of a given sale to the extent that (a) the Stock Purchase Price
is adjusted pursuant to any other Section of this Warrant or (b) the conversion
price of the Preferred Stock is decreased pursuant to the terms thereof.
4.5 Notice of Adjustment. Upon any adjustment of the Stock Purchase
Price, and/or any increase or decrease in the number of shares purchasable upon
the exercise of this Warrant the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company. The
notice shall be signed by the Company's chief financial officer and shall state
the Stock Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
4.6 Other Notices. If at any time:
(a) the Company shall declare any cash dividend upon its
Preferred Stock;
(b) the Company shall declare any dividend upon its Preferred
Stock payable in stock or make any special dividend or other distribution to the
holders of its Preferred Stock;
(c) the Company shall offer for subscription pro rata to the
holders of its Preferred Stock any additional shares of stock of any class or
other rights;
(d) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation;
(e) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(f) the Company shall take or propose to take any other
action, notice of which is actually provided to holders of the Preferred Stock;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the holder of this Warrant at the address of
such holder as shown on the books of the Company, (i) at least 20 day's prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action and (ii) in the case of any such
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<PAGE> 7
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, or other action, at least 20 day's written notice of
the date when the same shall take place. Any notice given in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Preferred
Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of
Preferred Stock shall be entitled to exchange their Preferred Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action as the case may be.
4.7 Certain Events. If any change in the outstanding Preferred Stock
of the Company or any other event occurs as to which the other provisions of
this Section 4 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Holder of the Warrant in accordance
with the essential intent and principles of such provisions, then the Board of
Directors of the Company shall make an adjustment in the number and class of
shares available under the Warrant, the Stock Purchase Price and/or the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such purchase rights as aforesaid. The adjustment
shall be such as will give the Holder of the Warrant upon exercise for the same
aggregate Stock Purchase Price the total number, class and kind of shares as he
would have owned had the Warrant been exercised prior to the event and had he
continued to hold such shares until after the event requiring adjustment.
5. Issue Tax. The issuance of certificates for shares of Preferred Stock
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Holder of the Warrant being exercised.
6. Closing of Books. The Company will at no time close its transfer books
against the transfer of any Warrant or of any shares of Preferred Stock issued
or issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
7. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent as a shareholder in respect of meetings
of shareholders for the election of directors of the Company or any other
matters or any rights whatsoever as a shareholder of the Company. No dividends
or interest shall be payable or accrued in respect of this Warrant or the
interest represented hereby or the shares purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised. No provisions
hereof, in the absence of affirmative action by the holder to purchase shares of
Preferred Stock, and no mere enumeration herein of the rights or privileges of
the Holder hereof, shall give rise to any liability of such Holder for the Stock
Purchase Price or as a shareholder of the Company, whether such liability is
asserted by the Company or by its creditors.
8. Intentionally Deleted.
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<PAGE> 8
9. Registration Rights. The Holder hereof shall be entitled with respect
to the shares of Common Stock or other securities issued upon conversion of the
Preferred Stock issued upon exercise hereof to all of the registration rights
set forth in the 2nd Amendment to the Amended and Restated Registration Rights
Agreement dated as of the date hereof to the extent set forth therein. The
Company shall take such action as may be reasonably necessary to assure that the
granting of such registration rights to the Holder does not violate the
provisions of such agreement or any of the Company's charter documents or rights
of prior Grantees of registration rights.
10. Rights and Obligations Survive Exercise of Warrant. The rights and
obligations of the Company, of the Holder of this Warrant and of the holder of
shares of Preferred Stock issued upon exercise of this Warrant, contained in
Sections 6, 8 and 9 shall survive the exercise of this Warrant.
11. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be deemed to
have been given (i) upon receipt if delivered personally or by courier, (ii)
upon confirmation of receipt if by telecopy or (iii) three business days after
deposit in the US mail, with postage prepaid and certified or registered, to
each such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor in the first paragraph of this
Warrant.
13. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Preferred Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assign of the holder hereof. The Company will, at the time of the
exercise of this Warrant, in whole or in part, upon request of the Holder hereof
but at the Company's expense, acknowledge in writing its continuing obligation
to the Holder hereof in respect of any rights (including, without limitation,
any right to registration of the shares of Common Stock) to which the holder
hereof shall continue to be entitled after such exercise in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the Holder
hereof in respect of such rights.
14. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California.
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<PAGE> 9
15. Lost Warrants or Stock Certificates. The Company represents and
warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Warrant or stock certificate and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or stock certificate, the Company at its expense will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
16. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Stock Purchase Price.
17. Representations of Holder. With respect to this Warrant, Holder
represents and warrants to the Company as follows:
17.1 Experience. It is experienced in evaluating and investing in
companies engaged in businesses similar to that of the Company; it understands
that investment in the Warrant involves substantial risks; it has made detailed
inquiries concerning the Company, its business and services, its officers and
its personnel; the officers of the Company have made available to Holder any and
all written information it has requested; the officers of the Company have
answered to Holder's satisfaction all inquiries made by it; in making this
investment it has relied upon information made available to it by the Company;
and it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of investment in the Company
and it is able to bear the economic risk of that investment.
17.2 Investment. It is acquiring the Warrant for investment for its
own account and not with a view to, or for resale in connection with, any
distribution thereof. It understands that the Warrant, the shares of Preferred
Stock issuable upon exercise thereof and the shares of Common Stock issuable
upon conversion of the Preferred Stock, have not been registered under the
Securities Act of 1933, as amended, nor qualified under applicable state
securities laws.
17.3 Rule 144. It acknowledges that the Warrant, the Preferred Stock
and the Common Stock must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. It has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act.
17.4 Access to Data. It has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management and has had the opportunity to inspect the Company's facilities.
18. Additional Representations and Covenants of the Company. The Company
hereby represents, warrants and agrees as follows:
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<PAGE> 10
18.1 Corporate Power. The Company has all requisite corporate power
and corporate authority to issue this Warrant and to carry out and perform its
obligations hereunder.
18.2 Authorization. All corporate action on the part of the Company,
its directors and shareholders necessary for the authorization, execution,
delivery and performance by the Company of this Warrant has been taken. This
Warrant is a valid and binding obligation of the Company, enforceable in
accordance with its terms.
18.3 Offering. Subject in part to the truth and accuracy of Holder's
representations set forth in Section 17 hereof, the offer, issuance and sale of
the Warrant is, and the issuance of Preferred Stock upon exercise of the Warrant
and the issuance of Common Stock upon conversion of the Preferred Stock will be
exempt from the registration requirements of the Securities Act, and are exempt
from the qualification requirements of any applicable state securities laws; and
neither the Company nor anyone acting on its behalf will take any action
hereafter that would cause the loss of such exemptions.
18.4 Stock Issuance. Upon exercise of the Warrant, the Company will
use its best efforts to cause stock certificates representing the shares of
Preferred Stock purchased pursuant to the exercise to be issued in the
individual names of Holder, its nominees or assignees, as appropriate at the
time of such exercise. Upon conversion of the shares of Preferred Stock to
shares of Common Stock, the Company will issue the Common Stock in the
individual names of Holder, its nominees or assignees, as appropriate.
18.5 Articles and By-Laws. The Company has provided Holder with true
and complete copies of the Company's Articles or Certificate of Incorporation,
By-Laws, and each Certificate of Determination or other charter document setting
forth any rights, preferences and privileges of Company's capital stock, each as
amended and in effect on the date of issuance of this Warrant.
18.6 Conversion of Preferred Stock. As of the date hereof, each
share of the Preferred Stock is convertible into one share of the Common Stock.
18.7 Financial and Other Reports. From time to time up to the
earlier of the Expiration Date or the complete exercise of this Warrant, the
Company shall furnish to Holder (i) within 90 days after the close of each
fiscal year of the Company an audited balance sheet and statement of changes in
financial position at and as of the end of such fiscal year, together with an
audited statement of income for such fiscal year; (ii) within 45 days after the
close of each fiscal quarter of the Company, an unaudited balance sheet and
statement of cash flows at and as of the end of such quarter, together with an
unaudited statement of income for such quarter; and (iii) promptly after
sending, making available, or filing, copies of all reports, proxy statements,
and financial statements that the Company sends or makes available to its
shareholders and all registration statements and reports that the Company files
with the SEC or any other governmental or regulatory authority.
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<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 18th day of September,
1996.
WINK COMMUNICATIONS, INC.
By: /s/ Brian P. Dougherty
---------------------------------
Title: President
---------------------------------
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<PAGE> 12
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ___________________ (__________) (1) shares of Preferred
Stock of ___________________ and herewith makes payment of
____________________________________________________ Dollars ($__________)
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to, ____________________________________________________,
whose address is ______________________________________________________________.
The undersigned represents that it is acquiring such Preferred Stock for
its own account for investment and not with a view to or for sale in connection
with any distribution thereof (subject, however, to any requirement of law that
the disposition thereof shall at all times be within its control).
DATED:_______________________________________
_____________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
(Address)
_____________________________________________
_____________________________________________
(1) Insert here the number of shares called for on the face of the Warrant
(or, in the case of a partial exercise, the portion thereof as to which
the Warrant is being exercised), in either case without making any
adjustment for additional Preferred Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of the Warrant, may be deliverable upon exercise.
<PAGE> 13
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, the holder of the within Warrant,
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Warrant, with respect to the number of shares of Preferred Stock
covered thereby set forth hereinbelow, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
---------------- ------- -------------
DATED:_______________________________________
_____________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
<PAGE> 1
EXHIBIT 10.36
WINK COMMUNICATIONS, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 2, 1996 between Wink
Communications, Inc., a California corporation (the "Company"), and Mary Agnes
Wilderotter ("Purchaser").
WHEREAS Purchaser is an employee of or consultant to the Company whose
continued affiliation with the Company is considered to be important for the
Company's continued growth; and
WHEREAS in order to provide Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for Purchaser to continue to
participate in the affairs of the Company, the Company is willing to sell to
Purchaser and Purchaser desires to purchase shares of Common Stock according to
the terms and conditions hereof;
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions of
this Agreement, the Company hereby agrees to sell to Purchaser and Purchaser
agrees to purchase from the Company 1,310,000 shares of the Company's Common
Stock (the "Stock") at a price of $0.40 per share, for an aggregate purchase
price of $524,000.00. The purchase price for the Stock shall be paid by a
full-recourse promissory note (the "Note") in the form attached hereto as
Exhibit A, in the amount of $524,000.00. Purchaser shall be required to execute
and deliver a Security Agreement in the form attached hereto as Exhibit B. The
Note shall bear interest at 6.4%, and shall be secured by a pledge of the Stock
purchased by the Note pursuant to the Security Agreement. The Company shall
issue a certificate for the stock to the Purchaser upon execution of this
agreement.
2. REPURCHASE OPTION, PUT OPTION AND RELEASE OF SHARES.
(a) REPURCHASE OPTION/PUT OPTION.
(i) In the event of any voluntary or involuntary
termination of Purchaser's employment by or consulting services to the Company
(including as a result of death or disability) before all shares of the Stock
are released from the Company's repurchase option under Section 2(b) below, the
Company shall, upon the date of such termination (as reasonably fixed and
determined by the Company) have an irrevocable, exclusive option for a period of
twenty-four (24) months from such date to repurchase all or any portion of the
Stock which has not been released from the repurchase option described in this
Section 2 (the "Repurchase Option") at the time of such termination at the
original purchase price per share. The Repurchase Option shall be exercised by
the Company by written notice to Purchaser or his/her executor (with a copy to
the Escrow Agent described in Section 7 hereof) and, at the Company's option,
(A) by delivery to Purchaser or his/her executor with such notice of a check in
the amount of the aggregate repurchase price for the Stock being repurchased,
(B) by cancellation by the Company of an amount of Purchaser's indebtedness to
the
<PAGE> 2
Company equal to the aggregate repurchase price for the Stock being repurchased,
or (C) by a combination of (A) and (B) so that the combined payment and
cancellation of indebtedness equals such aggregate repurchase price. Upon
delivery of such notice and the payment of the aggregate repurchase price in any
of the ways described above, the Company shall become the legal and beneficial
owner of the Stock being repurchased and all rights and interests therein or
relating thereto, and the Company shall have the right to retain and transfer to
its own name the number of shares of the Stock being repurchased by the Company.
(ii) If Purchaser's employment with the Company is
terminated (A) by the Company other than for Cause (as defined below) or (B) as
a result of Purchaser's death or Disability (as defined below), Purchaser or
his/her executor shall have the right to cause the Company to repurchase all
Stock at the original purchase price per share (the "Put Option"). The Put
Option shall be exercised by Purchaser by written notice to the Company (with a
copy to the Escrow Agent described in Section 7 hereof) delivered within sixty
(60) days of such termination, and, at the Company's option, (A) by delivery to
Purchaser or his/her executor within ninety (90) days (or such longer period as
may reasonably be necessary to avoid adverse tax consequences to the Company or
its shareholders generally) a check in the amount of the aggregate repurchase
price for the Stock being repurchased, (B) by cancellation by the Company of an
amount of Purchaser's indebtedness to the Company equal to the aggregate
repurchase price for the Stock being repurchased, or (C) by a combination of (A)
and (B) so that the combined payment and cancellation of indebtedness equals
such aggregate repurchase price. Upon payment of the aggregate repurchase price
in any of the ways described above, the Company shall become the legal and
beneficial owner of the Stock being repurchased and all rights and interests
therein or relating thereto, and the Company shall have the right to retain and
transfer to its own name the number of shares of the Stock being repurchased by
the Company. Purchaser's rights under the Put Option shall terminate on the
earlier to occur of (x) the closing of the Company's initial public offering of
its stock under the Securities Act of 1933, and (y) __________,19__.
(iii) Whenever the Company shall have the right or
obligation to repurchase shares of the Stock hereunder, the Company may
designate and assign one or more employees, officers, directors or shareholders
of the Company or other persons or organizations to carry out all or a part of
the Company's repurchase rights or obligations, as the case may be, under this
Agreement and to purchase all or a part of such Stock; provided that if the
aggregate fair market value of the Stock to be repurchased on the date of such
designation or assignment ("Repurchase FMV") exceeds the aggregate repurchase
price of the Stock to be repurchased, then each such designee or assignee shall
pay the Company cash equal to the difference between the Repurchase FMV and the
aggregate repurchase price of the Stock which such designee or assignee shall
have the right or obligation to repurchase.
(b) RELEASE OF SHARES FROM REPURCHASE OPTION.
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<PAGE> 3
(i) Subject to Section 2(b)(ii), 1/48th of the Stock
shall be released from the Company's Repurchase Option on the one-month
anniversary of this Agreement, and an additional 1/48th of the Stock shall be
released on each monthly anniversary of such date thereafter until all shares of
the Stock have been released; provided in each case that there has not been any
voluntary or involuntary termination prior to each such date of release.
(ii) Notwithstanding Section 2(b)(i), if Purchaser's
employment with the Company is terminated by the Company other than for Cause
(as defined below) prior to the one-year anniversary of this Agreement, then an
additional portion of the Stock shall be released from the Company's Repurchase
Option such that the aggregate amount released pursuant to Sections 2(b)(i) and
2(b)(ii) is 1/4th of the Stock.
(c) CERTAIN DEFINITIONS
(i) For purposes of this Agreement, "Cause" shall mean
(A) the willful failure by Purchaser to perform his/her duties within 10 days
after written demand for such performance is delivered to Purchaser by the
Board, (B) Purchaser's failure to follow reasonable policies or directives
established by the Board, (C) Purchaser's willful, bad faith or grossly
negligent conduct that is detrimental to the Company, or (D) the conviction of
Purchaser of any felony or any other crime involving dishonesty or the property
or business of the Company.
(ii) For purposes of this Agreement, "Disability" shall
mean that Purchaser, at the time notice of termination is given, has been unable
to substantially perform his/her duties under this Agreement for a period of not
less than six (6) consecutive months as the result of his/her incapacity due to
physical or mental illness.
(iii) This Agreement shall not confer upon Purchaser any
right with respect to employment by the Company, nor shall it interfere with or
affect in any manner the right or power of the Company, or a parent or
subsidiary of the Company, to terminate Purchaser's employment or consulting
relationship with the Company, which right is hereby reserved, subject to the
provisions of any separate employment agreement between Purchaser and the
Company.
3. STOCK SPLITS, ETC. If, from time to time during the term of this
Agreement:
(a) There is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) Subject to Section 13 hereof, there is any consolidation,
merger or sale of all, or substantially all, of the assets of the Company;
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<PAGE> 4
then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of the Stock shall be immediately subject to this Agreement and be included in
the word "Stock" for all purposes with the same force and effect as the shares
of Stock currently subject to the Repurchase Option and other terms of this
Agreement. While the aggregate repurchase price payable upon execution of the
Repurchase Option shall remain the same after each such event, the repurchase
price per share of Stock shall be appropriately adjusted.
4. RESTRICTION ON TRANSFER. Purchaser shall not sell, transfer, pledge,
hypothecate or otherwise dispose of any shares of the Stock which remain subject
to the Repurchase Option. The Company shall not be required (i) to transfer on
its books any shares of Stock which shall have purportedly been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (ii) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any purported transferee to whom such shares shall
have been purportedly transferred.
5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The share certificate evidencing the Stock issued
hereunder shall be endorsed with the following legends (in addition to any
legends required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.
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.
(b) STOP-TRANSFER NOTICES. Purchaser 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.
6. PURCHASER'S REPRESENTATIONS AND COVENANTS. In connection with the
purchase of the Stock, Purchaser hereby represents and warrants to the Company
as follows:
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<PAGE> 5
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. Purchaser
is purchasing the Stock solely for Purchaser's own account for investment and
not with a view to or for sale in connection with any distribution of the Stock
or any portion thereof and not with any present intention of selling, offering
to sell or otherwise disposing of or distributing the Stock or any portion
thereof. Purchaser also represents that the entire legal and beneficial interest
of the Stock is being purchased, and will be held, for Purchaser's account only,
and neither in whole or in part for any other person. Purchaser either (i) has a
pre-existing business or personal relationship with the Company or at least one
of its officers, directors or controlling persons, or (ii) by reason of
Purchaser's business or financial experience (or the business or financial
experience of Purchaser's professional advisors who are unaffiliated with and
who are not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), can be reasonably assumed to have the capacity
to evaluate the merits and risks of an investment in the Company and to protect
Purchaser's own interests in connection with this transaction.
(b) RESIDENCE. Purchaser's principal residence is within the
State of California and is located at the address indicated beneath Purchaser's
signature below.
(c) INFORMATION CONCERNING COMPANY. Purchaser has discussed the
Company and its plans, operations and financial condition with the Company's
officers and has received all such information as Purchaser has deemed necessary
and appropriate to enable Purchaser to evaluate the financial risk inherent in
making an investment in the Stock. Purchaser has received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
(d) ECONOMIC RISK. Purchaser realizes that the purchase of the
Stock will be a highly speculative investment and involves a high degree of
risk. Purchaser is able, without impairing Purchaser's financial condition, to
hold the Stock for an indefinite period of time and to suffer a complete loss on
Purchaser's investment.
(e) RESTRICTED SECURITIES. Purchaser understands and acknowledges
that:
(i) The Stock has not been registered under the
Securities Act of 1933, as amended, in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein. In this connection,
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
Purchaser's representation was predicated solely upon a present intention to
hold the Stock 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 Stock, or for a period of one year or any other fixed period
in the future.
(ii) The Stock must be held indefinitely unless it is
subsequently registered under the Securities Act or unless an exemption from
such registration is otherwise available.
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<PAGE> 6
Purchaser further acknowledges and understands that the Company is under no
obligation to register the Stock. In addition, Purchaser understands that the
certificate evidencing the Stock will be imprinted with a legend which prohibits
the transfer of the Stock unless it is registered or such registration is not
required in the opinion of counsel satisfactory to the Company.
(f) DISPOSITION UNDER RULE 144. Purchaser understands that:
(i) The shares of Stock are restricted securities within
the meaning of Rule 144 promulgated under the Securities Act; that the exemption
from registration under Rule 144 will not be available in any event for at least
two (2)) years from the date of purchase and payment of the Stock, and even then
will not be available unless (i) a public trading market then exists for the
Common Stock of the Company, (ii) adequate information concerning the Company is
then available to the public, and (iii) other terms and conditions of Rule 144
are complied with; and that any sale of the Stock may be made only in limited
amounts in accordance with such terms and conditions of Rule 144;
(ii) That at the time Purchaser wishes to sell the Stock
there may be no public market upon which to make such a sale; that, even if such
a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144; and that, in such event, Purchaser
would be precluded from selling the Stock under Rule 144 even if the two (2)
year minimum holding period had been satisfied; and
(iii) In the event all of the requirements of Rule 144
are not satisfied, registration under the Securities Act or compliance with
Regulation A or another registration exemption will be required; that,
notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering or pursuant to Rule 144 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.
(g) FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting Purchaser's representations set forth above, Purchaser further agrees
that Purchaser shall in no event make any disposition of all or any portion of
the Stock unless and until:
(i) Either:
(A) There is then in effect a Registration Statement
under the Securities Act covering such proposed disposition, and such
disposition is made in accordance with said Registration Statement; or
(B) (1) Purchaser shall have notified the Company of the
proposed disposition; (2) Purchaser shall have furnished the Company with an
opinion of Purchaser's counsel
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<PAGE> 7
to the effect that such disposition will not require registration of such shares
under the Securities Act; and (3) such opinion of Purchaser's counsel shall have
been concurred in by counsel for the Company, and the Company shall have advised
Purchaser of such concurrence; and,
(ii) The shares of Stock proposed to be transferred are
no longer subject to the Repurchase Option set forth in Section 2 hereof, and
Purchaser shall have complied with the Standoff Agreement set forth in Section 9
hereof.
(h) VALUATION OF COMMON STOCK.
(i) Purchaser understands that the Stock has been valued
by the Company's Board of Directors and that the Company believes this valuation
represents a fair attempt at reaching an accurate appraisal of its worth.
Purchaser understands, however, that the Company can give no assurances that
such price is in fact the fair market value of the Stock, and that it is
possible that, with the benefit of hindsight, the Internal Revenue Service would
successfully assert that the value of the Stock on the date of purchase is
substantially greater than so determined.
(ii) If the Internal Revenue Service were to succeed in a
tax determination that the Stock had a value greater than that upon which this
transaction is based, the additional value would constitute ordinary income to
Purchaser as of the date of its receipt. The additional taxes (and interest) due
would be payable by Purchaser. There is no provision for the Company to
reimburse Purchaser for that tax liability, and Purchaser assumes all
responsibility therefor. Furthermore, in the event such additional value
represents more than twenty-five percent (25%) of Purchaser's gross income for
the year in which the value of the shares would be taxable, the Internal Revenue
Service would have six (6) years from the due date for filing the return for
such year (or the actual filing date of the return if filed thereafter) within
which to assess Purchaser the additional tax and interest which would then be
due.
(iii) The Company would have the benefit, in any such
transaction, if a determination was made prior to the three (3) year statute of
limitations period affecting the Company, of an increase in its deduction for
compensation paid, which would offset its operating profits, or, if the Company
were not profitable at such time, would create net operating loss carry-forwards
arising from operations in that year.
(i) SECTION 83(b) ELECTION.
(i) Purchaser understands that Purchaser (and not the
Company) is responsible for Purchaser's own federal, state, local or foreign tax
liability and any other tax consequences that may arise as a result of the
transactions contemplated by this Agreement. Purchaser agrees to rely solely on
the determinations of Purchaser's tax advisors or Purchaser's own
determinations, and not on any statements or representations by the Company or
any of its attorneys or agents, with regard to all tax matters.
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<PAGE> 8
(ii) Purchaser understands that Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income
the difference between the amount paid for the Stock and the fair market value
of the Stock as of the date any restrictions on the Stock lapse. In this
context, "restriction" includes the right of the Company to buy back the Stock
pursuant to the Repurchase Option. (In the event the Company has registered any
of its shares under the Securities Exchange Act of 1934, "restriction" with
respect to officers, directors and ten percent (10%) shareholders also means the
period after the purchase of the Stock during which such officer, director and
ten percent (10%) shareholders could be subject to suit under Section 16(b) of
the Securities Exchange Act.)
(iii) Purchaser understands that Purchaser may elect to
be taxed at the time the Stock is purchased rather than when and as the
Repurchase Option (or Section 16(b) restrictions) lapse by filing an election
under Section 83(b) of the Code with the Internal Revenue Service within thirty
(30) days after the date of purchase of the Stock. The form for making this
election is attached hereto as Exhibit C. PURCHASER ACKNOWLEDGES THAT IT IS
PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE
ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PURCHASER REQUESTS THAT THE
COMPANY OR ITS REPRESENTATIVES MAKE THIS FILING ON PURCHASER'S BEHALF.
7. ESCROW. As security for the faithful performance of the terms of this
Agreement and to ensure the availability for delivery of the Stock upon exercise
of the Repurchase Option, Purchaser agrees to deliver to and deposit with the
Secretary of the Company, or such other person designated by the Company, as
escrow agent in this transaction ("Escrow Agent"), two Stock Assignments duly
endorsed (with date and number of shares blank) in the form attached hereto as
Exhibit D, together with the certificate or certificates evidencing the Stock.
Such documents are to be held by the Escrow Agent and delivered by the Escrow
Agent pursuant to the Joint Escrow Instructions of the Company and Purchaser set
forth in Exhibit E attached hereto and incorporated by this reference, which
instructions shall also be delivered to the Escrow Agent upon execution hereof.
Certificates representing all Stock released from the Company's repurchase
option will be held by the Escrow Agent only until requested by the Purchaser
when the loan is repaid.
8. ARBITRATION.
(a) ELECTION OF ARBITRATION. At the option of either party, any
and all disputes or controversies whether of law or fact and of any nature
whatsoever arising from or respecting this Agreement shall be decided by
arbitration by the American Arbitration Association in accordance with the rules
and regulations of that Association.
(b) SELECTION OF ARBITRATORS. The arbitrators shall be selected
as follows: In the event the Company and Purchaser agree on one arbitrator, the
arbitration shall be conducted by such arbitrator. In the event the Company and
Purchaser do not so agree, the Company and Purchaser shall
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<PAGE> 9
each select one independent, qualified arbitrator, and the two arbitrators so
selected shall select the third arbitrator. The Company reserves the right to
object to any individual arbitrator who shall be employed by or affiliated with
a competing organization.
(c) CONDUCT OF ARBITRATION. Arbitration shall take place in San
Francisco, California or any other location mutually agreeable to the parties.
Reasonable notice of the time and place of arbitration shall be given to all
persons other than the parties as shall be required by law, and such persons or
their authorized representatives shall have the right to attend and/or
participate in all the arbitration hearings in such manner as the law shall
require.
(d) SECRECY OF PROCEEDINGS. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such case
all documents, testimony and records shall be received, heard and maintained by
the arbitrators in secrecy under seal, available for the inspection only of the
Company or Purchaser and their respective attorneys and their respective
experts, who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known.
(e) RELIEF. The arbitrators, who shall act by majority vote,
shall be able to decree any and all relief of an equitable nature (including
without limitation such relief as temporary restraining orders or temporary
and/or permanent injunctions), and shall also be able to award damages, with or
without an accounting and costs. The decree or judgment of an award rendered by
the arbitrators may be entered in any court having jurisdiction thereof.
9. STANDOFF AGREEMENT. Purchaser agrees, in connection with an initial
public offering of the Company's equity securities, upon request of the Company
or the underwriters managing such offering, (i) not to sell, make any short sale
of, loan, grant any option for the purchase of or otherwise dispose of any
shares of Stock (other than those included in the registration, if any) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) from
the effective date of such registration) as may be requested by the Company or
such underwriters, and (ii) to execute any agreement regarding (i) above as may
be requested by the Company or underwriters at the time of the public offering;
provided, that the officers and directors of the Company who own stock of the
Company also agree to such restrictions.
10. GOVERNING LAW. This Agreement shall be governed and construed by the
laws of the State of California as applied to agreements made and performed in
California by residents of the State of California.
11. MISCELLANEOUS.
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<PAGE> 10
(a) RIGHTS AS SHAREHOLDER. Subject to the provisions and
limitations hereof, Purchaser may, during the term of this Agreement, exercise
all rights and privileges of a shareholder of the Company with respect to the
Stock deposited in escrow pursuant to Section 7 hereof.
(b) FURTHER ASSURANCES. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
(c) NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
(including by express courier) or upon deposit in the United States Post Office,
by First Class mail with postage and fees prepaid, addressed to Purchaser at
his/her address shown on the Company's employment records and to the Company at
the address of its principal corporate offices (attention: President) or at such
other address as such party may designate by ten (10) days' advance written
notice to the other party.
(d) ASSIGNMENT. The Company may assign its rights and delegate
its duties under this Agreement, including Section 2 hereof. This Agreement
shall inure to the benefit of the successors and assigns of the Company and,
subject to the restrictions on transfer herein set forth, be binding upon
Purchaser, his/her heirs, executors, administrators, successors and assigns. The
rights of Purchaser under this Agreement may be assigned only with the prior
written consent of the Company.
(e) AUTHORIZATION OF TRANSFER. Purchaser hereby authorizes and
directs the Secretary or transfer agent of the Company to transfer the Stock as
to which the Repurchase Option has been exercised from Purchaser to the Company
or the Company's assignees.
(f) NO EFFECT ON EMPLOYMENT/CONSULTING RELATIONSHIP. PURCHASER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREUNDER DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS EMPLOYEE OR CONSULTANT OF THE COMPANY FOR ANY PERIOD OR AT ALL.
NOTHING IN THIS AGREEMENT SHALL AFFECT IN ANY MANNER WHATSOEVER OR INTERFERE
WITH THE RIGHT OR POWER OF THE COMPANY, OR A PARENT OR SUBSIDIARY OF THE
COMPANY, TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE
COMPANY AT ANY TIME, FOR ANY OR NO REASON, WITH OR WITHOUT CAUSE, SUBJECT TO THE
PROVISIONS OF ANY EMPLOYMENT AGREEMENT BETWEEN PURCHASER AND THE COMPANY.
(g) WAIVER. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
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<PAGE> 11
(h) ADVICE OF COUNSEL. Purchaser has reviewed this Agreement in
its entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions hereof.
(i) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
(j) ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the purchase of Common Stock by
Purchaser and the vesting thereof, supersedes all prior understandings and
agreements, written and oral, with regard thereto, and satisfies all of the
Company's obligations to Purchaser with regard to the issuance or sale of
securities. This Agreement may be modified or amended only in writing signed by
both parties.
12. SPECIAL TERMINATION OF REPURCHASE OPTION. If, after any of the
following transactions (a "Corporate Transaction"):
(a) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
(b) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(c) any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger,
Purchaser's proposed role in the surviving entity is not reasonably acceptable
to Purchaser, then the Repurchase Option shall automatically lapse with respect
to fifty percent (50%) of the unvested Shares, and Purchaser shall acquire a
vested interest in such shares effective upon the consummation of such Corporate
Transaction; provided, however, that Purchaser's employment shall not have
terminated prior to the consummation of such Corporate Transaction.
-11-
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WINK COMMUNICATIONS, INC., MARY AGNES WILDEROTTER
a California corporation
By: /s/ Brian P. Dougherty /s/ Mary Agnes Wilderotter
------------------------------ ---------------------------------------
(Signature)
Title: Chairman 132 Beechwood Drive
--------------------------- ---------------------------------------
(Address)
Oakland, CA
---------------------------------------
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<PAGE> 13
CONSENT OF SPOUSE
I, Philip J. Wilderotter IV, spouse of Mary Agnes Wilderotter, have read
and approve the foregoing Agreement. In consideration of the granting to my
spouse of the right to purchase shares of Wink Communications, Inc., as set
forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in
respect to the exercise of any rights under the Agreement and agree to be bound
by the provisions of the Agreement insofar as I may have any rights in the
Agreement or in any shares issued pursuant thereto under the community property
laws of the State of California or similar laws relating to marital property in
effect in the state of our residence as of the date of the signing of the
Agreement.
Dated: 12/2/96
/s/ Philip J. Wilderotter IV
--------------------------------------
(Signature of Spouse)
-13-
<PAGE> 14
EXHIBIT A
PROMISSORY NOTE
$524,000.00 Alameda, California
December 2, 1996
FOR VALUE RECEIVED, Mary Agnes Wilderotter promises to pay to Wink
Communications, Inc., a California corporation (the "Company"), or order, the
principal sum of Five Hundred Twenty Four Thousand Dollars ($524,000.00),
together with interest on the unpaid principal hereof from the date hereof at
the rate of _________% per annum, compounded annually.
Principal and interest shall be due and payable on December 2, 2006.
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 without penalty all or any
portion of the principal or interest owing hereunder.
This Note is subject to the terms of the Restricted Stock Purchase
Agreement, dated as of December 2, 1996. This Note is secured 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.
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. This Note shall be governed and construed in accordance with the
laws of the State of California.
/s/ Mary Agnes Wilderotter
----------------------------------------
Mary Agnes Wilderotter
<PAGE> 15
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, 19__ between Wink
Communications, Inc., a California corporation ("Pledgee"), and Mary Agnes
Wilderotter ("Pledgor").
Recitals
Pursuant to Pledgor's purchase of Stock under the Restricted Stock
Purchase Agreement dated December ___, 1996, between Pledgor and Pledgee, and
Pledgor's election to pay for such Stock with her promissory note (the "Note"),
Pledgor has purchased 1,310,000 shares of Pledgee's Common Stock (the "Shares")
at a price of $0.40 per share, for a total purchase price of $524,000.00. The
Note and the obligations thereunder are as set forth in Exhibit B to the
Restricted Stock Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Restricted Stock Purchase
Agreement, Pledgor, pursuant to the California Commercial Code, hereby pledges
all of such Shares (herein sometimes referred to as the "Collateral")
represented by certificate number ______, 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 the Pledgeholder shall not
encumber or dispose of such Shares except in accordance with the provisions of
this Security Agreement.
2. 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.
c. 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
<PAGE> 16
("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.
3. 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.
4. 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.
5. 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 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.
6. 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
Restricted Stock Purchase Agreement 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.
7. 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 hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be 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.
-2-
<PAGE> 17
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
-3-
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" By: /s/ Mary Agnes Wilderotter
---------------------------------
Mary Agnes Wilderotter
------------------------------------
Print Name
Address:
------------------------------------
------------------------------------
"PLEDGEE" WINK COMMUNICATIONS, INC.
a California corporation
By: /s/ Brian P. Dougherty
---------------------------------
Title: Chairman
"PLEDGEHOLDER" By: /s/ Gary Hammer
------------------------------------
Secretary of
Wink Communications, Inc.
-4-
<PAGE> 19
EXHIBIT C
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
The undersigned taxpayer hereby elects, pursuant to the above-referenced
Internal Revenue Code Section, to include in his/her gross income for the
current taxable year, the amount of any compensation taxable to him/her in
connection with his/her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME :TAXPAYER: SPOUSE:
ADDRESS :TAXPAYER: SPOUSE:
IDENTIFICATION # :TAXPAYER: SPOUSE:
TAXABLE YEAR :TAXPAYER: SPOUSE:
2. The property with respect to which the election is made is described as
follows:
1,310,000 shares of Common Stock of Wink Communications, Inc., a California
corporation (the "Company").
3. The date on which the property was transferred is: _______________________.
4. The property is subject to the following restrictions:
Restriction on sale or transfer of the stock in accordance with Restricted
Stock Purchase Agreement with the Company dated __________.
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: $524,000.00
6. The amount (if any) paid for such property: $524,000.00
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: __________________, 19___ __________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: __________________, 19___ __________________________________
Spouse of Taxpayer
<PAGE> 20
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement dated as of __________________ (the "Agreement"), Mary Agnes
Wilderotter ("Purchaser") hereby sells, assigns and transfers unto ____________
(____________) shares of the Common Stock of Wink Communications, Inc., a
California corporation, standing in the undersigned's name on the books of said
corporation represented by certificate no. _______ herewith, and does hereby
irrevocably constitute and appoint _______ attorney to transfer the said stock
on the books of the said corporation with full power of substitution in the
premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND
THE EXHIBITS THERETO.
Dated ________________ MARY AGNES WILDEROTTER
/s/ Mary Agnes Wilderotter
----------------------------------------
Signature
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the corporation to exercise its
"Repurchase Option" set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE> 21
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement dated as of __________________ (the "Agreement"), Mary Agnes
Wilderotter ("Purchaser") hereby sells, assigns and transfers unto ____________
(__________) shares of the Common Stock of Wink Communications, Inc., a
California corporation, standing in the undersigned's name on the books of said
corporation represented by certificate no. _______ herewith, and does hereby
irrevocably constitute and appoint _________________________ attorney to
transfer the said stock on the books of the said corporation with full power of
substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY
THE AGREEMENT AND THE EXHIBITS THERETO.
Dated ________________ MARY AGNES WILDEROTTER
/s/ Mary Agnes Wilderotter
---------------------------------------
Signature
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the corporation to exercise its
"Repurchase Option" set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE> 22
EXHIBIT E
JOINT ESCROW INSTRUCTIONS
___________, 1996
Secretary
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, California 94501
Dear Sir:
As Escrow Agent for both Wink Communications, Inc., California
corporation ("Company"), and the undersigned purchaser of stock of the Company
("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, to which a copy
of these Joint Escrow Instructions is attached as Exhibit E, 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
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 such purchase 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 such 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, in accordance with the Agreement, against the simultaneous delivery to
you of the purchase price (by check, wire transfer or promissory note) for the
number of shares of stock being purchased pursuant to the exercise of the
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 hereby irrevocably constitutes and appoints you as Purchasers
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 the Department of Corporations of
the State of California of an Application for Consent to Transfer Securities
Subject to Legend or Escrow Condition pursuant to Section 25151 of the
California Corporation Securities Law of 1968. 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.
<PAGE> 23
4. Upon written request of Purchaser, but no more than once per calendar
year, unless the 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 Repurchase Option. Within two months after the
Company's Repurchase Option expires, you will deliver to Purchaser a certificate
or certificates representing the aggregate number of shares sold and issued
pursuant to the Agreement and not purchased by the Company or its assignees
pursuant to exercise of the 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 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 of any arbitrator provided
for in the Agreement, and are hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court and of any such arbitrator. 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.
-2-
<PAGE> 24
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer 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 any
arbitrator provided for in the Agreement or 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 (including by
express courier) or upon deposit in the United States Post Office, by First
Class 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: Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: President
PURCHASER: Mary Agnes Wilderotter
-----------------------------
-----------------------------
ESCROW AGENT: Secretary
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
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.
-3-
<PAGE> 25
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
Very truly yours,
WINK COMMUNICATIONS, INC.
a California corporation
By: /s/ Brian P. Dougherty
--------------------------------------
Its: Chairman
------------------------------------
MARY AGNES WILDEROTTER
/s/ Mary Agnes Wilderotter
-----------------------------------------
(Signature)
ESCROW AGENT:
/s/ Gary Hammer
- - --------------------------------------
-4-
<PAGE> 1
EXHIBIT 10.37
WINK COMMUNICATIONS, INC.
1994 STOCK PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the 1994 Stock
Plan (the "Plan") shall have the same defined meanings in this Notice of Grant.
MARY AGNES WILDEROTTER
C/O WINK COMMUNICATIONS, INC.
1001 MARINA VILLAGE PARKWAY
ALAMEDA, CA 94501
You have been granted the right to purchase Common Stock of the Company,
subject to the Company's repurchase option and your ongoing Continuous Status as
an Employee or Consultant (as described in the Plan and the attached Restricted
Stock Purchase Agreement), as follows:
DATE OF GRANT JANUARY 15, 1998
PRICE PER SHARE $4.00
TOTAL NUMBER OF SHARES SUBJECT 25,000
TO THIS STOCK PURCHASE RIGHT
EXPIRATION DATE: FEBRUARY 15, 1998
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
By your signature and the signature of the Company's representative below, you
and the Company agree that this Stock Purchase Right is granted under and
governed by the terms and conditions of the Plan and the Restricted Stock
Purchase Agreement attached hereto as Attachment 1, each of which is hereby
incorporated herein by reference. You further agree to execute the Restricted
Stock Purchase Agreement as a condition to purchasing any shares under this
Stock Purchase Right.
GRANTEE: WINK COMMUNICATIONS, INC.
/s/ Mary Agnes Wilderotter By: /s/ Paritosh K. Choksi
- - -------------------------- ----------------------
Signature
Mary Agnes Wilderotter Title: Secretary
- - -------------------------- -------------------
Print Name
<PAGE> 2
ATTACHMENT 1
WINK COMMUNICATIONS, INC.
1994 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.
THIS AGREEMENT is made as of February 1, 1998 between Wink
Communications, Inc., a California corporation (the "Company"), and Mary Agnes
Wilderotter ("Purchaser").
WHEREAS Purchaser is an employee of or consultant to the Company whose
continued affiliation with the Company is considered to be important for the
Company's continued growth; and
WHEREAS in order to provide Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for Purchaser to continue to
participate in the affairs of the Company, the Company is willing to sell to
Purchaser and Purchaser desires to purchase shares of Common Stock according to
the terms and conditions hereof;
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions of
this Agreement, the Company hereby agrees to sell to Purchaser and Purchaser
agrees to purchase from the Company 25,000 shares of the Company's Common Stock
(the "Stock") at a price of $4.00 per share, for an aggregate purchase price of
$100,000.00. The purchase price for the Stock shall be paid by a full-recourse
promissory note (the "Note") in the form attached hereto as Exhibit A, in the
amount of $100,000.00. Purchaser shall be required to execute and deliver a
Security Agreement in the form attached hereto as Exhibit B. The Note shall bear
interest at a rate no less than the "applicable federal rate" prescribed under
the Code and its regulations at time of purchase, and shall be secured by a
pledge of the Stock purchased by the Note pursuant to the Security Agreement.
2. REPURCHASE OPTION, PUT OPTION AND RELEASE OF SHARES.
(a) REPURCHASE OPTION/PUT OPTION.
(i) In the event of any voluntary or involuntary
termination of Purchaser's employment by or consulting services to the Company
(including as a result of death
-2-
<PAGE> 3
or disability) before all shares of the Stock are released from the Company's
repurchase option under Section 2(b) below, the Company shall, upon the date of
such termination (as reasonably fixed and determined by the Company) have an
irrevocable, exclusive option for a period of twenty-four (24) months from such
date to repurchase all or any portion of the Stock which has not been released
from the repurchase option described in this Section 2 (the "Repurchase Option")
at the time of such termination at the original purchase price per share. The
Repurchase Option shall be exercised by the Company by written notice to
Purchaser or his/her executor (with a copy to the Escrow Agent described in
Section 7 hereof) and, at the Company's option, (A) by delivery to Purchaser or
his/her executor with such notice of a check in the amount of the aggregate
repurchase price for the Stock being repurchased, (B) by cancellation by the
Company of an amount of Purchaser's indebtedness to the Company equal to the
aggregate repurchase price for the Stock being repurchased, or (C) by a
combination of (A) and (B) so that the combined payment and cancellation of
indebtedness equals such aggregate repurchase price. Upon delivery of such
notice and the payment of the aggregate repurchase price in any of the ways
described above, the Company shall become the legal and beneficial owner of the
Stock being repurchased and all rights and interests therein or relating
thereto, and the Company shall have the right to retain and transfer to its own
name the number of shares of the Stock being repurchased by the Company.
(ii) If Purchaser's employment with the Company is
terminated (A) by the Company other than for Cause (as defined below) or (B) as
a result of Purchaser's death or Disability (as defined below), Purchaser or
his/her executor shall have the right to cause the Company to repurchase all
Stock at the original purchase price per share (the "Put Option"). The Put
Option shall be exercised by Purchaser by written notice to the Company (with a
copy to the Escrow Agent described in Section 7 hereof) delivered within sixty
(60) days of such termination, and, at the Company's option, (A) by delivery to
Purchaser or his/her executor within ninety (90) days (or such longer period as
may reasonably be necessary to avoid adverse tax consequences to the Company or
its shareholders generally) a check in the amount of the aggregate repurchase
price for the Stock being repurchased, (B) by cancellation by the Company of an
amount of Purchaser's indebtedness to the Company equal to the aggregate
repurchase price for the Stock being repurchased, or (C) by a combination of (A)
and (B) so that the combined payment and cancellation of indebtedness equals
such aggregate repurchase price. Upon payment of the aggregate repurchase price
in any of the ways described above, the Company shall become the legal and
beneficial owner of the Stock being repurchased and all rights and interests
therein or relating thereto, and the Company shall have the right to retain and
transfer to its own name the number of shares of the Stock being repurchased by
the Company. Purchaser's rights under the Put Option shall terminate on the
earlier to occur of (x) the closing of the Company's initial public offering of
its stock under the Securities Act of 1933, and (y) 12/02/06.
(iii) Whenever the Company shall have the right or
obligation to repurchase shares of the Stock hereunder, the Company may
designate and assign one or more employees, officers, directors or shareholders
of the Company or other persons or organizations to carry out all or a part of
the Company's repurchase rights or obligations, as the case may be,
-3-
<PAGE> 4
under this Agreement and to purchase all or a part of such Stock; provided that
if the aggregate fair market value of the Stock to be repurchased on the date of
such designation or assignment ("Repurchase FMV") exceeds the aggregate
repurchase price of the Stock to be repurchased, then each such designee or
assignee shall pay the Company cash equal to the difference between the
Repurchase FMV and the aggregate repurchase price of the Stock which such
designee or assignee shall have the right or obligation to repurchase.
(b) RELEASE OF SHARES FROM REPURCHASE OPTION.
(i) Subject to Section 2(b)(ii), 1/48th of the Stock
shall be released from the Company's Repurchase Option on the one-month
anniversary of this Agreement, and an additional 1/48th of the Stock shall be
released on each monthly anniversary of such date thereafter until all shares of
the Stock have been released; provided in each case that there has not been any
voluntary or involuntary termination prior to each such date of release.
(ii) Notwithstanding Section 2(b)(i), if Purchaser's
employment with the Company is terminated by the Company other than for Cause
(as defined below) prior to the one-year anniversary of this Agreement, then an
additional portion of the Stock shall be released from the Company's Repurchase
Option such that the aggregate amount released pursuant to Sections 2(b)(i) and
2(b)(ii) is 1/4th of the Stock.
(c) CERTAIN DEFINITIONS
(i) For purposes of this Agreement, "Cause" shall mean
(A) the willful failure by Purchaser to perform his/her duties within 10 days
after written demand for such performance is delivered to Purchaser by the
Board, (B) Purchaser's failure to follow reasonable policies or directives
established by the Board, (C) Purchaser's willful, bad faith or grossly
negligent conduct that is detrimental to the Company, or (D) the conviction of
Purchaser of any felony or any other crime involving dishonesty or the property
or business of the Company.
(ii) For purposes of this Agreement, "Disability" shall
mean that Purchaser, at the time notice of termination is given, has been unable
to substantially perform his/her duties under this Agreement for a period of not
less than six (6) consecutive months as the result of his/her incapacity due to
physical or mental illness.
(iii) This Agreement shall not confer upon Purchaser any
right with respect to employment by the Company, nor shall it interfere with or
affect in any manner the right or power of the Company, or a parent or
subsidiary of the Company, to terminate Purchaser's employment or consulting
relationship with the Company, which right is hereby reserved, subject to the
provisions of any separate employment agreement between Purchaser and the
Company.
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<PAGE> 5
3. STOCK SPLITS, ETC. If, from time to time during the term of this
Agreement:
(a) There is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) Subject to Section 13 hereof, there is any consolidation,
merger or sale of all, or substantially all, of the assets of the Company;
then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of the Stock shall be immediately subject to this Agreement and be included in
the word "Stock" for all purposes with the same force and effect as the shares
of Stock currently subject to the Repurchase Option and other terms of this
Agreement. While the aggregate repurchase price payable upon execution of the
Repurchase Option shall remain the same after each such event, the repurchase
price per share of Stock shall be appropriately adjusted.
4. RESTRICTION ON TRANSFER. Purchaser shall not sell, transfer, pledge,
hypothecate or otherwise dispose of any shares of the Stock which remain subject
to the Repurchase Option. The Company shall not be required (i) to transfer on
its books any shares of Stock which shall have purportedly been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (ii) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any purported transferee to whom such shares shall
have been purportedly transferred.
5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The share certificate evidencing the Stock issued
hereunder shall be endorsed with the following legends (in addition to any
legends required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF AN
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<PAGE> 6
AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) STOP-TRANSFER NOTICES. Purchaser 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.
6. PURCHASER'S REPRESENTATIONS AND COVENANTS. In connection with the
purchase of the Stock, Purchaser hereby represents and warrants to the Company
as follows:
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. Purchaser
is purchasing the Stock solely for Purchaser's own account for investment and
not with a view to or for sale in connection with any distribution of the Stock
or any portion thereof and not with any present intention of selling, offering
to sell or otherwise disposing of or distributing the Stock or any portion
thereof. Purchaser also represents that the entire legal and beneficial interest
of the Stock is being purchased, and will be held, for Purchaser's account only,
and neither in whole or in part for any other person. Purchaser either (i) has a
pre-existing business or personal relationship with the Company or at least one
of its officers, directors or controlling persons, or (ii) by reason of
Purchaser's business or financial experience (or the business or financial
experience of Purchaser's professional advisors who are unaffiliated with and
who are not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), can be reasonably assumed to have the capacity
to evaluate the merits and risks of an investment in the Company and to protect
Purchaser's own interests in connection with this transaction.
(b) RESIDENCE. Purchaser's principal residence is within the
State of California and is located at the address indicated beneath Purchaser's
signature below.
(c) INFORMATION CONCERNING COMPANY. Purchaser has discussed the
Company and its plans, operations and financial condition with the Company's
officers and has received all such information as Purchaser has deemed necessary
and appropriate to enable Purchaser to evaluate the financial risk inherent in
making an investment in the Stock. Purchaser has received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
(d) ECONOMIC RISK. Purchaser realizes that the purchase of the
Stock will be a highly speculative investment and involves a high degree of
risk. Purchaser is able, without impairing Purchaser's financial condition, to
hold the Stock for an indefinite period of time and to suffer a complete loss on
Purchaser's investment.
(e) RESTRICTED SECURITIES. Purchaser understands and acknowledges
that:
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<PAGE> 7
(i) The Stock has not been registered under the
Securities Act of 1933, as amended, in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein. In this connection,
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
Purchaser's representation was predicated solely upon a present intention to
hold the Stock 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 Stock, or for a period of one year or any other fixed period
in the future.
(ii) The Stock must be held indefinitely unless it is
subsequently registered under the Securities Act or unless an exemption from
such registration is otherwise available. Purchaser further acknowledges and
understands that the Company is under no obligation to register the Stock. In
addition, Purchaser understands that the certificate evidencing the Stock will
be imprinted with a legend which prohibits the transfer of the Stock unless it
is registered or such registration is not required in the opinion of counsel
satisfactory to the Company.
(f) DISPOSITION UNDER RULE 144. Purchaser understands that:
(i) The shares of Stock are restricted securities
within the meaning of Rule 144 promulgated under the Securities Act; that the
exemption from registration under Rule 144 will not be available in any event
for at least two (2)) years from the date of purchase and payment of the Stock,
and even then will not be available unless (i) a public trading market then
exists for the Common Stock of the Company, (ii) adequate information concerning
the Company is then available to the public, and (iii) other terms and
conditions of Rule 144 are complied with; and that any sale of the Stock may be
made only in limited amounts in accordance with such terms and conditions of
Rule 144;
(ii) That at the time Purchaser wishes to sell the Stock
there may be no public market upon which to make such a sale; that, even if such
a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144; and that, in such event, Purchaser
would be precluded from selling the Stock under Rule 144 even if the two (2)
year minimum holding period had been satisfied; and
(iii) In the event all of the requirements of Rule 144 are
not satisfied, registration under the Securities Act or compliance with
Regulation A or another registration exemption will be required; that,
notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering or pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales; and that
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<PAGE> 8
such persons and their respective brokers who participate in such transactions
do so at their own risk.
(g) FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting Purchaser's representations set forth above, Purchaser further agrees
that Purchaser shall in no event make any disposition of all or any portion of
the Stock unless and until:
(i) Either:
(A) There is then in effect a Registration
Statement under the Securities Act covering such proposed disposition, and such
disposition is made in accordance with said Registration Statement; or
(B) (1) Purchaser shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition; (2)
Purchaser shall have furnished the Company with an opinion of Purchaser's
counsel to the effect that such disposition will not require registration of
such shares under the Securities Act; and (3) such opinion of Purchaser's
counsel shall have been concurred in by counsel for the Company, and the Company
shall have advised Purchaser of such concurrence; and,
(ii) The shares of Stock proposed to be transferred are no
longer subject to the Repurchase Option set forth in Section 2 hereof, and
Purchaser shall have complied with the Standoff Agreement set forth in Section 9
hereof.
(h) VALUATION OF COMMON STOCK.
(i) Purchaser understands that the Stock has been valued
by the Company's Board of Directors and that the Company believes this valuation
represents a fair attempt at reaching an accurate appraisal of its worth.
Purchaser understands, however, that the Company can give no assurances that
such price is in fact the fair market value of the Stock, and that it is
possible that, with the benefit of hindsight, the Internal Revenue Service would
successfully assert that the value of the Stock on the date of purchase is
substantially greater than so determined.
(ii) If the Internal Revenue Service were to succeed in
a tax determination that the Stock had a value greater than that upon which this
transaction is based, the additional value would constitute ordinary income to
Purchaser as of the date of its receipt. The additional taxes (and interest) due
would be payable by Purchaser. There is no provision for the Company to
reimburse Purchaser for that tax liability, and Purchaser assumes all
responsibility therefor. Furthermore, in the event such additional value
represents more than twenty-five percent (25%) of Purchaser's gross income for
the year in which the value of the shares would be taxable,
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<PAGE> 9
the Internal Revenue Service would have six (6) years from the due date for
filing the return for such year (or the actual filing date of the return if
filed thereafter) within which to assess Purchaser the additional tax and
interest which would then be due.
(iii) The Company would have the benefit, in any such
transaction, if a determination was made prior to the three (3) year statute of
limitations period affecting the Company, of an increase in its deduction for
compensation paid, which would offset its operating profits, or, if the Company
were not profitable at such time, would create net operating loss carry-forwards
arising from operations in that year.
(i) SECTION 83(b) ELECTION.
(i) Purchaser understands that Purchaser (and not the
Company) is responsible for Purchaser's own federal, state, local or foreign tax
liability and any other tax consequences that may arise as a result of the
transactions contemplated by this Agreement. Purchaser agrees to rely solely on
the determinations of Purchaser's tax advisors or Purchaser's own
determinations, and not on any statements or representations by the Company or
any of its attorneys or agents, with regard to all tax matters.
(ii) Purchaser understands that Section 83 of the Internal
Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income the
difference between the amount paid for the Stock and the fair market value of
the Stock as of the date any restrictions on the Stock lapse. In this context,
"restriction" includes the right of the Company to buy back the Stock pursuant
to the Repurchase Option. (In the event the Company has registered any of its
shares under the Securities Exchange Act of 1934, "restriction" with respect to
officers, directors and ten percent (10%) shareholders also means the period
after the purchase of the Stock during which such officer, director and ten
percent (10%) shareholders could be subject to suit under Section 16(b) of the
Securities Exchange Act.)
(iii) Purchaser understands that Purchaser may elect to be
taxed at the time the Stock is purchased rather than when and as the Repurchase
Option (or Section 16(b) restrictions) lapse by filing an election under Section
83(b) of the Code with the Internal Revenue Service within thirty (30) days
after the date of purchase of the Stock. The form for making this election is
attached hereto as Exhibit C. PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b) OF THE CODE, EVEN IF PURCHASER REQUESTS THAT THE COMPANY OR ITS
REPRESENTATIVES MAKE THIS FILING ON PURCHASER'S BEHALF.
7. ESCROW. As security for the faithful performance of the terms of this
Agreement and to ensure the availability for delivery of the Stock upon exercise
of the Repurchase Option, Purchaser agrees to deliver to and deposit with the
Secretary of the Company, or such other
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<PAGE> 10
person designated by the Company, as escrow agent in this transaction ("Escrow
Agent"), two Stock Assignments duly endorsed (with date and number of shares
blank) in the form attached hereto as Exhibit D, together with the certificate
or certificates evidencing the Stock. Such documents are to be held by the
Escrow Agent and delivered by the Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and Purchaser set forth in Exhibit E attached hereto
and incorporated by this reference, which instructions shall also be delivered
to the Escrow Agent upon execution hereof.
8. ARBITRATION.
(a) ELECTION OF ARBITRATION. At the option of either party, any
and all disputes or controversies whether of law or fact and of any nature
whatsoever arising from or respecting this Agreement shall be decided by
arbitration by the American Arbitration Association in accordance with the rules
and regulations of that Association.
(b) SELECTION OF ARBITRATORS. The arbitrators shall be selected
as follows: In the event the Company and Purchaser agree on one arbitrator, the
arbitration shall be conducted by such arbitrator. In the event the Company and
Purchaser do not so agree, the Company and Purchaser shall each select one
independent, qualified arbitrator, and the two arbitrators so selected shall
select the third arbitrator. The Company reserves the right to object to any
individual arbitrator who shall be employed by or affiliated with a competing
organization.
(c) CONDUCT OF ARBITRATION. Arbitration shall take place in San
Francisco, California or any other location mutually agreeable to the parties.
Reasonable notice of the time and place of arbitration shall be given to all
persons other than the parties as shall be required by law, and such persons or
their authorized representatives shall have the right to attend and/or
participate in all the arbitration hearings in such manner as the law shall
require.
(d) SECRECY OF PROCEEDINGS. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such case
all documents, testimony and records shall be received, heard and maintained by
the arbitrators in secrecy under seal, available for the inspection only of the
Company or Purchaser and their respective attorneys and their respective
experts, who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known.
(e) RELIEF. The arbitrators, who shall act by majority vote,
shall be able to decree any and all relief of an equitable nature (including
without limitation such relief as temporary restraining orders or temporary
and/or permanent injunctions), and shall also be able to award damages, with or
without an accounting and costs. The decree or judgment of an award rendered by
the arbitrators may be entered in any court having jurisdiction thereof.
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<PAGE> 11
9. STANDOFF AGREEMENT. Purchaser agrees, in connection with an initial
public offering of the Company's equity securities, upon request of the Company
or the underwriters managing such offering, (i) not to sell, make any short sale
of, loan, grant any option for the purchase of or otherwise dispose of any
shares of Stock (other than those included in the registration, if any) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) from
the effective date of such registration) as may be requested by the Company or
such underwriters, and (ii) to execute any agreement regarding (i) above as may
be requested by the Company or underwriters at the time of the public offering;
provided, that the officers and directors of the Company who own stock of the
Company also agree to such restrictions.
10. GOVERNING LAW. This Agreement shall be governed and construed by the
laws of the State of California as applied to agreements made and performed in
California by residents of the State of California.
11. MISCELLANEOUS.
(a) RIGHTS AS SHAREHOLDER. Subject to the provisions and
limitations hereof, Purchaser may, during the term of this Agreement, exercise
all rights and privileges of a shareholder of the Company with respect to the
Stock deposited in escrow pursuant to Section 7 hereof.
(b) FURTHER ASSURANCES. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
(c) NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
(including by express courier) or upon deposit in the United States Post Office,
by First Class mail with postage and fees prepaid, addressed to Purchaser at
his/her address shown on the Company's employment records and to the Company at
the address of its principal corporate offices (attention: President) or at such
other address as such party may designate by ten (10) days' advance written
notice to the other party.
(d) ASSIGNMENT. The Company may assign its rights and delegate
its duties under this Agreement, including Section 2 hereof. This Agreement
shall inure to the benefit of the successors and assigns of the Company and,
subject to the restrictions on transfer herein set forth, be binding upon
Purchaser, his/her heirs, executors, administrators, successors and assigns. The
rights of Purchaser under this Agreement may be assigned only with the prior
written consent of the Company.
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<PAGE> 12
(e) AUTHORIZATION OF TRANSFER. Purchaser hereby authorizes and
directs the Secretary or transfer agent of the Company to transfer the Stock as
to which the Repurchase Option has been exercised from Purchaser to the Company
or the Company's assignees.
(f) NO EFFECT ON EMPLOYMENT/CONSULTING RELATIONSHIP. PURCHASER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREUNDER DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS EMPLOYEE OR CONSULTANT OF THE COMPANY FOR ANY PERIOD OR AT ALL.
NOTHING IN THIS AGREEMENT SHALL AFFECT IN ANY MANNER WHATSOEVER OR INTERFERE
WITH THE RIGHT OR POWER OF THE COMPANY, OR A PARENT OR SUBSIDIARY OF THE
COMPANY, TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE
COMPANY AT ANY TIME, FOR ANY OR NO REASON, WITH OR WITHOUT CAUSE, SUBJECT TO THE
PROVISIONS OF ANY EMPLOYMENT AGREEMENT BETWEEN PURCHASER AND THE COMPANY.
(g) WAIVER. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
(h) ADVICE OF COUNSEL. Purchaser has reviewed this Agreement in
its entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions hereof.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
(i) ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the purchase of Common Stock by
Purchaser and the vesting thereof, supersedes all prior understandings and
agreements, written and oral, with regard thereto, and satisfies all of the
Company's obligations to Purchaser with regard to the issuance or sale of
securities. This Agreement may be modified or amended only in writing signed by
both parties.
12. SPECIAL TERMINATION OF REPURCHASE OPTION. If, after any of the
following transactions (a "Corporate Transaction"):
(a) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
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<PAGE> 13
(b) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(c) any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger,
Purchaser's proposed role in the surviving entity is not reasonably acceptable
to Purchaser, then the Repurchase Option shall automatically lapse with respect
to fifty percent (50%) of the unvested Shares, and Purchaser shall acquire a
vested interest in such shares effective upon the consummation of such Corporate
Transaction; provided, however, that Purchaser's employment shall not have
terminated prior to the consummation of such Corporate Transaction.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WINK COMMUNICATIONS, INC., MARY AGNES WILDEROTTER
a California corporation
By: /s/ Paritosh K. Choksi /s/ Mary Agnes Wilderotter
---------------------- --------------------------
(Signature)
Title: CFO
------------------- --------------------------
(Address)
--------------------------
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<PAGE> 15
CONSENT OF SPOUSE
I, Philip J. Wilderotter IV, spouse of Mary Agnes Wilderotter, have read
and approve the foregoing Agreement. In consideration of the granting to my
spouse of the right to purchase shares of Wink Communications, Inc., as set
forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in
respect to the exercise of any rights under the Agreement and agree to be bound
by the provisions of the Agreement insofar as I may have any rights in the
Agreement or in any shares issued pursuant thereto under the community property
laws of the State of California or similar laws relating to marital property in
effect in the state of our residence as of the date of the signing of the
Agreement.
Dated: 2/1/98
/s/ Philip J. Wilderotter IV
-----------------------------
(Signature of Spouse)
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<PAGE> 16
EXHIBIT A
PROMISSORY NOTE
$100,000.00 Alameda, California
February 1, 1998
FOR VALUE RECEIVED, Mary Agnes Wilderotter promises to pay to Wink
Communications, Inc., a California corporation (the "Company"), or order, the
principal sum of One Hundred Thousand Dollars ($100,000.00), together with
interest on the unpaid principal hereof from the date hereof at the rate of
6.4% per annum, compounded annually.
Principal and interest shall be due and payable on February 1, 2008.
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 without penalty all or any
portion of the principal or interest owing hereunder.
This Note is subject to the terms of the Restricted Stock Purchase
Agreement, dated as of February 1, 1998. This Note is secured 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.
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. This Note shall be governed and construed in accordance with the
laws of the State of California.
/s/ Mary Agnes Wilderotter
--------------------------
Mary Agnes Wilderotter
<PAGE> 17
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of February 1, 1998 between Wink
Communications, Inc., a California corporation ("Pledgee"), and Mary Agnes
Wilderotter ("Pledgor").
Recitals
Pursuant to Pledgor's purchase of Stock under the Restricted Stock
Purchase Agreement dated February 1, 1998, between Pledgor and Pledgee, and
Pledgor's election to pay for such Stock with her promissory note (the "Note"),
Pledgor has purchased 25,000 shares of Pledgee's Common Stock (the "Shares") at
a price of $4.00 per share, for a total purchase price of $100,000.00. The Note
and the obligations thereunder are as set forth in Exhibit B to the Restricted
Stock Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Restricted Stock Purchase
Agreement, Pledgor, pursuant to the California Commercial Code, hereby pledges
all of such Shares (herein sometimes referred to as the "Collateral")
represented by certificate number ______, 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 the Pledgeholder shall not
encumber or dispose of such Shares except in accordance with the provisions of
this Security Agreement.
2. 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.
c. 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"
<PAGE> 18
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.
3. 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.
4. 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.
5. 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 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.
6. 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
Restricted Stock Purchase Agreement 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.
7. 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 released shall be that
number of full Shares which bears the same proportion to the initial number of
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<PAGE> 19
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
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<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" Mary Agnes Wilderotter
/s/ Mary Agnes Wilderotter
-----------------------------------
(signature)
Address:
-----------------------------------
-----------------------------------
"PLEDGEE" WINK COMMUNICATIONS, INC.
a California corporation
By: /s/ Paritosh K. Choksi
----------------------------
Title: CFO
---
"PLEDGEHOLDER" /s/ Paritosh K. Choksi
-----------------------------------
Secretary of
Wink Communications, Inc.
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<PAGE> 21
EXHIBIT C
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
The undersigned taxpayer hereby elects, pursuant to the above-referenced
Internal Revenue Code Section, to include in his/her gross income for the
current taxable year, the amount of any compensation taxable to him/her in
connection with his/her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME :TAXPAYER: SPOUSE:
ADDRESS :TAXPAYER: SPOUSE:
IDENTIFICATION # :TAXPAYER: SPOUSE:
TAXABLE YEAR :TAXPAYER: SPOUSE:
2. The property with respect to which the election is made is described as
follows:
25,000 shares of Common Stock of Wink Communications, Inc., a California
corporation (the "Company").
3. The date on which the property was transferred is: February 1, 1998.
4. The property is subject to the following restrictions:
Restriction on sale or transfer of the stock in accordance with Restricted
Stock Purchase Agreement with the Company dated February 1, 1998.
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: $100,000.00
6. The amount (if any) paid for such property: $100,000.00
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: __________________, 19___ __________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: __________________, 19___ __________________
Spouse of Taxpayer
<PAGE> 22
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement dated as of February 1, 1998 (the "Agreement"), Mary Agnes
Wilderotter ("Purchaser") hereby sells, assigns and transfers unto ___________
_______________________________ (_________________) shares of the Common Stock
of Wink Communications, Inc., a California corporation, standing in the
undersigned's name on the books of said corporation represented by certificate
no. _______ herewith, and does hereby irrevocably constitute and appoint
_________ attorney to transfer the said stock on the books of the said
corporation with full power of substitution in the premises. THIS ASSIGNMENT MAY
ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE EXHIBITS THERETO.
Dated ________________ MARY AGNES WILDEROTTER
/s/ Mary Agnes Wilderotter
----------------------------
Signature
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the corporation to exercise its
"Repurchase Option" set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE> 23
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement dated as of February 1, 1998 (the "Agreement"), Mary Agnes
Wilderotter ("Purchaser") hereby sells, assigns and transfers unto ____________
_________________________ (____________) shares of the Common Stock of Wink
Communications, Inc., a California corporation, standing in the undersigned's
name on the books of said corporation represented by certificate no. _______
herewith, and does hereby irrevocably constitute and appoint __________ attorney
to transfer the said stock on the books of the said corporation with full power
of substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED
BY THE AGREEMENT AND THE EXHIBITS THERETO.
Dated ________________ MARY AGNES WILDEROTTER
/s/ Mary Agnes Wilderotter
----------------------------
Signature
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the corporation to exercise its
"Repurchase Option" set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE> 24
EXHIBIT E
JOINT ESCROW INSTRUCTIONS
February 1, 1998
Secretary
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, California 94501
Dear Sir:
As Escrow Agent for both Wink Communications, Inc., California
corporation ("Company"), and the undersigned purchaser of stock of the Company
("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, to which a copy
of these Joint Escrow Instructions is attached as Exhibit E, 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
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 such purchase 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 such 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, in accordance with the Agreement, against the simultaneous delivery to
you of the purchase price (by check, wire transfer or promissory note) for the
number of shares of stock being purchased pursuant to the exercise of the
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 hereby irrevocably constitutes and appoints you as Purchasers
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 the Department of Corporations of
the State of California of an Application for Consent to Transfer Securities
Subject to Legend or Escrow Condition pursuant to Section 25151 of the
California
<PAGE> 25
Corporation Securities Law of 1968. 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 Purchaser, but no more than once per calendar
year, unless the 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 Repurchase Option. Within two months after the
Company's Repurchase Option expires, you will deliver to Purchaser a certificate
or certificates representing the aggregate number of shares sold and issued
pursuant to the Agreement and not purchased by the Company or its assignees
pursuant to exercise of the 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 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 of any arbitrator provided
for in the Agreement, and are hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court and of any such arbitrator. 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.
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<PAGE> 26
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.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer 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 any
arbitrator provided for in the Agreement or 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 (including by
express courier) or upon deposit in the United States Post Office, by First
Class 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: Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: President
PURCHASER: Mary Agnes Wilderotter
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
ESCROW AGENT: Secretary
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
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<PAGE> 27
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.
Very truly yours,
WINK COMMUNICATIONS, INC.
a California corporation
By: /s/ Paritosh K. Choksi
------------------------
Its: Secretary
------------------------
MARY AGNES WILDEROTTER
/s/ Mary Agnes Wilderotter
----------------------------
(Signature)
ESCROW AGENT:
/s/ Paritosh K. Choksi
- - -----------------------------
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<PAGE> 1
EXHIBIT 10.38
WINK COMMUNICATIONS, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of November 3, 1997 between Wink
Communications, Inc., a California corporation (the "Company"), and Paritosh K.
Choksi ("Purchaser").
WHEREAS Purchaser is an employee of or consultant to the Company whose
continued affiliation with the Company is considered to be important for the
Company's continued growth; and
WHEREAS in order to provide Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for Purchaser to continue to
participate in the affairs of the Company, the Company is willing to sell to
Purchaser and Purchaser desires to purchase shares of Common Stock according to
the terms and conditions hereof;
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions of
this Agreement, the Company hereby agrees to sell to Purchaser and Purchaser
agrees to purchase from the Company 215,000 shares of the Company's Common Stock
(the "Stock") at a price of $2.00 per share, for an aggregate purchase price of
$430,000.00. The purchase price for the Stock shall be paid by a full recourse
promissory note in substantially the form attached hereto as Exhibit A (the
"Note"). Purchaser shall be required to execute and deliver a Security Agreement
in the form attached hereto as Exhibit B. The Note shall be secured by a pledge
of the Stock purchased by the Note pursuant to the Security Agreement. Upon such
payment, the Company shall issue a duly executed certificate evidencing the
Stock in the name of Purchaser to be held pursuant to the escrow described in
Section 7 hereof.
2. REPURCHASE OPTION AND RELEASE OF SHARES.
(a) REPURCHASE OPTION.
(i) In the event of any voluntary or involuntary
termination of Purchaser's employment by or consulting services to the Company
(including as a result of death or disability) before all shares of the Stock
are released from the Company's repurchase option under Section 2(b) below, the
Company shall, upon the date of such termination (as reasonably fixed and
determined by the Company) have an irrevocable, exclusive option for a period of
twenty-four (24) months from such date to repurchase all or any portion of the
Stock which has not been released from the repurchase option described in this
Section 2 (the "Repurchase Option") at the time of such termination at the
original purchase price per share. The Repurchase Option shall be exercised by
the Company by written notice to Purchaser or his/her executor (with a copy to
the Escrow Agent described in Section 7 hereof) and, at the Company's option,
(A) by delivery to Purchaser or his/her executor with such notice of a check in
the amount of the aggregate repurchase price for the Stock being repurchased,
(B) by cancellation by the Company of an amount of Purchaser's indebtedness to
the Company equal to the aggregate
<PAGE> 2
repurchase price for the Stock being repurchased, or (C) by a combination of (A)
and (B) so that the combined payment and cancellation of indebtedness equals
such aggregate repurchase price. Upon delivery of such notice and the payment of
the aggregate repurchase price in any of the ways described above, the Company
shall become the legal and beneficial owner of the Stock being repurchased and
all rights and interests therein or relating thereto, and the Company shall have
the right to retain and transfer to its own name the number of shares of the
Stock being repurchased by the Company.
(ii) Whenever the Company shall have the right to
repurchase shares of the Stock hereunder, the Company may designate and assign
one or more employees, officers, directors or shareholders of the Company or
other persons or organizations to exercise all or a part of the Company's
repurchase rights under this Agreement and to purchase all or a part of such
Stock; provided that if the aggregate fair market value of the Stock to be
repurchased on the date of such designation or assignment ("Repurchase FMV")
exceeds the aggregate repurchase price of the Stock to be repurchased, then each
such designee or assignee shall pay the Company cash equal to the difference
between the Repurchase FMV and the aggregate repurchase price of the Stock which
such designee or assignee shall have the right to repurchase.
(b) RELEASE OF SHARES FROM REPURCHASE OPTION.
(i) 1/48th of the Stock shall be released from the
Company's Repurchase Option on each monthly anniversary of November 3, 1997
until all shares of the Stock have been released; provided in each case that
there has not been any voluntary or involuntary termination prior to each such
date of release.
(ii) This Agreement shall not confer upon Purchaser any
right with respect to employment by the Company, nor shall it interfere with or
affect in any manner the right or power of the Company, or a parent or
subsidiary of the Company, to terminate Purchaser's employment or consulting
relationship with the Company, which right is hereby reserved.
3. STOCK SPLITS, ETC. If, from time to time during the term of this
Agreement:
(a) There is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) Subject to Section 13 hereof, there is any consolidation,
merger or sale of all, or substantially all, of the assets of the Company;
then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of the Stock shall be immediately subject to this Agreement and be included in
the word "Stock" for all purposes with the same force and effect as the shares
of Stock currently subject to the Repurchase Option and other terms of this
Agreement. While the aggregate repurchase price payable upon execution of the
Repurchase Option shall remain the same after each such event, the repurchase
price per share of Stock shall be appropriately adjusted.
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<PAGE> 3
4. RESTRICTION ON TRANSFER. Purchaser shall not sell, transfer, pledge,
hypothecate or otherwise dispose of any shares of the Stock which remain subject
to the Repurchase Option. The Company shall not be required (i) to transfer on
its books any shares of Stock which shall have purportedly been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (ii) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any purported transferee to whom such shares shall
have been purportedly transferred.
5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The share certificate evidencing the Stock issued
hereunder shall be endorsed with the following legends (in addition to any
legends required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.
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.
(b) STOP-TRANSFER NOTICES. Purchaser 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.
6. PURCHASER'S REPRESENTATIONS AND COVENANTS. In connection with the
purchase of the Stock, Purchaser hereby represents and warrants to the Company
as follows:
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. Purchaser
is purchasing the Stock solely for Purchaser's own account for investment and
not with a view to or for sale in connection with any distribution of the Stock
or any portion thereof and not with any present intention of selling, offering
to sell or otherwise disposing of or distributing the Stock or any portion
thereof. Purchaser also represents that the entire legal and beneficial interest
of the Stock is being purchased, and will be held, for Purchaser's account only,
and neither in whole or in part for any other person. Purchaser either (i) has a
pre-existing business or personal relationship with the Company or at least one
of its officers, directors or controlling persons, or (ii) by reason of
Purchaser's business or financial experience (or the business or financial
experience of Purchaser's professional advisors who are unaffiliated with and
who
-3-
<PAGE> 4
are not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), can be reasonably assumed to have the capacity
to evaluate the merits and risks of an investment in the Company and to protect
Purchaser's own interests in connection with this transaction.
(b) RESIDENCE. Purchaser's principal residence is within the
State of California and is located at the address indicated beneath Purchaser's
signature below.
(c) INFORMATION CONCERNING COMPANY. Purchaser has discussed the
Company and its plans, operations and financial condition with the Company's
officers and has received all such information as Purchaser has deemed necessary
and appropriate to enable Purchaser to evaluate the financial risk inherent in
making an investment in the Stock. Purchaser has received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
(d) ECONOMIC RISK. Purchaser realizes that the purchase of the
Stock will be a highly speculative investment and involves a high degree of
risk. Purchaser is able, without impairing Purchaser's financial condition, to
hold the Stock for an indefinite period of time and to suffer a complete loss on
Purchaser's investment.
(e) RESTRICTED SECURITIES. Purchaser understands and acknowledges
that:
(i) The Stock has not been registered under the Securities
Act of 1933, as amended, in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein. In this connection, Purchaser understands
that, in the view of the Securities and Exchange Commission ("SEC"), the
statutory basis for such exemption may be unavailable if Purchaser's
representation was predicated solely upon a present intention to hold the Stock
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
Stock, or for a period of one year or any other fixed period in the future.
(ii) The Stock must be held indefinitely unless it is
subsequently registered under the Securities Act or unless an exemption from
such registration is otherwise available. Purchaser further acknowledges and
understands that the Company is under no obligation to register the Stock. In
addition, Purchaser understands that the certificate evidencing the Stock will
be imprinted with a legend which prohibits the transfer of the Stock unless it
is registered or such registration is not required in the opinion of counsel
satisfactory to the Company.
(f) DISPOSITION UNDER RULE 144. Purchaser understands that:
(i) The shares of Stock are restricted securities within
the meaning of Rule 144 promulgated under the Securities Act; that the exemption
from registration under Rule 144 will not be available in any event for at least
one (1)) year from the date of purchase and payment of the Stock, and even then
will not be available unless (i) a public trading market then exists for the
Common
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<PAGE> 5
Stock of the Company, (ii) adequate information concerning the Company is then
available to the public, and (iii) other terms and conditions of Rule 144 are
complied with; and that any sale of the Stock may be made only in limited
amounts in accordance with such terms and conditions of Rule 144;
(ii) That at the time Purchaser wishes to sell the Stock
there may be no public market upon which to make such a sale; that, even if such
a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144; and that, in such event, Purchaser
would be precluded from selling the Stock under Rule 144 even if the one (1)
year minimum holding period had been satisfied; and
(iii) In the event all of the requirements of Rule 144 are
not satisfied, registration under the Securities Act or compliance with
Regulation A or another registration exemption will be required; that,
notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering or pursuant to Rule 144 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.
(g) FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting Purchaser's representations set forth above, Purchaser further agrees
that Purchaser shall in no event make any disposition of all or any portion of
the Stock unless and until:
(i) Either:
(A) There is then in effect a Registration
Statement under the Securities Act covering such proposed disposition, and such
disposition is made in accordance with said Registration Statement; or
(B) (1) Purchaser shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition; (2)
Purchaser shall have furnished the Company with an opinion of Purchaser's
counsel to the effect that such disposition will not require registration of
such shares under the Securities Act; and (3) such opinion of Purchaser's
counsel shall have been concurred in by counsel for the Company, and the Company
shall have advised Purchaser of such concurrence; and,
(ii) The shares of Stock proposed to be transferred are no
longer subject to the Repurchase Option set forth in Section 2 hereof, and
Purchaser shall have complied with the Standoff Agreement set forth in Section 9
hereof.
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<PAGE> 6
(h) VALUATION OF COMMON STOCK.
(i) Purchaser understands that the Stock has been valued
by the Company's Board of Directors and that the Company believes this valuation
represents a fair attempt at reaching an accurate appraisal of its worth.
Purchaser understands, however, that the Company can give no assurances that
such price is in fact the fair market value of the Stock, and that it is
possible that, with the benefit of hindsight, the Internal Revenue Service would
successfully assert that the value of the Stock on the date of purchase is
substantially greater than so determined.
(ii) If the Internal Revenue Service were to succeed in a
tax determination that the Stock had a value greater than that upon which this
transaction is based, the additional value would constitute ordinary income to
Purchaser as of the date of its receipt. The additional taxes (and interest) due
would be payable by Purchaser. There is no provision for the Company to
reimburse Purchaser for that tax liability, and Purchaser assumes all
responsibility therefor. Furthermore, in the event such additional value
represents more than twenty-five percent (25%) of Purchaser's gross income for
the year in which the value of the shares would be taxable, the Internal Revenue
Service would have six (6) years from the due date for filing the return for
such year (or the actual filing date of the return if filed thereafter) within
which to assess Purchaser the additional tax and interest which would then be
due.
(iii) The Company would have the benefit, in any such
transaction, if a determination was made prior to the three (3) year statute of
limitations period affecting the Company, of an increase in its deduction for
compensation paid, which would offset its operating profits, or, if the Company
were not profitable at such time, would create net operating loss carry-forwards
arising from operations in that year.
(i) SECTION 83(b) ELECTION.
(i) Purchaser understands that Purchaser (and not the
Company) is responsible for Purchaser's own federal, state, local or foreign tax
liability and any other tax consequences that may arise as a result of the
transactions contemplated by this Agreement. Purchaser agrees to rely solely on
the determinations of Purchaser's tax advisors or Purchaser's own
determinations, and not on any statements or representations by the Company or
any of its attorneys or agents, with regard to all tax matters.
(ii) Purchaser understands that Section 83 of the Internal
Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income the
difference between the amount paid for the Stock and the fair market value of
the Stock as of the date any restrictions on the Stock lapse. In this context,
"restriction" includes the right of the Company to buy back the Stock pursuant
to the Repurchase Option. (In the event the Company has registered any of its
shares under the Securities Exchange Act of 1934, "restriction" with respect to
officers, directors and ten percent (10%) shareholders also means the period
after the purchase of the Stock during which such officer, director and ten
percent (10%) shareholders could be subject to suit under Section 16(b) of the
Securities Exchange Act.)
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<PAGE> 7
(iii) Purchaser understands that Purchaser may elect to be
taxed at the time the Stock is purchased rather than when and as the Repurchase
Option (or Section 16(b) restrictions) lapse by filing an election under Section
83(b) of the Code with the Internal Revenue Service within thirty (30) days
after the date of purchase of the Stock. The form for making this election is
attached hereto as Exhibit C. PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b) OF THE CODE, EVEN IF PURCHASER REQUESTS THAT THE COMPANY OR ITS
REPRESENTATIVES MAKE THIS FILING ON PURCHASER'S BEHALF.
7. ESCROW. As security for the faithful performance of the terms of this
Agreement and to ensure the availability for delivery of the Stock upon exercise
of the Repurchase Option, Purchaser agrees to deliver to and deposit with the
Secretary of the Company, or such other person designated by the Company, as
escrow agent in this transaction ("Escrow Agent"), two Stock Assignments duly
endorsed (with date and number of shares blank) in the form attached hereto as
Exhibit D, together with the certificate or certificates evidencing the Stock.
Such documents are to be held by the Escrow Agent and delivered by the Escrow
Agent pursuant to the Joint Escrow Instructions of the Company and Purchaser set
forth in Exhibit E attached hereto and incorporated by this reference, which
instructions shall also be delivered to the Escrow Agent upon execution hereof.
8. ARBITRATION.
(a) ELECTION OF ARBITRATION. At the option of either party, any
and all disputes or controversies whether of law or fact and of any nature
whatsoever arising from or respecting this Agreement shall be decided by
arbitration by the American Arbitration Association in accordance with the rules
and regulations of that Association.
(b) SELECTION OF ARBITRATORS. The arbitrators shall be selected
as follows: In the event the Company and Purchaser agree on one arbitrator, the
arbitration shall be conducted by such arbitrator. In the event the Company and
Purchaser do not so agree, the Company and Purchaser shall each select one
independent, qualified arbitrator, and the two arbitrators so selected shall
select the third arbitrator. The Company reserves the right to object to any
individual arbitrator who shall be employed by or affiliated with a competing
organization.
(c) CONDUCT OF ARBITRATION. Arbitration shall take place in San
Francisco, California or any other location mutually agreeable to the parties.
Reasonable notice of the time and place of arbitration shall be given to all
persons other than the parties as shall be required by law, and such persons or
their authorized representatives shall have the right to attend and/or
participate in all the arbitration hearings in such manner as the law shall
require.
(d) SECRECY OF PROCEEDINGS. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such case
all documents, testimony and records shall be received, heard and maintained by
the arbitrators in secrecy under seal, available for the inspection only
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<PAGE> 8
of the Company or Purchaser and their respective attorneys and their respective
experts, who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known.
(e) RELIEF. The arbitrators, who shall act by majority vote,
shall be able to decree any and all relief of an equitable nature (including
without limitation such relief as temporary restraining orders or temporary
and/or permanent injunctions), and shall also be able to award damages, with or
without an accounting and costs. The decree or judgment of an award rendered by
the arbitrators may be entered in any court having jurisdiction thereof.
9. STANDOFF AGREEMENT. Purchaser agrees, in connection with an initial
public offering of the Company's equity securities, upon request of the Company
or the underwriters managing such offering, (i) not to sell, make any short sale
of, loan, grant any option for the purchase of or otherwise dispose of any
shares of Stock (other than those included in the registration, if any) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) from
the effective date of such registration) as may be requested by the Company or
such underwriters, and (ii) to execute any agreement regarding (i) above as may
be requested by the Company or underwriters at the time of the public offering;
provided, that the officers and directors of the Company who own stock of the
Company also agree to such restrictions.
10. RIGHT OF FIRST REFUSAL.
(a) RIGHT. Purchaser hereby grants the Company a right of first
refusal (the "First Refusal Right") in connection with any proposed sale or
other transfer of Stock which is no longer subject to the Repurchase Option. For
purposes of this Section 10, the term "transfer" shall include any assignment,
pledge, encumbrance or other disposition for the value of Stock intended to be
made by Purchaser. Nothing in this Section 10 shall be construed to confer upon
Purchaser the right to transfer any shares that remain subject to the Repurchase
Option.
(b) NOTICE OF DISPOSITION. In the event Purchaser desires to
accept a bona fide third-party offer for any or all Stock which is no longer
subject to the Repurchase Option (the shares subject to such offer to be
hereinafter called, for the purpose of this Section 10, the "Target Shares"),
Purchaser shall promptly (i) deliver to the Secretary of the Company written
notice (the "Disposition Notice") of the offer, which notice shall describe the
basic terms and conditions thereof, including the proposed purchase price, and
(ii) provide satisfactory proof that the disposition of the Target Shares to the
third-party offeror would not be in contravention of the provisions of this
Agreement, including without limitation, Section 6 hereof.
(c) EXERCISE OF RIGHT. The Company (or its assignees) shall, for
a period of thirty (30) days following receipt of the Disposition Notice, have
the right to repurchase all, but not less than all, of the Target Shares upon
substantially the same terms and conditions specified therein. Such right shall
be exercisable by written notice (the "Exercise Notice") delivered to Purchaser
prior to the expiration of the thirty day exercise period. If such right is
exercised with respect to the Target Shares,
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<PAGE> 9
then the Company (or its assignees) shall effect the repurchase of the Target
Shares, including payment of the purchase price, not more than five (5) business
days after the delivery of the Exercise Notice; and at such time Purchaser shall
deliver to the Company the certificates representing the Target Shares to be
repurchased, each certificate properly endorsed for transfer. To the extent any
of the Target Shares are at the time remain in escrow under Section 7 even
though they are not longer subject to the Repurchase Option, the certificates
for such shares shall automatically be released from escrow and surrendered to
the Company for cancellation. The Target Shares so purchased shall thereupon be
cancelled and cease to be issued and outstanding shares of the Company's Common
Stock.
(d) NON-CASH CONSIDERATION. Should the purchase price specified
in the Disposition Notice be payable in property other than cash or evidences of
indebtedness, the Company (or its assignees) shall have the right to pay the
purchase price in the form of cash equal in amount to the value of such
property. If Purchaser and the Company (or its assignees) cannot agree on such
cash value within ten (10) days after the Company's receipt of the Disposition
Notice, the valuation shall be made by an appraiser of recognized standing
selected by Purchaser and the Company (or its assignees). If Purchaser and the
Company cannot agree on an appraiser within twenty (20) days after the Company's
receipt of the Disposition Notice, each shall select an appraiser of recognized
standing, and the two appraisers shall designate a third appraiser of recognized
standing, whose appraisal shall be determinative of such value. The cost of such
appraisal shall be shared equally by Purchaser and the Company. The closing of
the purchase of the Targeted Shares by the Company shall then be held on the
later of (i) the fifth business day following delivery of the Exercise Notice,
or (ii) the 15th day after such cash valuation shall have been made.
(e) DISPOSITION OF TARGET SHARES. In the event an Exercise Notice
is not given to Purchaser within thirty (30) days following the date of the
Company's receipt of the Disposition Notice, Purchaser shall have a period of
thirty (30) days thereafter, in which to sell or otherwise dispose of the Target
Shares upon terms and conditions (including the purchase price) no more
favorable to a third-party purchaser than those specified in the Disposition
Notice; provided, however, that any such sale or disposition must not be
effected in contravention of the provisions of this Agreement, including without
limitation, Section 6 hereof. In the event Purchaser does not sell or otherwise
dispose of all Target Shares within the specified thirty (30) day period, the
First Refusal Right shall continue to be applicable to any subsequent
disposition of the Target Shares by Purchaser until such right lapses in
accordance with Section 10(g).
(f) STOCK SPLITS, ETC. In the event of any stock dividend, stock
split, recapitalization or other transaction affecting the Company's outstanding
Common Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Stock shall be immediately
subject to the First Refusal Right.
(g) LAPSE OF RIGHT. The First Refusal Right shall lapse and cease
to have effect upon the occurrence of a firm commitment underwritten public
offering pursuant to an effective registration
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<PAGE> 10
statement under the Securities Act, covering the offer and sale of the Company's
Common Stock in the aggregate amount of at least $10,000,000.
11. GOVERNING LAW. This Agreement shall be governed and construed by the
laws of the State of California as applied to agreements made and performed in
California by residents of the State of California.
12. MISCELLANEOUS.
(a) RIGHTS AS SHAREHOLDER. Subject to the provisions and
limitations hereof, Purchaser may, during the term of this Agreement, exercise
all rights and privileges of a shareholder of the Company with respect to the
Stock deposited in escrow pursuant to Section 7 hereof.
(b) FURTHER ASSURANCES. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
(c) NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
(including by express courier) or upon deposit in the United States Post Office,
by First Class mail with postage and fees prepaid, addressed to Purchaser at
his/her address shown on the Company's employment records and to the Company at
the address of its principal corporate offices (attention: President) or at such
other address as such party may designate by ten (10) days' advance written
notice to the other party.
(d) ASSIGNMENT. The Company may assign its rights and delegate
its duties under this Agreement, including Section 2 hereof. This Agreement
shall inure to the benefit of the successors and assigns of the Company and,
subject to the restrictions on transfer herein set forth, be binding upon
Purchaser, his/her heirs, executors, administrators, successors and assigns. The
rights of Purchaser under this Agreement may be assigned only with the prior
written consent of the Company.
(e) AUTHORIZATION OF TRANSFER. Purchaser hereby authorizes and
directs the Secretary or transfer agent of the Company to transfer the Stock as
to which the Repurchase Option has been exercised from Purchaser to the Company
or the Company's assignees.
(f) NO EFFECT ON EMPLOYMENT/CONSULTING RELATIONSHIP. PURCHASER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREUNDER DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS EMPLOYEE OR CONSULTANT OF THE COMPANY FOR ANY PERIOD OR AT ALL.
NOTHING IN THIS AGREEMENT SHALL AFFECT IN ANY MANNER WHATSOEVER OR INTERFERE
WITH THE RIGHT OR POWER OF THE COMPANY, OR A PARENT OR SUBSIDIARY OF THE
COMPANY, TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE
COMPANY AT ANY TIME, FOR ANY OR NO REASON, WITH OR WITHOUT CAUSE.
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<PAGE> 11
(g) WAIVER. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
(h) ADVICE OF COUNSEL. Purchaser has reviewed this Agreement in
its entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions hereof.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
(i) ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the purchase of Common Stock by
Purchaser, may be modified or amended only in writing signed by both parties,
and satisfies all of the Company's obligations to Purchaser with regard to the
issuance or sale of securities.
13. SPECIAL TERMINATION OF REPURCHASE OPTION. In the event of any of the
following transactions (a "Corporate Transaction"):
(a) A merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
(b) The sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(c) Any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger,
then the Repurchase Option shall automatically lapse as to 50% of the number of
shares then still subject to the Repurchase Option, and Purchaser shall acquire
a vested interest in such Shares, effective upon the consummation of such
Corporate Transaction; provided, however, that Purchaser's employment or
consulting services shall not have terminated prior to the consummation of such
Corporate Transaction.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WINK COMMUNICATIONS, INC., PARITOSH K. CHOKSI
a California corporation
By: /s/ Maggie Wilderotter /s/ Paritosh K. Choksi
------------------------------ -----------------------------------
(Signature)
Title: President
---------------------------
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<PAGE> 13
CONSENT OF SPOUSE
I, Lopa P. Choksi, spouse of Paritosh Choksi, have read and approve the
foregoing Agreement. In consideration of the granting to my spouse of the right
to purchase shares of Wink Communications, Inc., as set forth in the Agreement,
I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in the Agreement or in any shares
issued pursuant thereto under the community property laws of the State of
California or similar laws relating to marital property in effect in the state
of our residence as of the date of the signing of the Agreement.
Dated: November 3, 1997
/s/ Lopa P. Choksi
-------------------------------------
(Signature of Spouse)
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<PAGE> 14
EXHIBIT A
PROMISSORY NOTE
$430,000.00 Alameda, California
November 3, 1997
FOR VALUE RECEIVED, Paritosh K. Choksi promises to pay to Wink
Communications, Inc., a California corporation (the "Company"), or order, the
principal sum of Four Hundred Thirty Thousand Dollars ($430,000.00), together
with interest on the unpaid principal hereof from the date hereof at the rate of
6.42% per annum, compounded annually.
Principal and interest shall be due and payable on November 3, 2007.
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 without penalty all or any
portion of the principal or interest owing hereunder.
This Note is subject to the terms of the Restricted Stock Purchase
Agreement, dated as of November 3, 1997. This Note is secured 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.
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. This Note shall be governed and construed in accordance with the
laws of the State of California.
/s/ Paritosh K. Choksi
-------------------------------------
Paritosh K. Choksi
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<PAGE> 15
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of November 3, 1997 between Wink
Communications, Inc., a California corporation ("Pledgee"), and Paritosh K.
Choksi ("Pledgor").
Recitals
Pursuant to Pledgor's purchase of Stock under the Restricted Stock
Purchase Agreement dated November 3, 1997, between Pledgor and Pledgee, and
Pledgor's election to pay for such Stock with her promissory note (the "Note"),
Pledgor has purchased 215,000 shares of Pledgee's Common Stock (the "Shares") at
a price of $2.00 per share, for a total purchase price of $430,000.00. The Note
and the obligations thereunder are as set forth in Exhibit B to the Restricted
Stock Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Restricted Stock Purchase
Agreement, Pledgor, pursuant to the California Commercial Code, hereby pledges
all of such Shares (herein sometimes referred to as the "Collateral")
represented by certificate number ______, 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 the Pledgeholder shall not
encumber or dispose of such Shares except in accordance with the provisions of
this Security Agreement.
2. 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.
c. 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.
<PAGE> 16
3. 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.
4. 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.
5. 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 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.
6. 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
Restricted Stock Purchase Agreement 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.
7. 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 hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be 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.
8. 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.
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<PAGE> 17
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" By: /s/ Paritosh K. Choksi
---------------------------------
Paritosh K. Choksi
Address:
------------------------------------
------------------------------------
"PLEDGEE" WINK COMMUNICATIONS, INC.
a California corporation
By: Maggie Wilderotter
---------------------------------
Title: President
------------------------------
"PLEDGEHOLDER" /s/ Gary Hammer
------------------------------------
Secretary of
Wink Communications, Inc.
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<PAGE> 19
EXHIBIT C
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
The undersigned taxpayer hereby elects, pursuant to the above-referenced
Internal Revenue Code Section, to include in his/her gross income for the
current taxable year, the amount of any compensation taxable to him/her in
connection with his/her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME :TAXPAYER: Paritosh K. Choksi SPOUSE: ______________
ADDRESS :TAXPAYER: 91 Sugar Loaf Drive SPOUSE: ______________
Tiburon, CA 94920
IDENTIFICATION # :TAXPAYER: ________________ SPOUSE: ______________
TAXABLE YEAR :TAXPAYER: ________________ SPOUSE: ______________
2. The property with respect to which the election is made is described as
follows:
215,000 shares of Common Stock of Wink Communications, Inc., a California
corporation (the "Company").
3. The date on which the property was transferred is: November 3, 1997.
4. The property is subject to the following restrictions:
Restriction on sale or transfer of the stock in accordance with Common
Stock Purchase Agreement with the Company dated November 3, 1997.
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: $430,000.00.
6. The amount (if any) paid for such property: $430,000.00.
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: __________________, 19___ ___________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: __________________, 19___ ___________________________________
Spouse of Taxpayer
<PAGE> 20
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement dated as of November 3, 1997 (the "Agreement"), Paritosh K.
Choksi ("Purchaser") hereby sells, assigns and transfers unto _________________
__________________________ (________________) shares of the Common Stock of Wink
Communications, Inc., a California corporation, standing in the undersigned's
name on the books of said corporation represented by certificate no. _______
herewith, and does hereby irrevocably constitute and appoint _________________
attorney to transfer the said stock on the books of the said corporation with
full power of substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS
AUTHORIZED BY THE AGREEMENT AND THE EXHIBITS THERETO.
Dated ________________ PARITOSH K. CHOKSI
/s/ Paritosh K. Choksi
------------------------------------
Signature
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the corporation to exercise its
"Repurchase Option" set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE> 21
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement dated as of November 3, 1997 (the "Agreement"), Paritosh K.
Choksi ("Purchaser") hereby sells, assigns and transfers unto _________________
__________________________ (________________) shares of the Common Stock of Wink
Communications, Inc., a California corporation, standing in the undersigned's
name on the books of said corporation represented by certificate no. _______
herewith, and does hereby irrevocably constitute and appoint __________________
attorney to transfer the said stock on the books of the said corporation with
full power of substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS
AUTHORIZED BY THE AGREEMENT AND THE EXHIBITS THERETO.
Dated ________________ PARITOSH K. CHOKSI
/s/ Paritosh K. Choksi
--------------------------------------
Signature
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the corporation to exercise its
"Repurchase Option" set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
<PAGE> 22
EXHIBIT E
JOINT ESCROW INSTRUCTIONS
November 3, 1997
Secretary
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, California 94501
Dear Sir:
As Escrow Agent for both Wink Communications, Inc., California
corporation ("Company"), and the undersigned purchaser of stock of the Company
("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, to which a copy
of these Joint Escrow Instructions is attached as Exhibit C, 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
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 such purchase 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 such 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, in accordance with the Agreement, against the simultaneous delivery to
you of the purchase price (by check, wire transfer or promissory note) for the
number of shares of stock being purchased pursuant to the exercise of the
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 hereby irrevocably constitutes and appoints you as Purchasers
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 the Department of Corporations of
the State of California of an Application for Consent to Transfer Securities
Subject to Legend or Escrow Condition pursuant to Section 25151 of the
California Corporation Securities Law of 1968. 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.
<PAGE> 23
4. Upon written request of Purchaser, but no more than once per calendar
year, unless the 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 Repurchase Option. Within two months after the
Company's Repurchase Option expires, you will deliver to Purchaser a certificate
or certificates representing the aggregate number of shares sold and issued
pursuant to the Agreement and not purchased by the Company or its assignees
pursuant to exercise of the 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 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 of any arbitrator provided
for in the Agreement, and are hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court and of any such arbitrator. 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.
-2-
<PAGE> 24
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer 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 any
arbitrator provided for in the Agreement or 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 (including by
express courier) or upon deposit in the United States Post Office, by First
Class 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: Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: President
PURCHASER: Paritosh K. Choksi
91 Sugar Loaf Drive
Tiburon, CA 94920
ESCROW AGENT: Secretary
Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, CA 94501
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.
-3-
<PAGE> 25
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
Very truly yours,
WINK COMMUNICATIONS, INC.
a California corporation
By: /s/ Maggie Wilderotter
------------------------------------
Its: President
-----------------------------------
PARITOSH K. CHOKSI
/s/ Paritosh K. Choksi
---------------------------------------
(Signature)
ESCROW AGENT:
/s/ Gary Hammer
- - -------------------------------------
-4-
<PAGE> 1
EXHIBIT 10.39
[LOGO]
WINK COMMUNICATIONS
October 20, 1997
Mr. Paritosh K. Choksi
91 Sugar Loaf Drive
Tiburon, CA 94920
Dear Pari:
I know I speak for all of the individuals you have interacted with in this
process that we are extremely excited about your joining our team. On a
personal note, I look forward to your leadership and business experience as
together we grow Wink to its fullest potential.
Based upon our discussions, I am pleased to offer you the position of Vice
President and Chief Financial Officer, with Wink Communications, Inc., (The
"Company"), at a semi-monthly salary of $7,291.67 equivalent to $175,000 per
year. You will also be eligible to participate in our Executive Bonus Plan
beginning in 1998. The amount of this bonus will be determined as we define
the plan which you will help architect. In this position, you will report to me.
We will recommend to the Board of Directors that you be granted the right to
purchase, by way of a promissory note, 215,000 shares of Wink common stock. The
current fair market value of this stock has been set by the Board of Directors
at $2.00 per share. The Company's right to repurchase these shares at their
issue price will lapse consistent with the normal vesting plan which 1/48th per
month over 48 months.
In addition, in the event that your employment is terminated for reasons other
then cause and resignation you will receive 6 months severance equivalent to
base salary.
As a regular employee of the Company, you will become eligible to participate
in a number of Company-sponsored benefits, including medical, dental, life and
LTD insurance coverage and participation in the Company's 401(k) Plan. These
benefits may be modified from time to time.
The attached Acceptance, and Employment, Confidential Information and Invention
Assignment Agreement ("Employment Agreement") each contain other terms and
conditions of your employment. If you accept this offer, please return one
signed original copy of the Acceptance, and the Employment Agreement to Rita
Dettore in our People Development department at 1001 Marina Village Parkway,
Alameda, CA 94501. Please retain the duplicates for your files.
Pari, your role as Vice President and CFO will be broad and include all
financial responsibilities as well as legal, strategy, business planning and
new business opportunities. Since Wink is a growing organization, you will be
actively involved in all facets of the business.
We look forward to having you start your employment at a mutually agreed upon
date and no later than November 24, 1997. This offer expires October 27, 1997.
Pari, we are excited about having you join Wink Communications, and look
forward to your significant contributions to our organization. Please feel free
to contact me at 510-337-6305 if you have any questions.
Sincerely,
/s/ Maggie Wilderotter
President and CEO
<PAGE> 1
EXHIBIT 10.40
October 22, 1996
Ms. Mary Agnes Wilderotter
14004 217th Place N.E.
Woodinville, WA 98072
Dear Maggie,
I am pleased to offer you the position of President and CEO of Wink
Communications and a position on the Wink Board of Directors. As we have
discussed, you would be appointed to the Wink board on or about November 18th,
1996 and you would start working at Wink on a part-time basis on or about
December 2nd, 1996. You would begin working full time on or about January 6th,
1997. The principal terms and conditions of your offer are detailed below:
1. Your beginning annual salary will be $200,000. While Wink currently has no
formal cash compensation bonus program. I expect that you will develop one
as the company transitions from "start-up" mode to significant revenues and
profitability. As CEO, you would obviously participate in this program as
well. Similarly, as the company grows, the board expects salaries to become
more competitive with the market as opposed to the currently low executive
salaries (that are "sweat equity" investments by the executive team).
2. In the unlikely event that your employment is discontinued "without cause"
by the Board, Wink will compensate you at a $300,000 annual salary level
for one year, or until you take another job, whichever is shorter.
3. As you have discussed with Bruce Dunlevie, his firm, Benchmark Capital,
will loan you up to $100,000, using 16,667 shares of your stock options as
collateral.
4. You will be allowed to purchase, by way of a promissory note, 1,310,000
(slightly over 9% + 16,667) shares of Wink common stock. The current fair
market value of this stock has been set by the Board at $0.40 per share.
The Company's right to repurchase these shares at their issue price will
lapse consistent with the normal vesting plan which is 1/48th per month
over 48 months. In the event Wink is acquired by or merged into another
company prior to your shares fully vesting and if you are not retained by
the acquiring company in a role that is acceptable to you, vesting will be
accelerated for 1/2 of your invested shares.
5. Wink will pay for you and your family's re-location to the Bay Area. Wink
will also pay for your temporary living arrangements until your family has
re-located, which is expected to be after the current academic year
concludes in June 1997.
Maggie, I am tremendously excited to have you join Wink as its new CEO and I
look forward to working with you to grow Wink into a truly great company. Please
acknowledge your agreement with the foregoing by signing below.
Brian P. Dougherty
Chairman of the Board
Wink Communications
Signed and Accepted: /s/ Mary Agnes Wilderotter
____________________________________
Date: ____________________________________
<PAGE> 1
EXHIBIT 11.1
WINK COMMUNICATIONS, INC.
COMPUTATION OF HISTORICAL AND PRO FORMA NET LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL(1) PRO FORMA(2)
------------------------------------------------- ---------------------------
THREE MONTHS
THREE MONTHS ENDED YEAR ENDED ENDED
YEAR ENDED DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31,
--------------------------- ------------------- ------------ ------------
1995 1996 1997 1997 1998 1997 1998
------- ------- ------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Loss.................. $(2,148) $(5,884) $(9,166) $(1,829) $(2,656) $(9,166) $(2,656)
======= ======= ======= ======= ======= ======= =======
Weighted average common
shares outstanding...... 7,848 8,128 9,269 9,365 9,257 9,269 9,257
Unvested portion of
weighted average shares
subject to repurchase
rights.................. (1,988) (1,696) (1,932) (2,563) (1,226) (1,932) (1,226)
Pro forma weighted average
shares of Preferred
Stock as if converted
into Common Stock on
January 1, 1997, or at
date of original
issuance, if later...... -- -- -- -- -- 4,873 5,911
Weighted average common
equivalent shares
outstanding(3).......... -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Weighted average common
shares outstanding...... 5,860 6,432 7,337 6,802 8,031 12,210 13,942
======= ======= ======= ======= ======= ======= =======
Basic and diluted net
loss per share.......... $ (0.37) $ (0.91) $ (1.25) $ (0.27) $ (0.33) $ (0.75) $ (0.19)
======= ======= ======= ======= ======= ======= =======
</TABLE>
- - ---------------
(1) See computation of historical net loss per share in Note 2 to Consolidated
Financial Statements.
(2) See computation of pro forma net loss per share in Note 2 to Consolidated
Financial Statements.
(3) Due to the Company's net losses, inclusion of common equivalents shares in
the computation of diluted net loss per share would be antidilutive.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
Wink Japan, Inc.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated March 11, 1998 relating
to the consolidated financial statements of Wink Communications, Inc., which
appears in such Prospectus. We also consent to the references to us under the
headings "Experts" and "Selected Consolidated Financial Data" in such
Prospectus. However, it should be noted that Price Waterhouse LLP has not
prepared or certified such "Selected Consolidated Financial Data."
PRICE WATERHOUSE LLP
San Jose, California
June 16, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1997 AND FOR THE
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH
31, 1997 AND 1998 CONTAINED IN THE COMPANY'S REGISTRATION STATEMENT ON FORM S-1
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-END> DEC-31-1997 MAR-31-1998
<CASH> 8,530 7,965
<SECURITIES> 5,452 5,452
<RECEIVABLES> 128 299
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 14,304 13,916
<PP&E> 2,094 2,490
<DEPRECIATION> 991 1,148
<TOTAL-ASSETS> 15,629 15,494
<CURRENT-LIABILITIES> 2,937 2,996
<BONDS> 0 0
0 0
6 6
<COMMON> 10 10
<OTHER-SE> 11,909 11,810
<TOTAL-LIABILITY-AND-EQUITY> 11,925 11,826
<SALES> 619 141
<TOTAL-REVENUES> 619 141
<CGS> 538 70
<TOTAL-COSTS> 10,275 2,976
<OTHER-EXPENSES> (684) (219)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 194 40
<INCOME-PRETAX> (9,166) (2,656)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (9,166) (2,656)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (9,166) (2,656)
<EPS-PRIMARY> (1.25) (.33)
<EPS-DILUTED> (1.25) (.33)
</TABLE>
