<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 8, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WINK COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 7372 94-3212322
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
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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<S> <C>
ARTHUR F. SCHNEIDERMAN, ESQ. CARY K. HYDEN, ESQ.
HERBERT P. FOCKLER, ESQ. R. SCOTT SHEAN, ESQ.
BETSEY SUE, ESQ. LATHAM & WATKINS
WILSON SONSINI GOODRICH & ROSATI 650 TOWN CENTER DRIVE, SUITE 2000
PROFESSIONAL CORPORATION COSTA MESA, CALIFORNIA 92626
650 PAGE MILL ROAD (714) 540-1235
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
</TABLE>
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. [ ]
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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 REGISTRATION FEE
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Common Stock, $0.001 par value.................. $60,000,000 $16,680
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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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SUBJECT TO COMPLETION -- JUNE 8, 1999
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PROSPECTUS
, 1999
[INSERT WINK LOGO]
WINK COMMUNICATIONS, INC.
SHARES OF COMMON STOCK
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WINK COMMUNICATIONS:
- - We provide a complete end-to-end system for low-cost electronic commerce on
television.
- - Wink Communications, Inc.
1001 Marina Village Parkway
Alameda, California 94501
(510) 337-2950
PROPOSED SYMBOL & MARKET:
- - WINK/Nasdaq National Market
THE OFFERING:
- - We are offering shares of our common stock and existing stockholders
are offering shares.
- - The underwriters have an option to purchase an additional shares
from Wink to cover over-allotments.
- - This is our initial public offering, and no public market currently exists for
our shares.
- - We intend to use the proceeds from this offering for working capital and other
general corporate purposes.
- - Closing: , 1999.
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<CAPTION>
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Per Share Total
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<S> <C> <C>
Public offering price (Estimated): $ $
Underwriting fees:
Proceeds to Wink:
Proceeds to the selling stockholders:
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</TABLE>
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 8.
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Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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DONALDSON, LUFKIN & JENRETTE
DEUTSCHE BANC ALEX. BROWN
BEAR, STEARNS & CO. INC.
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY US FEDERAL SECURITIES LAWS TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE> 3
[INSIDE COVER PAGES -- GATE-FOLD]
<PAGE> 4
TABLE OF CONTENTS
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PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
Forward-Looking Statements............ 18
Use of Proceeds....................... 18
Dividend Policy....................... 18
Capitalization........................ 19
Dilution.............................. 20
Selected Consolidated Financial
Data................................ 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 24
</TABLE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Business.............................. 34
Management............................ 46
Certain Transactions.................. 56
Principal and Selling Stockholders.... 61
Description of Capital Stock.......... 64
Shares Eligible for Future Sale....... 67
Underwriting.......................... 69
Legal Matters......................... 71
Experts............................... 71
Additional Information................ 71
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
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Wink is a registered trademark of Wink Communications, Inc. 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 Wink
Communications, Inc. All other trade names and trademarks appearing in this
prospectus are the property of their respective owners. As used in this
prospectus and unless otherwise indicated, "Wink," "Wink Communications," the
"Company," "we," "us" and "our" refer to Wink Communications, Inc. and its
subsidiaries, collectively.
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus should create an
implication that the information contained in this prospectus or the affairs of
Wink have not changed since the date of this prospectus.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all the information you should
consider before buying shares in the offering. You should read the entire
prospectus carefully.
WINK COMMUNICATIONS
Wink Communications provides a complete end-to-end system for low-cost
electronic commerce on television. Our system, Wink Enhanced Broadcasting,
allows advertisers, merchants and broadcast and cable networks to create
interactive enhancements to traditional television advertisements and programs.
With a click of their remote control during an enhanced program or
advertisement, viewers can purchase merchandise, or request product samples,
coupons or catalogues. Similarly, viewers can use Wink to access program-related
information, such as news, sports and weather, participate in votes and polls,
and play along with gameshows. Our business plan is to derive the primary
portion of our future revenues from transaction fees charged to advertisers and
merchants for each purchase order or other request for information.
Our immediate goal is to maximize the presence of Wink Enhanced
Broadcasting in television households. To this end, we have established
relationships with, and licensed our technology to, over 40 key participants
from many segments of the television industry. In addition, we have agreed to
share a portion of our transaction fees to provide incentives for industry
participants to adopt and transmit Wink Enhanced Broadcasting. We currently have
agreements with:
- most of the major broadcast and cable networks, including NBC, CBS, ABC,
The Weather Channel, CNBC, TBS, TNT, CourtTV, E!, Showtime, HBO,
Lifetime, Nickelodeon/Nick-at-Nite, VH-1 and TNN;
- five of the six largest cable operators in the United States, including
AT&T/TCI, Time Warner Cable, Comcast Cable Communications, Cox
Communications and Charter Communications;
- the largest direct broadcast satellite operator in the United States,
DirecTV;
- the leading software company in the world, Microsoft Corporation;
- several of the leading set-top box and television manufacturers,
including General Instrument, Scientific Atlanta, Pioneer, Toshiba,
Matsushita and Thomson Consumer Electronics; and
- several national advertisers, including AT&T, Procter & Gamble, J. Walter
Thompson USA, Inc. on behalf of Ford Motor Company, The Goodyear Tire &
Rubber Company, Charles Schwab, Levi Strauss, The Clorox Company,
Universal Pictures, General Electric and Wells Fargo.
A number of key strategic and financial investors have invested in Wink,
including set-top box and television manufacturers, such as General Instrument,
Scientific Atlanta and Toshiba, as well as GE Capital and Vulcan Ventures
(controlled by Paul Allen). In addition, in May 1999, Microsoft agreed to
purchase 2,500,000 shares of our convertible preferred stock and to collaborate
with us to develop, market and distribute Wink Enhanced Broadcasting on
Microsoft's television platforms.
We began the roll-out of our service in the United States in June 1998, and
we currently serve viewers in select cable markets in California, Connecticut,
Florida, Illinois, Missouri and Tennessee. In addition, Wink Enhanced
Broadcasting has been offered by Wink licensees in Japan since October 1996.
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MARKET OPPORTUNITY
Television is one of the most pervasive communications media in society
today. According to Nielsen Media Research, there were approximately 99 million
television households in the United States in August 1998. Veronis Suhler &
Associates, a television industry market research consultant, estimates that the
average person in the United States watched approximately 1,600 hours of
television (approximately 4.3 hours per day) in 1998. With recent advances in
technology, new televisions and advanced analog and digital set-top boxes can
provide a platform for interactive television. According to Paul Kagan
Associates, a leading cable industry research firm, in 1998 there were
approximately 30 million cable set-top boxes in use, of which approximately
eight million were advanced analog or digital cable set-top boxes. By 2002, Paul
Kagan Associates expects that the number of advanced analog and digital cable
set-top boxes in use will increase to approximately 33 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. According to Veronis Suhler & Associates, the total amount spent
on television advertising in the United States in 1998 was approximately $49
billion. Despite the fact that traditional television broadcasting, cable and
direct broadcast satellite television systems do not provide an integrated means
for viewers to respond to programs and advertisements, the Direct Marketing
Association estimates approximately $91 billion of goods and services were
purchased through direct response television programming and advertising in
1998. The Direct Marketing Association predicts this amount will grow to
approximately $127 billion in 2002. In addition, we believe that electronic
commerce conducted through television viewing devices will benefit from the
rapid growth in internet online shopping, as consumers become more accustomed to
purchasing goods and services electronically. We believe that an opportunity
exists for a simple, immediate, inexpensive and automated method of responding
to direct response advertising on television.
THE WINK EXPERIENCE
The Wink service is free to viewers and easy-to-use which we believe will
encourage broad and frequent usage. Viewers can receive Wink Enhanced
Broadcasting through Wink-enabled televisions and new and existing advanced
analog and digital set-top boxes. Many existing set-top boxes already installed
in consumers' homes can be activated through a remote cable download to receive
Wink Enhanced Broadcasting. To access a Wink enhancement, a television viewer
simply clicks the remote control when the Wink icon appears on the screen. For
example, with a few clicks of the remote control, Wink allows viewers to:
- access additional information (graphics and text) about a specific news
story from CNN Headline News;
- respond to an offer for telecommunications services from AT&T;
- access the local weather forecast instantly from The Weather Channel or
find weather forecasts for other cities;
- obtain coupons and product samples from Procter & Gamble or a new car
brochure from Ford;
- access real-time game scores on-demand or search for statistics relating
to a specific sporting event while watching ESPN;
- subscribe to HBO or Showtime upon seeing an advertisement; or
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- enter a virtual shopping mall which offers products for sale through
dedicated interactive channels.
BUSINESS STRATEGY
Our objective is to capitalize on the pervasiveness and popularity of
television to create a mass market medium for sales lead generation and
electronic commerce. Our strategy to achieve this objective consists of the
following key elements:
- increase the presence of Wink Enhanced Broadcasting in television
households by promoting the deployment of Wink-enabled set-top boxes and
television sets and the launch of the Wink service through these devices;
- promote usage by offering viewers an easy-to-use, entertaining and
informative interactive television experience;
- expand the availability of Wink-enhanced direct response offers by
working with our broadcast and cable network partners to enlist
advertisers to add Wink enhancements to their television advertisements;
- benefit multiple participants in the television industry by offering new
opportunities for generating revenue and cost savings while preserving
traditional revenue streams and customer relationships;
- leverage relationships to encourage television industry participants to
adopt Wink Enhanced Broadcasting; and
- promote the Wink icon and the Wink brand to attract viewers.
Our success will depend upon the broad acceptance of the concept of
enhanced broadcasting by industry participants. Many of our agreements with
industry participants do not contain firm commitments or may be subject to
further negotiations. Because of the complex interrelationships among industry
participants, failure to adopt Wink Enhanced Broadcasting by a significant
industry participant or group of participants could impair our business and
deter or preclude adoption by other industry participants.
Wink was incorporated in California in October 1994 and will be
reincorporated in Delaware prior to the closing of this offering. Our principal
executive office is located at 1001 Marina Village Parkway, Alameda, California
94501 and our telephone number is (510) 337-2950.
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THE OFFERING
Common stock offered by:
Wink........................... shares
Selling stockholders........... shares
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Total..................... shares
Common stock to be outstanding after
this offering....................... shares
Use of proceeds..................... For working capital and other general
corporate purposes, including expansion
of our sales and marketing efforts, our
research and development activities and
our viewer response system, the Wink
Response Network. We will not receive
any proceeds from the shares sold by
the selling stockholders. See "Use of
Proceeds."
Proposed Nasdaq National Market
symbol.............................. WINK
The number of shares of common stock to be outstanding after this offering
is based on shares outstanding as of March 31, 1999 and excludes (i) 3,127,190
shares of common stock issuable upon exercise of outstanding options at March
31, 1999, (ii) 3,000,000 shares reserved for future issuance under our employee
stock plans as of the date of this offering, and (iii) an aggregate of 2,180,700
shares of common stock subject to outstanding warrants at March 31, 1999, of
which warrants to purchase 1,192,500 shares are expected to remain outstanding
after this offering. The remaining warrants will expire if not exercised prior
to the completion of this offering. Subsequent to March 31, 1999 and through
April 30, 1999, additional options to purchase 51,000 shares were granted,
outstanding options to purchase 1,000 shares were exercised, and additional
warrants to purchase 500,000 shares were issued. Also excludes 2,875,000 shares
of convertible preferred stock which investors have agreed to purchase prior to
the date of this offering, subject to closing conditions. See "Capitalization,"
"Management -- Employee Benefit Plans" and Notes 2, 7, 8 and 9 of Notes to
Consolidated Financial Statements.
Generally, unless otherwise indicated, all information in this prospectus:
- gives effect to the conversion of all of our currently outstanding
preferred stock to common stock upon the closing of the offering;
- gives effect to our reincorporation in Delaware, which will be
completed prior to the date of the closing of this offering; and
- assumes no exercise of the underwriters' over-allotment option.
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SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL DATA
The following table summarizes the consolidated financial data for our
business. You should read the data set forth below together with our
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our Consolidated Financial Statements and related Notes included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- -------------------
1995 1996 1997 1998 1998 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Revenues................................ $ 100 $ 348 $ 619 $ 517 $ 141 $ 339
Operating expenses(a)................... 2,320 6,484 10,275 15,212 2,976 6,051
Loss from operations.................... (2,220) (6,136) (9,656) (14,695) (2,835) (5,712)
Net loss................................ (2,148) (5,884) (9,166) (14,036) (2,656) (5,497)
======= ======= ======= ======== ======= =======
Net loss per share(b):
Basic and diluted..................... $ (0.37) $ (0.91) $ (1.25) $ (1.57) $ (0.33) $ (0.55)
======= ======= ======= ======== ======= =======
Weighted average shares............... 5,860 6,432 7,337 8,954 8,031 9,906
Pro forma net loss per share(b):
Basic and diluted..................... $ (0.92) $ (0.31)
======== =======
Weighted average shares............... 15,198 17,712
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1999
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PRO FORMA
ACTUAL AS ADJUSTED(C)
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $17,289 $
Working capital............................................. 13,932
Total assets................................................ 19,735
Long-term obligations, less current portion................. 255 255
Total stockholders' equity.................................. 15,786
</TABLE>
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(a) Operating expenses include non-cash charges for stock compensation and
warrant amortization totaling $283,000, $4,000, $455,000, $1,256,000,
$530,000 and $2,056,000 for the years ended December 31, 1995, 1996, 1997
and 1998, and for the three months ended March 31, 1998 and 1999,
respectively. See Notes 7, 8 and 9 of Notes to Consolidated Financial
Statements.
(b) See Note 2 of Notes to Consolidated Financial Statements for a discussion of
the computation of historical and pro forma 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 July 1995.
(c) 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."
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RISK FACTORS
You should carefully consider the risks described below before buying
shares in this offering.
WE HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES
Wink was incorporated in October 1994. Wink Enhanced Broadcasting was
launched in Japan in October 1996 and in the United States in June 1998.
Accordingly, we have a limited operating history, which makes the prediction of
future results difficult. We have incurred significant net losses since
inception and, at March 31, 1999, had an accumulated deficit of $36.8 million.
To date, we have recognized minimal revenue and our ability to generate revenue
is subject to substantial uncertainty. In addition, we currently intend to incur
substantial operating expenses to fund additional technological development,
sales, marketing, transaction processing and general activities. For example, we
intend to spend approximately $20 to $25 million in the year ended December 31,
1999 on such expenses. As a result, we expect to incur substantial operating and
net losses for the foreseeable future.
Our 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. Achieving
and sustaining profitability will require:
- widespread adoption of Wink Enhanced Broadcasting by multiple industry
participants;
- continued improvements to our technology and operations;
- full implementation of the transaction processing systems in the Wink
Response Network;
- timely responses to competitive developments;
- the attraction, retention and motivation of qualified employees; and
- the firm establishment of the Wink brand.
If we fail to successfully meet any of these challenges, our financial
performance may be materially adversely affected. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."
OUR FUTURE FINANCIAL RESULTS ARE SUBJECT TO UNCERTAINTY
Our ability to forecast revenues is limited because of our brief operating
history and the emerging nature of the market in which we compete. Currently, we
derive revenue from license fees and engineering fees. In the future, however,
we anticipate that our revenues will depend substantially on the level of viewer
response activity which, in turn, is related to the amount of Wink-enhanced
advertising and programming available. Our experience with viewer responses is
extremely limited. Accordingly, our future revenue prospects, particularly those
derived from viewer response activities, are subject to a high degree of
uncertainty. Our expense levels are based largely on our operating plans and
estimates of future revenue, and are to a large extent fixed. We 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 our
financial performance.
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WE NEED TELEVISION VIEWERS TO ADOPT WINK ENHANCED BROADCASTING
Our success will depend heavily upon broad acceptance of Wink Enhanced
Broadcasting by television viewers. Viewers may not react favorably to Wink
Enhanced Broadcasting for the following reasons:
- they may feel that responding to Wink-enhanced programming and
advertising is too complex or interferes with viewing television;
- they may not be willing to incur the potential additional expense
necessary to use Wink Enhanced Broadcasting to the extent other industry
participants, such as set-top box manufacturers or cable operators,
choose to charge viewers for the addition of Wink capabilities;
- they may be concerned about security or privacy issues relating to the
transmission of their personal information through an electronic medium;
or
- they may be unwilling or unable to respond to Wink advertising
enhancements during the 30 second duration of a typical advertisement.
If significant numbers of viewers do not request information or purchase goods
and services in response to Wink-enhanced programming and advertising,
advertisers and merchants are likely to terminate their use of Wink-enhanced
advertising or never adopt Wink Enhanced Broadcasting. Accordingly, a lack of
response to Wink-enhanced programming and advertising by viewers would have a
material adverse effect on our business, operating results and financial
condition.
WE NEED ADVERTISERS AND MERCHANTS TO USE WINK-ENHANCED ADVERTISING BROADLY
We intend to derive the primary portion of our revenues from fees paid to
us by advertisers and merchants. If advertisers and merchants do not adopt Wink
Enhanced Broadcasting and do not use it widely to market or sell their products,
our business, operating results and financial condition will suffer.
In addition, our business plan is premised upon receiving transaction fees
from advertisers and merchants for each information request or purchase order
made through Wink Enhanced Broadcasting. If advertisers and merchants are
unwilling to pay for Wink-enhanced advertisements on a fee-per-transaction basis
or are unwilling to pay our rates, we will not be able to achieve our business
plan and, as a result, our business may suffer. Currently, we have no
commitments for advertisements that provide for a fee-per-transaction.
Under our "Charter Advertiser" program, our charter advertisers have agreed
to use only reasonable efforts to add Wink enhancements to a specified number of
their advertisements through various dates in 1999. We do not currently have any
commitments for advertising beyond 1999. If we are unable to successfully
negotiate favorable agreements with our charter advertisers and additional
advertisers for periods beyond 1999, our business will suffer.
WE NEED CABLE AND DIRECT BROADCAST SATELLITE SYSTEM OPERATORS TO ACCEPT WINK
ENHANCED BROADCASTING
Our success will heavily depend on broad acceptance of Wink Enhanced
Broadcasting by cable and direct broadcast satellite system operators. These
operators typically have numerous potential new services to offer their
subscribers and limited resources with which to implement these services.
Accordingly, unless the operators view Wink Enhanced Broadcasting as
sufficiently attractive relative
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to available alternative services, they may choose not to implement Wink
Enhanced Broadcasting. Also, because many older model Wink-capable set-top boxes
have insufficient memory capacity to include Wink enhancements without limiting
the operation of existing or contemplated services, operators may be unwilling
to offer the Wink services for these set-top boxes.
Our agreements with cable system operators are limited and generally set
forth only a framework and pricing for the operators' local cable systems to
adopt Wink Enhanced Broadcasting, should they choose to do so. In many cases,
actual deployment of Wink Enhanced Broadcasting may be subject to additional
negotiation and agreement with each local system. As a result, we cannot predict
with any certainty whether Wink Enhanced Broadcasting will be deployed in any
new markets or, if deployed, the timing of the deployment.
Similarly, our agreement with DirecTV does not require DirecTV to make Wink
Enhanced Broadcasting available on all models of set-top boxes, or to any
particular number of households or set-top boxes during the term of the
agreement. In addition, to deploy Wink Enhanced Broadcasting through DirecTV, we
must enter into separate agreements with the manufacturers of DirecTV-
compatible set-top boxes. Although we have reached an agreement with the leading
manufacturer of DirecTV compatible set-top boxes, we may not be able to
negotiate agreements with other manufacturers on favorable terms, or at all.
Wink Enhanced Broadcasting responses and purchase requests by cable
subscribers may only be returned to cable operators if the cable operators
deploy systems that enable transmission on a two-way basis. Cable system
operators are under no obligation to deploy systems on a two-way basis. If cable
system operators are unable or unwilling to deploy systems on a two-way basis,
our business will suffer.
WE NEED BROADCAST AND CABLE NETWORKS TO OFFER WINK-ENHANCED PROGRAMMING
Our viability will heavily depend on the willingness of broadcast and cable
networks to adopt Wink Enhanced Broadcasting because Wink enhancements are only
available to viewers of networks that have adopted Wink Enhanced Broadcasting.
In addition, we rely on these networks to market Wink enhancements to their
viewers. If the networks are unable or unwilling to market Wink Enhanced
Broadcasting, our business will suffer.
Currently, we have license agreements with 12 cable networks and three
broadcast networks. These agreements generally commit the networks to use only
reasonable efforts to air a specified amount of Wink-enhanced programming and do
not require a Wink programming enhancement to be available at all times during
this programming. In addition, NBC's commitment to air Wink-enhanced programming
has expired, although NBC continues to air such programming. Moreover, our
agreements allow the networks to select the programming to be enhanced at their
discretion, and do not require the networks to employ enhanced broadcasting for
all types of programming. Our agreements with networks are short-term (generally
one to eight years) and generally can be terminated after one year. Some
networks can also terminate their agreements with us early upon the occurrence
of certain events, including our failure to achieve specific performance
requirements. The termination of one or more of these agreements, or our failure
to enter into a significant number of new agreements and to increase programming
commitments substantially, may materially adversely affect our business.
WE NEED SET-TOP BOX AND TELEVISION MANUFACTURERS TO INCORPORATE OUR SOFTWARE
INTO THEIR PRODUCTS
Wink programming enhancements can only be viewed with an advanced analog or
digital set-top box or television that has been activated with Wink software,
either at the factory or through the
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<PAGE> 13
download of software. Therefore, our viability will depend heavily on the
wide-spread availability and use of advanced analog and digital set-top boxes
and Wink-enabled televisions. Currently, in the United States, there are only a
limited number of Wink-enabled televisions and Wink-enabled set-top boxes
deployed.
We have licensed Wink technology to General Instrument, Scientific Atlanta
and Pioneer for incorporation into their digital and advanced analog cable
set-top boxes and to Thomson Consumer Electronics for incorporation into their
DirecTV-compatible set-top boxes. We are currently in negotiations to enter into
license agreements with other manufacturers of DirecTV-compatible set-top boxes.
We may not be able to enter into such agreements. In addition, our existing and
future agreements with cable and DirecTV-compatible set-top box manufacturers
may not result in the production, marketing, distribution or sale of a
significant number of Wink-enabled set-top boxes. Moreover, any of these
agreements may be terminated. If one or more of these manufacturers does not
incorporate Wink technology into its products on a timely basis, or at all, our
programming enhancements will not be accessible to a significant number of cable
and DirecTV subscribers.
We have entered into agreements with two television manufacturers regarding
the incorporation of our technology into a limited number of their televisions
for distribution in Japan and one television manufacturer regarding the
incorporation of our technology into a limited number of televisions for
distribution in the United States. However, these agreements generally do not
contain firm commitments by the manufacturer to include Wink technology in any
of their products.
WE HAVE COMMITTED TO PROVIDE MINIMUM REVENUES AND DEVELOPMENT FUNDS
We have entered into agreements with Microsoft, cable and direct broadcast
satellite system operators and other market participants to share with these
entities a portion of revenues, if any, we generate from viewer responses to
Wink Enhanced Broadcasting. For certain cable and direct broadcast satellite
system operators, we have provided a minimum revenue guarantee if the operator
meets a minimum volume threshold for Wink Engines deployed. These guarantees
range from $2 to $5 per year per Wink-enabled home. In addition, we have made
minimum revenue guarantees to Microsoft ranging from $2 to $4 per year per
Wink-enabled device in which Microsoft controls the operating system,
application environment and content and data services, in exchange for certain
rights to process viewer responses to enhanced television offers. If Wink
Enhanced Broadcasting fails to generate sufficient revenue to meet the
guaranteed amount per Wink subscriber, we are required to pay the difference
between the guaranteed amount and the amount actually earned by the operator or
Microsoft. These liabilities may be substantial. See Notes 6 and 9 of Notes to
Consolidated Financial Statements.
We have also agreed to provide marketing and technical development funds to
a number of cable and direct broadcast satellite system operators, contingent
upon the commercial launch of Wink Enhanced Broadcasting. See Note 6 of Notes to
Consolidated Financial Statements.
WE NEED CREATORS OF PROGRAMMING AND ADVERTISING TO CREATE HIGH-QUALITY CONTENT
We believe that our future success depends, in part, on the development and
integration of high-quality Wink Enhanced Broadcasting content. This development
and integration depends, in part, on our ability to motivate advertisers,
merchants, broadcast and cable networks and cable system operators to create and
support content that viewers find useful and compelling. We believe that our
primary means of motivating these industry participants is to develop a Wink
Enhanced Broadcasting viewer base sufficiently large to justify investments in
the development of such content. If we are not successful in developing this
viewer base or otherwise motivating creators of programming and advertising, our
business may suffer. See "Business -- Strategy."
11
<PAGE> 14
WE ARE HEAVILY DEPENDENT ON THE EFFECTIVE AND RELIABLE PERFORMANCE OF OUR WINK
RESPONSE NETWORK
An essential part of our strategy is the generation of high volumes of
commercial transaction traffic through the Wink Response Network in conjunction
with related systems at broadcast and cable networks, cable and direct broadcast
satellite system operators, advertisers and merchants. Consequently, the
effective and reliable performance of the Wink Response Network systems and
infrastructure is vital to our 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 and is currently being used to
track viewer usage of Wink Enhanced Broadcasting. We have recently begun
capturing and routing transaction responses on a very limited basis. We have no
experience routing large numbers of transactions. Inability to successfully
implement the required transaction-processing systems and associated
infrastructure for the Wink Response Network by us or our strategic partners, or
the subsequent occurrence of significant system interruptions or errors would
materially adversely affect our business. We 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, merchants, networks or cable or direct
broadcast satellite system operators. We may not be able to accurately predict
the timing or rate of volume increases, if any, or 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, computer 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 our commercial success will be affected by
the successful and timely completion of these infrastructure upgrades, cable
system operators are under no obligation to us to undertake these deployments.
Many of these upgrades may be subject to change, delay or cancellation. Each of
the foregoing factors could materially adversely affect our business. See
"Business -- Components of Wink Enhanced Broadcasting."
OUR QUARTERLY OPERATING RESULTS MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS
In addition, our future quarterly operating results may fluctuate
significantly due to a number of other factors, many of which are outside our
control, including:
- the amount of transaction-processing activity through the Wink Response
Network;
- pricing changes in the marketplace;
12
<PAGE> 15
- the timing and success of infrastructure upgrades necessary to support
deployment by industry participants;
- the impact of competitors' activities;
- the timing of the change, if any, in the basis of our relationships with
advertisers and merchants from a fixed flat fee arrangement to a
fee-per-transaction arrangement;
- seasonality of transaction processing activity, such as potentially
reduced summertime activity when television viewing declines;
- the ability to manage rapid growth and deployment, including hiring,
training and retaining an adequate number of qualified personnel;
- the effect of stock-based incentives provided to various industry
participants; and
- general economic conditions.
Due to the foregoing factors, it is possible that our 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 our common
stock would likely decline. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY
We face competition from a number of companies, many of which have
significantly greater financial, technical, manufacturing and marketing
resources than Wink and which may be in a better position to compete in our
industry. Current and potential competitors in one or more aspects of our
business include television and other system software companies, interactive
television system providers and multimedia authoring tool providers. We also
face competition from other providers and companies operating in the direct
marketing business, especially operators of toll-free response call centers.
A number of companies are developing system software for the general
interactive television market, including At Home Corporation, Intel Corporation,
Liberate Technologies, Sun Microsystems, OpenTV, Inc. and Canal Plus. OpenTV and
Canal Plus already offer products with features similar to Wink Enhanced
Broadcasting for digital television. Intel and Liberate Technologies have
developed technology that enables interactivity over analog or digital
broadcasts. Many of these competitors have the support of, or relationships
with, industry participants with which we also have relationships, which could
adversely affect the extent of support these market participants give to Wink
Enhanced Broadcasting. In addition, Microsoft, which has recently agreed to
purchase 2,500,000 shares of our convertible preferred stock, subject to closing
conditions, and to collaborate with us to develop, market and distribute Wink
Enhanced Broadcasting on Microsoft television platforms, has been active in a
variety of aspects of the interactive television market.
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,
Worldgate Communications, Inc., Source Media and ACTV Inc. In addition, one or
more of these entities might choose to pursue hardware-independent,
cross-platform opportunities directly competitive with Wink Enhanced
Broadcasting. If we are not able to compete successfully against current or
future competitors, our business, operating results and financial condition will
be materially adversely affected.
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<PAGE> 16
WE NEED TO ADAPT TO TECHNOLOGICAL CHANGE
The interactive television field is still emerging. It 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 we continually improve the performance, features and reliability of
Wink Enhanced Broadcasting, particularly in response to competitive offerings.
We may not be successful in responding quickly, cost-effectively and adequately
to these developments. The introduction of new technologies or standards for
enhanced broadcasting could render Wink Enhanced Broadcasting obsolete or
unmarketable. In addition, the widespread adoption of new television
technologies or standards, cable-based or otherwise, could require us to make
substantial expenditures to modify or adapt our technology, products, services,
network or business model. If we fail to adequately adapt to technological
change, our business will suffer.
Recently, several formal and informal industry groups have proposed
competing standards for the language in which interactive programming and
advertising should be written. While we may support other proposed standards in
the future, we became an Early Adopter of the Advanced Television Enhancement
Forum's ("ATVEF") proposal for an HTML based standard for enhanced television in
the Summer of 1998. In conjunction with our agreement with Microsoft, we have
accelerated the development of an ATVEF-compatible version of the Wink Broadcast
Server and a means of capturing and generating Wink response packets from
broadcast ATVEF-compatible applications. If we fail to adapt our products to the
ATVEF standard or other widely-accepted new industry standards, our business
will suffer.
WE NEED TO MANAGE OUR GROWTH
Our development activities and operations have expanded rapidly since
mid-1997, and significant further expansion will be necessary to meet our
growing demands and to take advantage of market opportunities. Expansion has
placed and will continue to place substantial strain on our managerial,
operational and financial resources and systems. Some of our key personnel have
been with Wink for less than two years, and additional key personnel may join
the organization in the future. To manage our growth, we must successfully
implement, improve and effectively utilize our operational and financial systems
while aggressively expanding our workforce. We must also maintain and strengthen
the breadth and depth of current strategic relationships while rapidly
developing new relationships. Our existing or anticipated operational and
financial systems may not be sufficient to support our growth, and our
management may not be able to effectively identify, manage and exploit existing
and emerging market opportunities. If potential growth is not adequately
managed, our business will suffer.
WE ARE DEPENDENT ON KEY PERSONNEL
Our future success and performance is substantially dependent on the
continued services and performance of our senior management and other key
personnel. Our performance also depends on our ability to retain and motivate
our officers and key employees. The loss of the services of any of our executive
officers or other key employees could materially adversely affect our business.
We do not have long-term employment agreements with any of our key personnel.
Our future success also depends on our 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.
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<PAGE> 17
WE ARE DEPENDENT ON SIGNAL TRANSMISSION
We are 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
over-the-air broadcast television stations. Cable and direct broadcast satellite
system operators who choose not to offer Wink Enhanced Broadcasting could
attempt to remove the portion of the television signal containing the Wink
enhancements or choose video programming transmission technology that does not
preserve the Wink enhancements, thus preventing their subscribers with
Wink-enabled television sets or set-top boxes from receiving these enhancements.
Any increased costs or delays associated with finding alternative means to
distribute our products and services to the potentially large number of
customers who could be affected by such actions could materially adversely
affect our business.
WE MAY BE EXPOSED TO INTELLECTUAL PROPERTY RELATED RISKS
Our ability to compete is dependent in part upon our internally developed,
proprietary intellectual property. We rely on patent, trademark, trade secret
and copyright law, as well as confidentiality procedures and licensing
arrangements to establish and protect our rights in our technology. We typically
enter into confidentiality or license agreements with our employees,
consultants, customers, strategic partners and vendors, and typically control
access to and distribution of our software, documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use our products or technology without
authorization, or to develop similar technology independently through reverse
engineering or other means. Policing unauthorized use of our products is
difficult. The steps we take may not prevent misappropriation of our technology
or such agreements may not be enforceable. In addition, effective patent,
copyright and trade secret protection may be unavailable or limited in certain
foreign countries. Litigation may be necessary in the future to enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. Such litigation could
result in substantial costs and diversion of resources and could materially
adversely affect our business.
On August 6, 1998, John L. Berman, an individual, filed suit against us in
the U.S. District Court in the Northern District of California, alleging that we
infringed his patents for an interactive television graphics interface and for a
method and apparatus for applying overlay images. If we fail to defend these
allegations successfully, our business and financial performance may be
adversely affected.
In the future, we may receive other notices of claims of infringement of
other parties' proprietary rights or claims for indemnification resulting from
infringement claims. Irrespective of the validity or the successful assertion of
such claims, we would incur significant costs and a diversion of resources with
respect to the defense of any claims brought, which could materially adversely
affect our operating results and financial condition. In addition, the assertion
of such infringement claims could result in injunctions preventing us from
distributing certain products, which could materially adversely affect our
business. If any claims or actions are asserted against us, we may seek to
obtain a license under a third party's intellectual property rights. However, a
license under such circumstances may not be available on reasonable terms, if at
all.
WE MAY BE EXPOSED TO YEAR 2000 COMPLIANCE RISKS
During the next year, many electronic devices, systems and applications may
not recognize calendar dates beginning in the Year 2000. This problem could
force these devices, systems and applications to fail or create erroneous
results. To address this problem, we have examined our
15
<PAGE> 18
internal systems and software and believe our internal systems are Year 2000
compliant. We are currently testing the Year 2000 compliance of our external
software and hardware providers and third party network providers. If we or any
of these providers fail to remedy any Year 2000 issues, or if viewers are unable
to access or respond to Wink Enhanced Broadcasting due to Year 2000 problems of
any television industry participants, we could experience a material loss of
revenues that could materially adversely affect our business, results of
operations and financial conditions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
WE FACE CERTAIN 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 our security measures could misappropriate proprietary information or
cause interruptions in our operations. We may be required to expend significant
capital and other resources to protect against these security breaches or to
alleviate problems caused by these breaches. We intend to rely on third parties
for call center operators and data center processing under confidentiality
agreements, and we have no direct control over the confidentiality or security
practices of these parties. Negligent or hostile actions by third parties or
other events or developments may result in a compromise or breach of our current
or future systems designed to protect customer transaction data. Any such
compromise of security could materially adversely affect our reputation,
business, operating results and financial condition and expose us 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 REGULATIONS MAY ADVERSELY AFFECT OUR BUSINESS
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 our
business, market participants with which we have 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 we will encounter. In addition, future
legislation or regulatory requirements regarding privacy issues 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. Any of these
developments may materially adversely affect our business.
OWNERSHIP OF OUR STOCK IS CONCENTRATED
Upon completion of this offering, the current directors, executive officers
and principal stockholders of Wink and their affiliates will beneficially own
approximately % of the outstanding common stock of Wink, based on shares
outstanding as of , 1999. If the underwriters' over-allotment
option is exercised in full, these persons will own %, based on shares
outstanding as of , 1999. 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. This concentration of
ownership may also have the effect of delaying or preventing a change in control
of Wink. See "Principal and Selling Stockholders" and "Description of Capital
Stock."
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<PAGE> 19
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE
After this offering, we will have outstanding shares of
common stock, based upon shares outstanding as of , 1999. Of
these, the shares sold in this offering will be freely tradeable. The
remaining shares of common stock outstanding after this offering
will be available for sale, taking into account certain lock-up arrangements
with the underwriters, in the public market as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE OF AVAILABILITY
<C> <S>
0 , 1999 (date of this prospectus)
0 , 1999 (90 days after the date of this prospectus)
, 1999 (180 days after the date of this prospectus)
at various times thereafter upon the expiration of one-year
holding periods
</TABLE>
If our stockholders sell substantial amounts of common stock (including shares
issued upon the exercise of outstanding options) in the public market, the
market price of our common stock could fall. See "Shares Eligible for Future
Sale" and "Underwriting."
OUR SECURITIES HAVE NO PRIOR MARKET
Before this offering, there has not been a public market for our common
stock. The initial public offering price will be determined by negotiations
between Wink and the representatives of the underwriters. The trading market
price of our common stock may decline below the initial public offering price.
See "Underwriting" for a discussion of the factors considered in determining the
initial public offering price. In addition, an active public market for our
common stock may not develop or be sustained after this offering.
WE HAVE BROAD DISCRETION TO USE THE OFFERING PROCEEDS
The majority of the net proceeds of this offering are not allocated for
specific uses other than working capital and general corporate purposes. Our
management may spend most of the proceeds from this offering in ways with which
the stockholders may not agree. We cannot assure that the proceeds will be
invested to yield a favorable return. See "Use of Proceeds."
OUR CHARTER DOCUMENTS CONTAIN CERTAIN ANTITAKEOVER PROVISIONS
Certain provisions of our 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, which could adversely affect the market price of our
common stock. In addition, our Certificate of Incorporation authorizes the Board
of Directors to issue up to 5,000,000 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 Wink, thereby delaying, deferring or
preventing a change in control of Wink. Furthermore, preferred stock may have
other rights, including economic rights senior to the common stock, and, as a
result, the issuance of preferred stock could materially adversely affect the
market value of our common stock. See "Description of Capital
Stock -- Antitakeover Effects of Delaware Law and Certain Provisions of Wink's
Certificate of Incorporation and Bylaws."
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<PAGE> 20
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements regarding whether and
the extent to which Wink Enhanced Broadcasting will be adopted by industry
participants, and plans for the introduction of new products and services. We
use words such as "anticipates," "believes," "plans," "expects," "future,"
"intends" and similar expressions to identify such forward-looking statements.
This prospectus also contains forward-looking statements attributed to certain
third parties relating to their estimates regarding the growth of advanced
analog and digital set-top box use, increases in spending on direct response
television advertising and the growth of electronic commerce. You should not
place undue reliance on these forward-looking statements, which apply only as of
the date of this prospectus. Our actual results could differ materially from
those anticipated in these forward-looking statements for many reasons,
including the risks faced by us described under the caption "Risk Factors" and
elsewhere in this prospectus.
USE OF PROCEEDS
The net proceeds we will receive from our sale of shares of
common stock offered hereby are estimated to be approximately $ million.
This is based on an assumed initial public offering price of $ per share and
after deducting underwriting fees and expenses payable by us, which are
estimated at $ . We will receive additional net proceeds of up to
$ if the underwriters exercise their over-allotment option. We will not
receive any proceeds from the sale of shares by the selling stockholders.
We intend to use the net proceeds of this offering for working capital and
other general corporate purposes, including expansion of our sales and marketing
efforts, research and development activities, and our viewer response network,
the Wink Response Network. If necessary, we may also use a portion of the net
proceeds of this offering to fund revenue guarantees to industry participants.
The amounts actually expended by us for these purposes will depend upon a number
of factors, including future revenue growth, the amount of cash generated by our
operations and the progress of our efforts to establish Wink Enhanced
Broadcasting as a television standard. We may also use a portion of the proceeds
to acquire or invest in businesses, products or technologies that are
complementary to Wink's, although there are no current commitments regarding any
such acquisitions or investments.
Pending such uses, we intend to invest the net proceeds from this offering
in investment grade, interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
do not currently anticipate paying any cash dividends on our common stock in the
foreseeable future and we intend to retain any future earnings for use in the
expansion of our business and for general corporate purposes.
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<PAGE> 21
CAPITALIZATION
The following table sets forth our actual and pro forma as adjusted
capitalization as of March 31, 1999. Our pro forma as adjusted capitalization
gives effect to:
- the conversion of all outstanding shares of preferred stock into
7,806,000 shares of common stock and certain amendments to our
certificate of incorporation to be effected prior to the offering;
- the issuance and sale of shares of common stock offered by us in
this offering; and
- the application of the estimated net proceeds from the sale of our common
stock based on an assumed initial public offering price of per
share and after deducting estimated underwriting fees and other offering
expenses.
<TABLE>
<CAPTION>
AT MARCH 31, 1999
--------------------------
PRO FORMA
ACTUAL AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalent and short-term investments............ $ 17,289
======== ========
Capital lease obligations, less current portion............. $ 255 $ 255
-------- --------
Stockholders' equity
Convertible preferred stock, $0.001 par value: issuable in
series; 8,001,250 shares authorized actual, 5,000,000
pro forma as adjusted; 7,806,000 shares issued and
outstanding actual, none pro forma as adjusted(a)...... 8 --
Common stock, $0.001 par value: 30,000,000 shares
authorized actual, 100,000,000 pro forma as adjusted;
10,595,259 shares issued and outstanding actual,
pro forma as adjusted(a)(b).................. 11
Additional paid-in capital................................ 53,972
Stockholder notes receivable.............................. (1,046) (1,046)
Unearned compensation..................................... (403) (403)
Accumulated deficit....................................... (36,756) (36,756)
-------- --------
Total stockholders' equity........................ 15,786
-------- --------
Total capitalization.............................. $ 16,041 $
======== ========
</TABLE>
- ---------------
(a) Excludes 2,875,000 shares of convertible preferred stock which investors
have agreed to purchase, subject to closing conditions, prior to the date of
this offering.
(b) Excludes (i) 3,127,190 shares of common stock issuable upon exercise of
outstanding options at March 31, 1999, at a weighted average exercise price
of $3.86 per share, (ii) 3,000,000 shares reserved for future issuance under
our employee stock plans as of the date of this offering, and (iii) an
aggregate of 2,180,700 shares of common stock subject to outstanding
warrants at March 31, 1999, at a weighted average exercise price of $8.08
per share, of which warrants to purchase 1,192,500 shares of common stock
are expected to remain outstanding after the offering. Warrants to purchase
the remaining 988,200 shares of common stock, at a weighted average exercise
price of $7.24 per share, will expire if not exercised prior to the
completion of the offering. Subsequent to March 31, 1999 and through April
30, 1999, options to purchase 1,000 shares of common stock were exercised at
a weighted average exercise price of $0.40 per share. In addition, during
this period, we granted additional options to purchase an aggregate of
51,000 shares of common stock under our 1994 Stock Plan at a weighted
average exercise price of $8.00 per share and additional warrants to
purchase 500,000 shares at an exercise price of $12.00 per share. See
"Management -- Employee Benefit Plans" and Notes 2, 7, 8 and 9 of Notes to
Consolidated Financial Statements.
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<PAGE> 22
DILUTION
As of March 31, 1999, our pro forma net tangible book value was
$15,786,000, or $0.86 per share. Pro forma net tangible book value per share
represents the amount of our total tangible assets reduced by the amount of our
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 7,806,000 shares of common stock upon the completion of this
offering. After giving effect to the issuance and sale of the shares of common
stock offered in this offering at an assumed initial public offering price of
$ per share (after deducting estimated underwriting fees and other offering
expenses payable by us), our adjusted pro forma net tangible book value as of
March 31, 1999, 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............................................... $0.86
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, 1999, 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 us,
the total consideration paid and the average price paid per share.
<TABLE>
<CAPTION>
AVERAGE
PRICE
SHARES PURCHASED TOTAL CONSIDERATION PER SHARE
--------------------- ------------------- ---------
NUMBER PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C> <C>
Existing stockholders.............. % $ % $
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, 1999 or of certain warrants that will remain
outstanding after this offering. As of March 31, 1999, (i) 3,127,190 shares of
common stock were issuable upon exercise of outstanding options at a weighted
average exercise price of $3.86 per share and (ii) an aggregate of 2,180,700
shares of common stock were issuable upon exercise of warrants at a weighted
average exercise price of $8.08 per share, of which warrants to purchase
1,192,500 shares of common stock are expected to remain outstanding after this
offering. The warrants to purchase the remaining 988,200 shares of common stock,
at a weighted average exercise price of $7.24 per share, will expire if not
exercised prior to the completion of this offering. In addition, we have
reserved 3,000,000 additional shares for future issuance under our 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, 1999 and through April 30, 1999, options to
purchase 1,000 shares of common stock were exercised at a weighted average
exercise price of $0.40 per share. In addition, during this period, we granted
additional options to purchase an aggregate of 51,000 shares of common stock
under our 1994 Stock Plan at a weighted average exercise price of $8.00 per
share and
20
<PAGE> 23
additional warrants to purchase 500,000 shares at an exercise price of $12.00
per share. In addition, in May and June 1999, new investors agreed to purchase
2,875,000 shares of convertible preferred stock prior to the date of this
offering, subject to closing conditions. See "Management -- Employee Benefit
Plans" and Notes 2, 7, 8 and 9 of Notes to Consolidated Financial Statements.
Also, the second table on this page does not give effect to sales of shares
by the selling stockholders. Sales by the selling stockholders in this offering
will reduce the number of shares held by existing stockholders to
shares, or % of the shares outstanding, and will increase the number of
shares held by new investors to shares, or % of the shares
outstanding.
21
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data 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, 1996, 1997 and 1998 and the consolidated balance sheet data
as of December 31, 1997 and 1998 are derived from, and are qualified by
reference to, our audited Consolidated Financial Statements included elsewhere
in this prospectus. The consolidated statement of operations data for the period
from October 7, 1994 (inception) through December 31, 1994 and for the year
ended December 31, 1995 and the consolidated balance sheet data as of December
31, 1994, 1995 and 1996 are derived from audited Consolidated Financial
Statements, which are not included in this prospectus. The consolidated
statement of operations data for the three months ended March 31, 1998 and 1999
and the consolidated balance sheet data as of March 31, 1999 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 fair presentation of
such information. Historical results are not necessarily indicative of results
for any future period.
<TABLE>
<CAPTION>
OCTOBER 7,
1994
(INCEPTION)
THROUGH THREE MONTHS
DECEMBER 31, YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------ -------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Revenues:
Licenses -- related parties........ $ -- $ -- $ -- $ 384 $ 174 $ 40 $ 71
Licenses -- third parties.......... -- -- -- -- 224 2 89
Services -- related parties........ -- 100 155 148 -- -- 179
Services -- third parties.......... -- -- 193 87 119 99 --
------ ------- ------- ------- -------- ------- -------
Total revenues.............. -- 100 348 619 517 141 339
------ ------- ------- ------- -------- ------- -------
Costs and expenses:
Cost of services -- related
parties.......................... -- 98 323 162 -- -- 90
Cost of services -- third
parties.......................... -- -- 235 376 513 70 --
Research and development........... 4 786 2,595 4,313 6,345 1,256 1,931
Sales and marketing................ 10 689 2,263 3,198 4,732 788 1,127
General and administrative......... 11 464 1,064 1,771 2,366 332 847
Stock-based costs and
expenses(a)...................... -- 283 4 455 1,256 530 2,056
------ ------- ------- ------- -------- ------- -------
Total costs and expenses.... 25 2,320 6,484 10,275 15,212 2,976 6,051
------ ------- ------- ------- -------- ------- -------
Loss from operations................. (25) (2,220) (6,136) (9,656) (14,695) (2,835) (5,712)
Interest and other income............ -- 72 279 684 813 219 242
Interest expense..................... -- -- (27) (194) (154) (40) (27)
------ ------- ------- ------- -------- ------- -------
Net loss............................. $ (25) $(2,148) $(5,884) $(9,166) $(14,036) $(2,656) $(5,497)
====== ======= ======= ======= ======== ======= =======
Net loss per share(b):
Basic and diluted.................. $(0.01) $ (0.37) $ (0.91) $ (1.25) $ (1.57) $ (0.33) $ (0.55)
====== ======= ======= ======= ======== ======= =======
Weighted average shares............ 5,100 5,860 6,432 7,337 8,954 8,031 9,906
Pro forma net loss per share(b):
Basic and diluted.................. $ (0.92) $ (0.31)
======== =======
Weighted average shares............ 15,198 17,712
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
------------------------------------------ ------------
1994 1995 1996 1997 1998
(IN THOUSANDS) 1999
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.......................... $184 $2,909 $4,157 $ 8,530 $16,892 $14,294
Short-term investments............................. -- -- -- 5,452 4,441 2,995
Working capital.................................... (83) 2,218 2,886 11,367 17,443 13,932
Total assets....................................... 260 3,317 5,642 15,629 23,920 19,735
Long-term obligations, less current portion........ -- -- 1,114 767 365 255
Stockholders' equity (deficit)..................... (9) 2,530 3,135 11,925 19,125 15,786
</TABLE>
- ---------------
(a) Stock-based costs and expenses include non-cash charges for stock
compensation and warrant amortization. See Notes 7, 8 and 9 of Notes to
Consolidated Financial Statements.
(b) See Note 2 of Notes to Consolidated Financial Statements for a discussion of
the computation of historical and pro forma 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 July 1995.
23
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with, and is qualified in its entirety
by reference to, our Consolidated Financial Statements and the related Notes
thereto appearing elsewhere in this prospectus. This discussion contains
forward-looking statements relating to future events and our future financial
performance, each of which involves risks and uncertainties. These events and
our 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 provides a complete end-to-end system for low-cost
electronic commerce on television. Wink Enhanced Broadcasting allows
advertisers, merchants and broadcast and cable networks to create interactive
enhancements to traditional television advertisements and programs. With a click
of their remote control during an enhanced program or advertisement, viewers can
purchase merchandise or request product samples, coupons or catalogues.
Similarly, viewers can use Wink to access program-related information, such as
news, sports and weather, participate in votes and polls, and play along with
game shows. Our business plan is to derive the primary portion of our future
revenues from transaction fees charged to advertisers and merchants for each
purchase order or other request for information.
Wink Communications was founded in 1994 and our activities to date have
consisted of:
- developing and adapting our technology for operation in televisions and
advanced analog and digital set-top boxes;
- licensing our Wink Studio authoring tool software to major broadcast and
cable networks, third-party developers and advertisers to enable them to
develop Wink Enhanced Broadcasting;
- licensing our 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 Broadcasting;
- marketing the concept of Wink Enhanced Broadcasting and establishing the
Wink brand; and
- establishing relationships with and licensing our technology to key
television industry participants.
We began the roll-out of our service in the United States in June 1998, and
we currently serve viewers in select cable markets in California, Connecticut,
Florida, Illinois, Missouri and Tennessee. In addition, Wink Enhanced
Broadcasting has been offered by Wink licensees in Japan since October 1996.
Revenues. Through March 31, 1999, our revenues were derived from license
fees relating to the Wink Engine and Wink Studio software, non-recurring
engineering fees under agreements to port the Wink Engine software to various
televisions and set-top boxes and service fees relating to software installation
and post-installation customer support. We recognize 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.
License fees from Wink Studio software are recognized
24
<PAGE> 27
ratably over the term of the subscription license agreement. 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-installation 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.
Our business plan is to derive the primary portion of our future revenues
from the Wink Response Network by charging transaction fees to advertisers and
merchants for each information request or purchase order obtained from viewers
who respond to Wink Enhanced Broadcasting. We may also derive revenue in the
future from sales of products by Wink through our dedicated interactive
channels. As a result, we do not expect that non-recurring engineering services
will represent a significant component of future revenues. The Wink Response
Network has been developed and was activated on a limited basis in the second
half of 1998. However, no transaction fee revenue has been recognized to date.
All advertising agreements in place as of May 1999 provide for a flat fee to be
paid to Wink without any per transaction fees. These fees are recognized ratably
over the life of the agreement.
We have entered into agreements with Microsoft, cable and direct broadcast
satellite system operators and other market participants to share with these
entities a portion of revenues, if any, we generate from viewer responses to
Wink Enhanced Broadcasting. For Microsoft and certain cable and direct broadcast
satellite system operators, we have provided a minimum revenue guarantee. Any
amounts payable to third parties in future periods resulting from revenue
sharing or revenue guarantees will be included in cost of services. See Notes 6
and 9 of Notes to Consolidated Financial Statements.
We expect that, in future periods, revenues may also be derived from the
Wink Broadcast Server and Wink Server Studio applications. These applications
are 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 events. Revenues derived from such
arrangements will be recognized ratably over the term of the subscription
license agreement.
We have incurred net losses since inception and, at March 31, 1999, had an
accumulated deficit of approximately $36.8 million. We may never achieve
favorable operating results or profitability. See "Risk Factors -- We have a
history of losses and expect future losses." In addition, our future quarterly
operating results may fluctuate significantly due to a number of factors, many
of which are outside of our control. See "Risk Factors -- Our quarterly
operating results may be subject to significant fluctuations" and "Risk
Factors -- Our future financial results are subject to uncertainty."
Cost of Services. Cost of services is composed primarily of direct
engineering labor and materials associated with our arrangements to provide
non-recurring engineering services. In future periods, cost of services is also
expected to include costs of providing installation services, the portion of
transaction fees shared with third parties, cost of merchandise sold directly by
Wink through dedicated interactive channels and the costs of operating the Wink
Response Network, including processing and telecommunication costs.
Research and Development. Research and development expense includes costs
associated with our engineering and operations departments, including personnel
costs, allocated facilities-related expenses and payments to third-party
consultants. We expect research and development expense to increase in the
future as additional personnel are hired to support anticipated growth.
Sales and Marketing. Sales and marketing expense includes salaries,
consulting fees, travel-related costs, advertising expenses and allocated
facilities-related expenses associated with our cable sales, consumer marketing
and content departments. In future periods, sales and marketing expense is
25
<PAGE> 28
expected to increase significantly and to include costs incurred by our customer
service center to register and respond to inquiries from Wink television
viewers, costs of marketing materials, commercial spots and training for the
launch of Wink Enhanced Broadcasting in new cable systems, as well as costs of
sales performance incentives to various consumer electronics retailers to
encourage them to register their customers as Wink users.
General and Administrative. General and administrative expense includes
administrative and executive personnel costs, allocated facilities-related
expenses and other administrative costs. We expect general and administrative
expense to increase in the future as additional personnel are hired to support
anticipated growth.
Stock-Based Costs and Expenses. Stock-based costs and expenses include
compensation charges associated with the amortization of unearned compensation
related to certain stock option grants, sales of restricted stock to employees
and warrants granted for services rendered to Wink.
RESULTS OF OPERATIONS
Since inception, we have been engaged primarily in the development and
licensing of Wink Enhanced Broadcasting. Accordingly, our historical results of
operations are not indicative of and should not be relied upon as an indicator
of future performance.
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
REVENUES
Total revenues increased 140% to $339,000 for the three months ended March
31, 1999, compared to $141,000 for the three months ended March 31, 1998. The
increase was related primarily to a $179,000 increase in non-recurring
engineering revenue from a related party. These increases were partially offset
by a decrease in installation and training revenue. During the first three
months of 1999, transactions with Toshiba accounted for 73% of our total
revenues.
COSTS AND EXPENSES
Total costs and expenses increased 103% to $6.1 million for the three
months ended March 31, 1999, compared to $3.0 million for the three months ended
March 31, 1998. The increase was primarily a result of increased stock-based
costs and expenses and additional operating costs associated with the
development, testing and deployment of Wink Engine software, the Wink Broadcast
Server software and the Wink Response Network, as well as sales and marketing
expenses. We believe that costs and expenses will continue to increase as we
expand our operations and sales and marketing efforts.
Cost of Services. Cost of services increased 29% to $90,000 for the three
months ended March 31, 1999 from $70,000 for the three months ended March 31,
1998, reflecting the recognition of non-recurring engineering expenses related
to the performance of such services.
Research and Development. Research and development expense increased 54% to
$1.9 million for the three months ended March 31, 1999 from $1.3 million for the
three months ended March 31, 1998, as additional engineering and operations
personnel costs were incurred to support increased product deployment
activities.
Sales and Marketing. Sales and marketing expense increased 43% to $1.1
million for the three months ended March 31, 1999 from $788,000 for the three
months ended March 31, 1998. The increase was primarily due to increased
personnel costs in 1999.
26
<PAGE> 29
General and Administrative. General and administrative expense increased
155% to $847,000 for the three months ended March 31, 1999 from $332,000 for the
three months ended March 31, 1998. The increase was primarily related to the
hiring of administrative and executive personnel to support anticipated future
growth and to $82,000 of costs in the three months ended March 31, 1999
associated with our planned initial public offering that was postponed at the
beginning of 1999.
Stock-based Costs and Expenses. Stock-based costs and expenses increased
288% to $2.1 million for the three months ended March 31, 1999 from $530,000 for
the three months ended March 31, 1998. The increase was primarily due to the
1999 issuance of warrants to purchase common stock to a broadcast company and to
an affiliate of another broadcast company. Unearned compensation at March 31,
1999 totaled $403,000, which will be amortized in future periods over the
vesting periods of certain restricted stock and stock options.
During the three months ended March 31, 1999, we granted fully exercisable
warrants to purchase 325,000 shares of common stock at $12.00 per share, subject
to adjustment, as incentive for signing definitive software licensing
agreements. The fair value of these warrants on the measurement date totaled
$1,980,000 and was recognized as a stock-based cost and expense as there were no
remaining performance obligations on behalf of the holders and no significant
license revenues are expected to be derived from the agreements.
In May 1999, we granted to Microsoft a fully exercisable warrant to
purchase 500,000 shares of common stock at $12.00 per share, subject to
adjustment, in connection with the signing of a 10 year definitive software
distribution agreement. The fair value of this warrant on the measurement date
totaled $4,050,000 and will be recognized as a stock-based cost and expense over
the expected useful life of the underlying software.
Interest and Other Income, Net of Interest Expense. Net interest and other
income increased 20% to $215,000 for the three months ended March 31, 1999 from
$179,000 for the three months ended March 31, 1998. The increase was due to
increases in the average cash and investment balances as well as lower interest
expense associated with borrowings under the Company's lease financing facility.
Income Taxes. We have 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, 1999, we had federal and state
net operating loss carryforwards of approximately $30.5 million available to
reduce future taxable income. Due to a cumulative change of our ownership of
greater than 50% in June 1997, the amount of loss carryforwards that can be
utilized to reduce our future taxable income for federal and state income tax
purposes will be limited to approximately $6.7 million per year. 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.
Net Loss. We have incurred net losses since our inception. The net loss
increased 107% to $5.5 million for the three months ended March 31, 1999 from
$2.7 million for the three months ended March 31, 1998. The increase in net loss
was due primarily to significant increases in stock-based costs and expenses
from warrant grants and increases in operating expenses as a result of our
efforts to expand business activities, partially offset by a small increase in
revenue over the same period.
27
<PAGE> 30
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
REVENUES
Total revenues were $517,000, $619,000 and $348,000 for the years ended
December 31, 1998, 1997 and 1996, respectively. The decrease of 16% from the
year ended December 31, 1997 to the year ended December 31, 1998 was related
primarily to a decline in non-recurring engineering fees from related parties,
as certain development agreements were completed in 1997, and to a decline in
royalties from Wink Engine software from related parties, resulting from lower
shipments of Wink-enabled television sets. These decreases were partially offset
by an increase in software license fees with third parties totaling $224,000.
During 1998, transactions with Toshiba, Pioneer and a subsidiary of Thomson
Multimedia S.A. each accounted for at least 10% of our total revenues. The
increase of 78% from the year ended December 31, 1996 to the year ended December
31, 1997 was related primarily to Wink Engine royalties earned on shipments by
Toshiba of Wink-enabled televisions, partially offset by a decline in
non-recurring engineering fees, as certain development agreements neared
completion. During 1997, transactions with Toshiba, Scientific-Atlanta and
General Instrument each accounted for at least 10% of our total revenues.
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 boxes or televisions. During 1996, transactions with
Scientific-Atlanta, Matsushita, Pioneer and General Instrument each accounted
for at least 10% of our total revenues.
COSTS AND EXPENSES
Total costs and expenses were $15.2 million, $10.3 million and $6.5 million
for the years ended December 31, 1998, 1997 and 1996, respectively. The
increases of 48% from the year ended December 31, 1997 to the year ended
December 31, 1998, and 58% from the year ended December 31, 1996 to the year
ended December 31, 1997 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. We believe that continued
expansion of our operations and our sales and marketing efforts is critical to
the achievement of our goals. Therefore, we believe that costs and expenses will
continue to increase.
Cost of Services. Cost of services were $513,000, $538,000 and $558,000 for
the years ended December 31, 1998, 1997 and 1996, respectively. The decrease of
5% from the year ended December 31, 1997 to the year ended December 31, 1998 was
due primarily to the completion of various engineering projects during 1998. The
decrease of 4% from the year ended December 31, 1996 to the year ended December
31, 1997 was due primarily to engineering projects initiated by us in 1996 and
1995 that neared completion.
Changes in gross margins from services revenues realized during the years
ended December 31, 1998, 1997 and 1996 were primarily attributed to engineering
efforts required to meet the terms of individual non-recurring engineering
agreements. Our initial non-recurring engineering agreements were with related
parties and these agreements yielded lower gross margins than recognized on
subsequent non-recurring engineering agreements with third parties. We do not
expect that non-recurring engineering fees will represent a significant
component of future revenues.
Cost over-runs on non-recurring engineering service agreements with related
parties and third parties during the years ended December 31, 1998, 1997 and
1996, resulted in costs incurred in excess of revenues recognized. At each
reporting period, we record an accrued liability for the total remaining loss on
non-recurring engineering services agreements that are expected to result in an
overall loss.
28
<PAGE> 31
Research and Development. Research and development expenses were $6.3
million, $4.3 million and $2.6 million for the years ended December 31, 1998,
1997 and 1996, respectively. The increase of 47% from the year ended December
31, 1997 to the year ended December 31, 1998 was due primarily to additional
engineering and operations personnel costs incurred to support increased product
deployment activities. The increase of 66% from the year ended December 31, 1996
to the year ended December 31, 1997 was due primarily to increased personnel
costs associated with our expanded operations.
Sales and Marketing. Sales and marketing expenses were $4.7 million, $3.2
million and $2.3 million for the years ended December 31, 1998, 1997 and 1996,
respectively. The increase of 48% from the year ended December 31, 1997 to the
year ended December 31, 1998 was primarily a result of resources expended to
support the initial deployment of Wink Enhanced Broadcasting in 1998. The
increase of 41% from the year ended December 31, 1996 to the year ended December
31, 1997 was primarily a result of increased personnel and travel-related costs.
General and Administrative. General and administrative expense was $2.4
million, $1.8 million and $1.1 million for the years ended December 31, 1998,
1997, and 1996, respectively. The year-to-year increases of 34% and 66%,
respectively, resulted from recognizing $375,000 of costs in 1998 associated
with our planned initial public offering that was postponed in the second half
of 1998 and the hiring of administrative and executive personnel in 1998 and
1997 to begin to position us to achieve our long-term goals.
Stock-based Costs and Expenses. During the years ended December 31, 1998,
1997 and 1996, we recognized stock-based costs and expenses totaling $1,256,000,
$455,000 and $4,000, respectively. These amounts consist of the amortization of
unearned compensation related to certain stock option grants, sales of
restricted stock to employees and warrants granted for services rendered to
Wink.
During the years ended December 31, 1998, 1997 and 1996, we recognized
unearned compensation totaling $600,000, $700,000 and $0, respectively, with
respect to certain stock option grants and sales of restricted stock to
employees. Amortization of unearned compensation totaled $615,000, $215,000 and
$4,000 during the years ended December 31, 1998, 1997 and 1996, respectively.
The remaining unearned compensation at December 31, 1998, totaling $479,000, and
unearned compensation recognized subsequent to December 31, 1998 will be
amortized in future periods over the respective stock and option vesting
periods.
In June 1997, we granted warrants to purchase an aggregate of 375,000
shares of common stock to a broadcasting company, which is affiliated with one
of our stockholders. The broadcasting company has agreed to use reasonable
efforts to develop and air Wink-enhanced programming over approximately an
18-month period. A warrant to purchase 75,000 of these shares was exercisable on
the grant date and had an estimated fair value of $20,000, which was immediately
charged to stock-based costs and expenses. Vesting of a warrant to purchase the
remaining 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 $726,000, of
which $220,000 was recognized as a stock-based cost and 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. The $506,000 difference between the February 1, 1998
estimated fair value of $726,000 and the previously recognized expense is
included in stock-based costs and expenses over the period in which we received
benefits from the broadcaster's services, which was completed during the year
ended December 31, 1998.
29
<PAGE> 32
In August 1998, as consideration for consulting services, we granted a
fully exercisable warrant to purchase common stock to a company which is one of
our stockholders. The warrant enables the holder to purchase 25,000 shares of
common stock at $8.00 per share and expires in August 2003. The estimated fair
value of the warrant totaled $135,000 and is included in stock-based costs and
expenses for the year ended December 31, 1998.
In December 1998, we issued to Vulcan Ventures Incorporated, a stockholder,
warrants to purchase up to an aggregate of 250,000 shares of common stock,
subject to certain exercisability and performance conditions. Any exercise of
the warrants is conditioned upon cable television system operators affiliated
with Vulcan deploying set-top boxes containing Wink Engines to at least 200,000
households between January 1, 1999 and December 31, 2001. Vulcan may exercise
the warrants on or after February 1, 2001 for a number of shares equal to
one-fifth the number of households in which a Wink-enabled set-top box is
deployed by a Vulcan affiliate during calendar 1999, which box remains deployed
for at least one year after deployment. The exercise price for such shares is
$12.00 per share. Vulcan may exercise the warrants on or after February 1, 2002
for an additional number of shares equal to one-fifth the number of households
in which a Wink-enabled set-top box is deployed during calendar 2000, which box
remains deployed for at least one year thereafter, less the number of shares
which became exercisable in 2001, up to the aggregate maximum of 250,000 shares.
The exercise price of such additional shares is $16.00 per share. At December
31, 1998, the lowest aggregate fair value of the warrant totaled $1,218,000. At
March 31, 1999, the lowest aggregate fair value of the warrant totaled
$1,553,000. This amount will be remeasured at each reporting date until the
deployment of Wink-enabled technology to the specified number of cable
subscribers is achieved. When and if it becomes probable that the performance
criteria will be achieved, we will record the then fair value associated with
the units meeting the performance criteria as a charge to stock-based costs and
expenses.
Interest and Other Income, Net of Interest Expense. Net interest and other
income was $659,000, $490,000 and $252,000 for the years ended December 31,
1998, 1997 and 1996, 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. We have 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 December 31, 1998, we had federal and
state net operating loss carryforwards of approximately $27.0 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. 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.
Net Loss. We have incurred net losses since inception, including net losses
of $14.0 million, $9.2 million and $5.9 million for the years ended December 31,
1998, 1997, and 1996, respectively. The year-to-year increases in net losses
were due primarily to significant increases in expenses as a result of
additional business activities and stock-based costs and expenses. For the year
ended December 31, 1997, these increases in expenses were partially offset by a
small increase in revenue.
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<PAGE> 33
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our activities largely through the
private sale of equity securities and through proceeds from capital lease
financing. At March 31, 1999, our principal source of liquidity was from $17.3
million of cash, cash equivalents and short-term investments.
Net cash used in operating activities totaled $3.8 million, $10.9 million,
$7.0 million and $5.3 million for the three months ended March 31, 1999 and the
years ended December 31, 1998, 1997 and 1996, respectively, primarily as a
result of our net losses.
Net cash provided by investing activities totaled $1.2 million for the
three months ended March 31, 1999 and was attributable mainly to the net
proceeds from short-term investment maturities totaling $1.4 million and
partially offset by the acquisition of $275,000 of property and equipment. For
the year ended December 31, 1998, net cash used in investing activities was
$358,000 and was attributable to the acquisition of $1.4 million of property and
equipment, which was partially offset by $1.0 million of net proceeds from
short-term investment maturities. 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 provided by financing activities for the three months ended March
31, 1999 was $7,000, consisting primarily of proceeds from common stock
issuances totaling $102,000 and was partially offset by principal payments on
lease obligations totaling $95,000. For the years ended December 31, 1998 and
1997, net cash provided by financing activities was $19.6 million and $17.2
million, respectively, consisting primarily of net proceeds from sales of Series
C preferred stock and common stock in each year. 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.
We have entered into agreements with Microsoft, cable and direct broadcast
satellite system operators and other market participants to share with these
entities a portion of revenues, if any, we generate from viewer responses to
Wink Enhanced Broadcasting. For Microsoft and certain cable and direct broadcast
satellite system operators, we have provided a minimum revenue guarantee. If
Wink Enhanced Broadcasting fails to generate sufficient revenue to meet the
guaranteed amount per Wink subscriber, we are obligated to pay the difference
between the guaranteed amount and the amount actually earned. See Notes 6 and 9
of Notes to Consolidated Financial Statements.
In addition, we have also agreed to provide marketing and technical
development funds to certain cable and direct broadcast satellite system
operators, contingent upon the commercial launch of Wink Enhanced Broadcasting.
See Note 6 to Notes to Consolidated Financial Statements.
We believe that our existing cash, cash equivalents and short-term
investments, together with the net proceeds from this offering, will be
sufficient to meet our currently anticipated business requirements, including
capital expenditures and strategic operating programs, for at least the next 12
months. Thereafter, if any, we 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 our
stockholders. We may not be able to raise any such capital on terms acceptable
to us, if at all.
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,
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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. We rely on certain devices, systems and applications in operating and
monitoring all major aspects of our business, including financial systems (such
as general ledger, accounts payable and payroll), customer services,
infrastructure, networks and telecommunications equipment. We also rely,
directly and indirectly, on external systems of business enterprises, both
domestic and international, for accurate exchange of data.
We have tested our internally developed information technology and
non-information technology systems. Based on such testing, we believe that such
systems are Year 2000 compliant.
In addition to our internally developed software, we utilize software and
hardware developed by third parties both for our customers and internal
information systems. We have initiated Year 2000 tests with such third parties
to determine Year 2000 compliance. Based upon initial tests and evaluation of
our primary software and hardware providers, we believe that all of these
providers are in the process of reviewing and implementing their own Year 2000
issue compliance programs. We will continue to work with these providers to
address the Year 2000 issue and seek assurances from them that their products
are Year 2000 compliant.
We have not incurred any significant expenses to date, and we are not aware
of any material costs associated with our anticipated Year 2000 efforts.
However, if we, our providers of hardware and software or our third party
network providers fail to remedy any Year 2000 issues, we could experience a
material loss of revenues that could materially adversely affect our business,
results of operations and financial condition. Furthermore, even if our products
comply with Year 2000 requirements, we believe 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 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 we
offer, which could have a materially adversely affect on our business, operating
results and financial condition.
We have not yet developed a comprehensive contingency plan to address the
issues which could result from such failure. We are prepared to develop such a
contingency plan if our ongoing assessment indicates areas of significant
exposure. See "Risk Factors -- We may be exposed to Year 2000 compliance risks."
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RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. As issued, SFAS 133 is effective for
all fiscal quarters of all fiscal years beginning after June 15, 1999, with
earlier application encouraged. In May 1999, the FASB delayed the effective date
of SFAS 133 for one year, to fiscal quarters of all fiscal years beginning after
June 15, 2000. The Company does not currently nor does it intend in the future
to use derivative instruments and therefore does not expect that the adoption of
SFAS 133 will have any impact on its financial position or results of
operations.
In December 1998, the AICPA issued Statement of Position 98-9,
"Modification of SoP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions" ("SoP 98-9"), which is effective for transactions entered into in
fiscal years beginning after March 15, 1999. SoP 98-9 amends SoP 97-2 and
extends the effective date of SoP 98-4, "Deferral of the Effective Date of a
Provision of SoP 97-2, Software Revenue Recognition" ("SoP 98-4"), and provides
additional interpretive guidance. The adoption of SoP 97-2 has not had and the
adoption of SoP 98-4 and SoP 98-9 are not expected to have a material impact on
our future results of operations, financial position or cash flows.
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<PAGE> 36
BUSINESS
The following discussion of our business contains forward-looking
statements that involve risks and uncertainties. Our 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 provides a complete end-to-end system for low-cost
electronic commerce on television. Our system, Wink Enhanced Broadcasting,
allows advertisers, merchants and broadcast and cable networks to create
interactive enhancements to traditional television advertisements and programs.
With a click of their remote control during an enhanced program or
advertisement, viewers can purchase merchandise or request product samples,
coupons or catalogues. Similarly, viewers can use Wink to access program-related
information such as news, sports and weather, participate in votes and polls,
and play along with various games. Our business plan is to derive the primary
portion of our future revenues from transaction fees charged to advertisers and
merchants for each purchase order or other requests for information.
Our immediate goal is to maximize the presence of the Wink Enhanced
Broadcasting in television households. To this end, we have established
relationships with, and licensed our technology to, over 40 key industry
participants from many segments of the television industry. In addition, we have
agreed to share a portion of our transaction fees to provide incentives for
industry participants to adopt and transmit Wink Enhanced Broadcasting. We
currently have agreements with:
- most of the major broadcast and cable networks, including NBC, CBS, ABC,
The Weather Channel, CNBC, TBS, TNT, CourtTV, E!, Showtime, HBO,
Lifetime, Nickelodeon/Nick-at-Nite, VH-1 and TNN;
- five of the six largest cable operators in the United States, including
AT&T/TCI, Time Warner Cable, Comcast Cable Communications, Cox
Communications and Charter Communications;
- the largest direct broadcast satellite operator in the United States,
DirecTV;
- the leading software company in the world, Microsoft;
- several of the leading set-top box and television manufacturers including
General Instrument, Scientific Atlanta, Pioneer, Toshiba, Matsushita and
Thomson Consumer Electronics; and
- several national advertisers, including AT&T, Procter & Gamble, J. Walter
Thompson USA, Inc. on behalf of Ford Motor Company, The Goodyear Tire &
Rubber Company, Charles Schwab, Levi Strauss, The Clorox Company,
Universal Pictures, General Electric and Wells Fargo.
A number of key strategic and financial investors have invested in Wink,
including set-top box and television manufacturers, such as General Instrument,
Scientific Atlanta and Toshiba, as well as GE Capital and Vulcan Ventures
(controlled by Paul Allen). In addition, in May 1999, Microsoft agreed to
purchase 2,500,000 shares of our convertible preferred stock, subject to closing
conditions, and to collaborate with us to develop, market and distribute Wink
Enhanced Broadcasting on Microsoft's television platforms.
We began the roll-out of our service in the United States in June 1998, and
we currently serve viewers in select cable markets in California, Connecticut,
Florida, Illinois, Missouri and Tennessee.
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In addition, Wink Enhanced Broadcasting has been offered by Wink licensees in
Japan since October 1996.
MARKET OPPORTUNITY
Television is one of the most pervasive communications media in society
today. According to Nielsen Media Research, there were approximately 99 million
television households in the United States in August 1998. Veronis Suhler &
Associates, a television industry market research consultant, estimates that the
average person in the United States watched approximately 1,600 hours of
television (approximately 4.3 hours per day) in 1998. With recent advances in
technology, new televisions and advanced analog and digital set-top boxes can
provide a platform for interactive television. According to Paul Kagan
Associates, a leading cable industry analysis firm*, in 1998 there were
approximately 30 million cable set-top boxes in use, of which approximately
eight million were advanced analog or digital cable set-top boxes. By 2002, Paul
Kagan Associates expects that the number of advanced analog and digital cable
set-top boxes in use will increase to approximately 33 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. According to Veronis Suhler & Associates, the total amount spent
on television advertising in the United States in 1998 was approximately $49
billion. Despite the fact that traditional television broadcasting, cable and
direct broadcast satellite television systems do not provide an integrated means
for viewers to respond to programs and advertisements, the Direct Marketing
Association estimates approximately $91 billion of goods and services were
purchased through direct response television programming and advertising in
1998. The Direct Marketing Association predicts this amount will grow to
approximately $127 billion in 2002. In addition, we believe that electronic
commerce conducted through television viewing devices will benefit from the
rapid growth in internet online shopping, as consumers become more accustomed to
purchasing goods and services electronically. We believe that an opportunity
exists for a simple, immediate, inexpensive and automated method of responding
to direct response advertising on television.
In addition, many advertisers are using television advertisements to
generate requests for product information, which in turn serve as sales leads
for their products and services. Today, most direct response television
purchases and requests for information require a telephone call, which typically
cause advertisers to incur a significant cost per transaction. We believe that
television viewers, advertisers and merchants will respond favorably to a
simple, immediate, inexpensive and automated method for them to participate in
television commerce.
THE WINK EXPERIENCE
The Wink service is free to viewers and easy-to-use which we believe will
encourage broad and frequent usage. Viewers can receive Wink Enhanced
Broadcasting through Wink-enabled televisions and new and existing advanced
analog and digital set-top boxes. Many existing set-top boxes already installed
in consumers' homes can be activated through a remote cable download to receive
Wink Enhanced Broadcasting. To access a Wink enhancement, a television viewer
simply clicks the remote
- ---------------
* Paul Kagan of Paul Kagan Associates is a holder of 2,500 shares of our stock.
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control when the Wink icon appears on the screen. For example, with a few clicks
of the remote control, Wink allows viewers to:
- access additional information (graphics and text) about a specific news
story from CNN Headline News;
- respond to an offer for telecommunications services from AT&T;
- access the local weather forecast instantly from The Weather Channel or
find weather forecasts for other cities;
- obtain coupons and product samples from Procter & Gamble or a new car
brochure from Ford;
- access real-time game scores on demand or search for statistics relating
to a specific sporting event while watching ESPN;
- subscribe to HBO or Showtime upon seeing an advertisement; or
- enter a virtual shopping mall which offers products for sale through
dedicated interactive channels.
WINK AND THE TELEVISION INDUSTRY
Wink Enhanced Broadcasting is designed to benefit the following
participants in the television industry:
- Viewers. Wink Enhanced Broadcasting offers viewers an easy-to-use,
enhanced television viewing experience. We anticipate 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 the
viewer's existing remote control.
- Advertisers and Merchants. Wink Enhanced Broadcasting is designed to
allow advertisers and merchants the ability to provide additional
information to viewers, generate sales leads, sell products directly to
viewers and collect detailed market information. In addition, advertisers
and merchants can promote their brands by sponsoring Wink programming
enhancements. We believe that the use of Wink Enhanced Broadcasting will
provide advertisers and merchants a lower-cost alternative for capturing
sales leads and orders than traditional telemarketing methods.
- Broadcast and Cable Networks. We believe that Wink Enhanced Broadcasting
offers networks a new approach to increasing the number of viewers,
viewer loyalty and viewer involvement. As a result, the value of network
advertising space may be increased, allowing networks to charge
advertisers and merchants premiums for airing Wink-enhanced commercials.
The Wink enhancements 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 direct broadcast satellite
system operators an expanded menu of
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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 direct broadcast satellite
system operators to offer Wink Enhanced Broadcasting, we have offered to
share a portion of the revenues generated from subscribers' responses to
Wink-enhanced programming, advertising and dedicated interactive
channels.
- Set-top Box and Television Set Manufacturers. Wink Enhanced Broadcasting
is designed to offer set-top box and television set manufacturers an
opportunity to enhance their products with increased functionality and to
extend their product lines at a relatively low incremental cost. We
believe Wink Enhanced Broadcasting can assist manufacturers in
encouraging 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, we have offered to share a portion of the revenues generated
from responses to Wink-enhanced programming and advertising from users of
their devices.
BUSINESS STRATEGY
Our strategy is to capitalize on the pervasiveness and popularity of
television to create a mass market medium for sales lead generation and
electronic commerce. Our strategy to achieve this objective includes the
following key elements:
- Increase the Presence of Wink Enhanced Broadcasting in Television
Households. We intend to promote deployment of Wink-enabled set-top boxes
and televisions and the launch of Wink Enhanced Broadcasting through
these devices. We have entered into and will continue to target licensing
relationships with leading manufacturers of set-top boxes and television
sets. We are working with certain large cable and digital broadcasting
satellite system operators to encourage both the downloading of the Wink
Engine software to Wink-capable set-top boxes already installed in
consumer homes and the deployment of new Wink-capable set-top boxes. We
are also working with Microsoft to enable Microsoft television platforms
to generate and capture Wink viewer responses.
- Promote Use by Viewers. We believe that increased development and
broadcasting of Wink-enhanced advertising and programming and other
on-demand information and entertainment services are critical to
attracting viewers to Wink Enhanced Broadcasting. Consequently, we
actively encourage the broadcast and cable networks with whom we have
strategic relationships to air Wink enhancements that offer viewers an
easy-to-use, entertaining and informative interactive television
experience. We also intend to actively encourage usage of Wink Enhanced
Broadcasting through advertising, direct mail and promotions in
collaboration with cable and direct broadcast satellite operators,
equipment manufacturers and broadcast and cable networks.
- Expand Use of Wink-Enhanced Direct Response Offers. We believe that the
simplicity and convenience of the Wink transaction response mechanism
will encourage viewers to respond to Wink-enhanced advertising and
promotions. We intend to work with our broadcast and cable network
partners to encourage advertisers to add Wink enhancements to their
television advertisements. We believe that the low cost of response
collection and the ease with which viewers can respond to Wink-enhanced
advertising will encourage advertisers to complement their television
advertisements with direct response offers. In addition, we believe that
existing direct response television advertisers will utilize Wink to
lower their cost of capturing an order. We intend to introduce
interactive shopping services featuring a targeted selection of products
suitable for electronic commerce via television. To this end, we plan to
enter into relationships
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with merchants to create dedicated interactive channels that offer
viewers the ability to request product information, coupons, samples and
other offers and to purchase products and services.
- Benefit Multiple Participants in the Television Industry. We believe that
generating economic value for broadcast and cable networks, cable and
direct broadcast satellite system operators, set-top box and television
manufacturers, advertisers and merchants is critical to the success of
Wink Enhanced Broadcasting. Our business model has been designed to
deliver new opportunities for generating revenue and cost savings
directly to these industry participants. In addition, since Wink
enhancements are integrated with existing programming and advertising and
are under the control of the broadcast or cable networks, we believe Wink
Enhanced Broadcasting will not threaten the existing revenue streams and
customer relationships of these industry participants.
- Leverage Industry Relationships. We have formed strategic relationships
with key participants in the television industry. We believe that our
relationships with broadcast and cable networks and cable and direct
broadcast satellite system operators will assist us in attracting
interest from advertisers. Conversely, we believe our relationships with
national advertisers reinforce both the broadcast and cable networks' and
the cable and direct broadcast satellite operators' interest in launching
Wink Enhanced Broadcasting. We also believe our relationships with the
three leading cable set-top box manufacturers in North America will
encourage cable operators to adopt Wink Enhanced Broadcasting. We intend
to seek additional relationships and believe that increasing the breadth
and depth of our existing relationships will facilitate these efforts.
- Promote the Wink Icon and the Wink Brand. We believe that developing and
maintaining a strong brand identity is important to our ability to
attract viewers and obtain and retain key strategic relationships with
industry participants. Our goal is to make the Wink icon and the Wink
brand synonymous with interactive enhanced programming and advertising
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 and advertising, we intend
to build brand recognition and to increase the visibility of the Wink
icon through a variety of marketing and promotional activities, including
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.
STRATEGIC RELATIONSHIPS
We believe that development of strategic relationships with television
industry participants is critical to the acceptance of Wink Enhanced
Broadcasting, the promotion of the Wink brand and ultimately the success of our
business model. We are currently focused on developing strategic relationships
in each sector of the television industry. We have initially targeted larger,
established participants in each of the following sectors:
- Advertisers and Merchants. We encourage advertisers to utilize Wink
Enhanced Broadcasting through the advertising sales efforts of our
broadcast and cable network partners. To facilitate this process, we
established a "Charter Advertiser" program in 1998 under which leading
advertisers could obtain a fixed rate quote for all Wink products and
services during a charter period ending in the second half of 1999 in
exchange for a commitment to air a specific number of Wink-enhanced
advertisements. Wink charter advertisers include AT&T, Procter & Gamble,
J. Walter Thompson USA, Inc. on behalf of Ford Motor Company, The
Goodyear
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Tire & Rubber Company, Charles Schwab, Levi Strauss, The Clorox Company,
Universal Pictures, General Electric and Wells Fargo. We expect to add
more advertisers through our own sales efforts and those of our broadcast
and cable network partners. We expect that a substantial portion of our
future advertising arrangements will not include commitments to air a
specific number of Wink-enhanced advertisements, may be short term and
cancelable and may involve payment on a fee-per-transaction basis. We
also anticipate offering products from one or several merchants for sale
through Wink dedicated interactive channels.
- Broadcast and Cable Networks. We have license agreements with three of
the major broadcast networks and 12 cable networks, which collectively
offer a variety of programming types, including prime time entertainment,
news, sports, weather, movies and music programming. These license
agreements generally range in length from one to eight years and provide
that the networks will air a specific number of hours of Wink-enhanced
programming per week. Wink is the only interactive television company
that has announced agreements with three major broadcast networks. The
following is a list of networks that are currently airing or have aired
Wink-enhanced programming:
<TABLE>
<CAPTION>
NETWORK TYPES OF PROGRAMMING TYPICAL ENHANCEMENTS
<S> <C> <C>
ABC Entertainment/Sports/Talk Show Facts, Sports, Merchandise
CNN* News/Talk Shows Show Facts
CNN Headline News* News News Headlines and Stories
Court TV Trials Trial Facts
ESPN* Sports Sports Scoreboards
ESPN2* Sports Sports Scoreboards
NBC Entertainment/Sports/Talk Show Facts, Sports, Merchandise
Nickelodeon/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
The Weather Channel News Weather Forecasts
CNBC Financial News Financial Market Statistics
E! Entertainment News, Entertainment News
Variety
Lifetime Entertainment, Show Facts
Documentary
VH-1 Entertainment/Music CD Purchases, Games
</TABLE>
- ---------------
* Our agreements with these networks have expired. The networks currently
continue to air Wink-enhanced programming. We are currently negotiating
renewals of these agreements.
- Cable and Direct Broadcast Satellite System Operators. We focus on
establishing relationships with national cable and direct broadcast
satellite system operators and with local cable operators in order to
transmit the Wink Enhanced Broadcasting signal to viewers. The cable and
direct broadcast satellite system operators with which we have entered
into strategic relationships include DirecTV, AT&T/TCI, Time Warner
Cable, Comcast Cable Communications, Cox Communications, Charter
Communications Inc., Bresnan Communications Company, Century
Communications Corp. and InterMedia. Our agreements with cable system
operators generally provide a framework and pricing for deployment of
Wink Enhanced
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Broadcasting by the operators' local systems, although actual deployments
may require us to negotiate and enter into additional agreements with
each local operator.
- Cable and Direct Broadcast Satellite Set-Top Box Manufacturers. We have
licensed the Wink software to General Instrument, Pioneer and
Scientific-Atlanta, three of the leading U.S. cable set-top box
manufacturers. While we intend to license our software to other equipment
manufacturers, we believe our relationships with these three companies
are critical to our success in the cable business. General Instrument and
Scientific-Atlanta have licensed Wink technology for incorporation into
certain of their advanced analog and digital set-top boxes, and have each
begun shipment of certain Wink-capable advanced analog and digital
set-top boxes. In addition, Pioneer has begun shipping Wink-enabled
advanced analog cable set-top boxes. The agreement with DirecTV calls for
DirecTV to launch Wink enhanced broadcasting to Wink-enabled
DirecTV-compatible set-top boxes. Recently, we entered into an agreement
with Thomson Consumer Electronics, the largest supplier of
DirecTV-compatible set-top boxes, and we are currently negotiating
agreements with other manufacturers to incorporate Wink technology into
their DirecTV-compatible set-top boxes.
- Television Manufacturers. We are developing strategic relationships with
leading worldwide television manufacturers, including Toshiba and
Matsushita. Toshiba recently introduced the first U.S. television models
incorporating Wink technology. In addition, Matsushita and Toshiba have
incorporated Wink technology software in televisions currently marketed
in Japan.
Strategic Relationship with Microsoft. Our relationship with Microsoft
focuses on three areas: development, distribution and marketing.
- Microsoft's operating system and other software for set-top boxes and
televisions that comply with the proposed ATVEF standard for enhanced
television will be modified to capture viewer responses for processing by
the Wink Response Network. We have agreed to modify all components of
Wink Enhanced Broadcasting to support the ATVEF standard and these
Microsoft television platforms.
- Microsoft has agreed to enable its operating system for set-top boxes and
televisions to use the Wink Response Network to collect, aggregate and
process viewer responses to ATVEF applications delivered as part of video
programming and advertising for set-top boxes and televisions. Wink will
be the exclusive provider of such services for deployments of such
devices where Microsoft exclusively controls the operating system,
application environment and content and data services. Microsoft has also
agreed to use efforts to make other set-top boxes and televisions which
use a Microsoft operating system capable for the Wink Response Network
service. Microsoft is not obligated to use the Wink Response Network for
responses other than purchases and requests for information, or when
viewers respond by connecting directly to an advertiser's website, via
e-mail or other similar mechanisms. Wink has agreed to make Microsoft the
exclusive licensor of the Wink Engine, except for rights previously
granted to other customers and with respect to platforms for which the
Wink Engine is already available or under development and with respect to
platforms which do not support Microsoft's technology. As part of our
agreement with Microsoft, we have agreed to share a portion of the
revenues we generate from viewer responses and to provide minimum revenue
guarantees. See Notes 6 and 9 of Notes to Consolidated Financial
Statements.
- Microsoft and Wink have agreed to work together to promote the Wink
Response Network to current and prospective customers for set-top boxes
and televisions which utilize Microsoft software. Microsoft and Wink have
also agreed to work together to promote Microsoft's
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technology for set-top boxes and televisions, and to promote
ATVEF-compliant products, services and content.
Strategic Relationships for Japan. As of March 31, 1999, approximately
150,000 Wink-enabled television sets have been shipped for distribution in Japan
under the brand names of Toshiba, Sony, JVC and Panasonic. We utilize Toshiba's
broadcast equipment sales team to sell Wink server and authoring tool products
to Japanese networks and direct broadcast satellite system operators. We have
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 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. We also have produced and licensed versions of our software
localized for Japan. The Wink programming enhancements currently airing in Japan
are similar to those being aired in the United States. We do not receive any
transaction fee revenue from responses to Wink Enhanced Broadcasting in Japan.
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 us as
well as off-the-shelf electronic commerce and database solutions. Wink Enhanced
Broadcasting consists of:
- the Wink Studio and Wink Server Studio authoring tools that allow
networks, advertisers and cable operators to design interactive Wink
applications;
- the Wink Broadcast Server that manages the delivery of those
applications;
- the Wink Client software that enables the generation and capture of
viewer responses to Wink applications; and
- the Wink Response Server and Wink Response Network that are designed to
efficiently process viewer responses to applications and forward them to
advertisers or merchants.
The diagram below illustrates the functional components of Wink Enhanced
Broadcasting.
[BLOCK FLOW CHART DIAGRAM OF MARKET PARTICIPANTS AND WINK PRODUCTS USED BY EACH
AS PART OF WINK ENHANCED BROADCASTING]
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WINK STUDIO AND WINK SERVER STUDIO
Wink Studio is a high-level authoring tool that allows non-technical
designers to create interactive programming and advertising applications. Wink
Studio is Windows-based and graphically oriented, and enables the creation of
simple interactive applications. A designer simply drags objects from an object
palette onto forms to create enhancements. 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 provide live data updates to Wink applications. In
particular, Wink Server Studio is designed to make it easy to incorporate or
transpose data from web sites and databases 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, when available, to enable broadcast and cable
networks to automate 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. In the future,
we expect to offer the capability to schedule and insert ATVEF applications into
television programming through the Wink Broadcast Server.
WINK CLIENT SOFTWARE
We expect to offer two versions of the Wink Client software. In
ATVEF-enabled set-top boxes and televisions, the Wink Client software will
enable the generation of Wink viewer responses to ATVEF applications. In other
set top boxes and televisions, the Wink Client software, in this case known as
the Wink Engine, displays the Wink applications and enables the generation of
viewer responses. Wink Client software can be installed in Wink-capable
televisions and most new advanced analog and digital set-top boxes at the
factory or downloaded through cable systems, satellite systems or telephone
modems into certain of such set-top boxes already installed in a viewer's
household.
WINK RESPONSE SERVER
The Wink Response Server collects viewer response data, or response
packets, which are generated by Wink applications. These response packets are
retrieved directly from televisions and satellite set-top boxes through phone
dial-up and from cable set-top boxes through cable head-end systems. The Wink
Response Server aggregates response packets and delivers them to the Wink
Response Network.
WINK RESPONSE NETWORK
The Wink Response Network is designed to enable the collection and
aggregation of viewer responses, requests for information and purchase orders
for transmission to and use by advertisers, merchants, broadcast and cable
networks and cable and direct broadcast satellite system operators. The Wink
Response Network includes two databases: one database correlates device serial
numbers to customer address and billing information, while the second correlates
a unique code for each interactive application to routing instruction and
product information. When a consumer responds to a Wink application and orders a
product, a response packet is generated by the Wink Engine in the set-
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<PAGE> 45
top box or television. A response packet includes the device serial number, the
unique application code and application specific data. These response packets
are collected, aggregated, converted into full electronic orders (name, address,
and credit information, if appropriate), and delivered to the advertiser or
network.
In the case of set-top boxes, the customer database is maintained by the
satellite or cable operator's billing system, and Wink links to this database.
The Wink Response Network is operated by General Electric Information Services
at a data center located in Rockville, Maryland and with a backup in Brookpark,
Ohio. The Wink Response Network was activated in August 1998 following our first
launch of Wink Enhanced Broadcasting in Kingsport, Tennessee.
In addition to aggregating and delivering responses, we can provide
industry participants with additional reporting. For example, participating
networks are receiving aggregated information regarding all Wink applications
that run on their networks. Cable and direct broadcast satellite system
operators can obtain 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.
EMERGING STANDARDS
We believe that the most important aspects of our business relate to
capturing, aggregating and routing TV-viewer responses to interactive
programming and advertising. In contrast, we believe it is less important which
protocol or "language" is used to design interactive applications. Recently,
several formal and informal industry groups have proposed competing standards
for the language in which interactive programming and advertising should be
written. While we may support other proposed standards in the future, we became
an Early Adopter of ATVEF's proposal for an HTML based standard for enhanced
television in the Summer of 1998. In conjunction with our agreement with
Microsoft, we have accelerated the development of an ATVEF compatible version of
the Wink Broadcast Server, and a means of capturing and generating Wink response
packets from broadcast ATVEF compatible applications. ATVEF founders include
Microsoft Corporation, Intel Corporation, Liberate Technologies, Sony, DirecTV,
Cable Labs, NBC, The Walt Disney Company and Discovery Communications. We are
also monitoring the standardization efforts of the Advanced Television Systems
Committee.
TECHNICAL SUPPORT AND CUSTOMER SERVICE
We believe that comprehensive, high-quality support is an essential element
of our business approach. We provide users of our 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, we will provide customized technical consulting and support for
applications and server module development. We provide telephone technical
support for our products 24 hours a day, seven days a week, providing services
that include system monitoring, problem resolution and preventive
troubleshooting. We are also providing customer service to Wink viewers 24 hours
a day, seven days a week, through an agreement with Softbank that provides call-
center support. Whenever possible, we seek to connect viewers directly with
advertisers and merchants to lower customer service costs.
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<PAGE> 46
COMPETITION
We face 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.
Current and potential competitors in one or more aspects of our business include
television and other system software companies, interactive television system
providers and multimedia authoring tool providers. We also face competition from
other providers and companies operating in the direct marketing business,
especially operators of toll-free response call centers.
A number of companies are developing system software for the general
interactive television market, including At Home Corporation, Intel Corporation,
Liberate Technologies, Sun Microsystems, OpenTV and Canal Plus. OpenTV and Canal
Plus already offer certain products with features similar to Wink Enhanced
Broadcasting. Intel and Liberate Technologies have developed technology that
enables interactivity over analog or digital broadcasts. Many of these
competitors have the support of, or relationships with, industry participants
with which we also have relationships, which could adversely affect the extent
of support these market participants give to Wink Enhanced Broadcasting. In
addition, Microsoft, which has recently agreed to purchase a substantial equity
stake in Wink and to collaborate with us to develop, market and distribute Wink
Enhanced Broadcasting on Microsoft television platforms, has been active in a
variety of aspects of the interactive television market.
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,
Worldgate Communications, Inc., Source Media and ACTV Inc. In addition, one or
more of these entities might choose to pursue hardware-independent,
cross-platform opportunities directly competitive with Wink Enhanced
Broadcasting. If we are not able to compete successfully against current or
future competitors, our business, operating results and financial condition will
be materially adversely affected.
INTELLECTUAL PROPERTY
Our ability to compete is dependent in part upon our internally developed,
proprietary intellectual property. We rely on patent, trademark, trade secret
and copyright law, as well as confidentiality procedures and licensing
arrangements to establish and protect our rights in our technology. Others may
develop technologies that are similar or superior to our technology. We
typically enter into confidentiality or license agreements with our employees,
consultants, customers, strategic partners and vendors, and typically control
access to and distribution of our software, documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use our products or technology without
authorization, or to develop similar technology independently through reverse
engineering or other means. Policing unauthorized use of our products is
difficult. The steps we take may not prevent misappropriation of our technology
or such agreements may not be enforceable. In addition, effective patent,
copyright and trade secret protection may be unavailable or limited in certain
foreign countries. Litigation may be necessary in the future to enforce our
intellectual property rights, to protect our trade secrets, or to determine the
validity and scope of the proprietary rights of others. Such litigation could
result in substantial costs and diversion of resources and could materially
adversely affect our business.
On August 6, 1998, John L. Berman, an individual, filed suit against us in
the U.S. District Court in the Northern District of California, alleging that we
infringed his patents for an interactive television graphics interface and for a
method and apparatus for applying overlay images. We believe that the resolution
of this matter will not have a material adverse effect on us.
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<PAGE> 47
In the future, we may receive other notices of claims of infringement of
other parties' proprietary rights or claims for indemnification resulting from
infringement claims. Irrespective of the validity or the successful assertion of
such claims, we would incur significant costs and diversion of resources with
respect to the defense of any claims brought, which could materially adversely
affect our business. In addition, the assertion of such infringement claims
could result in injunctions preventing us from distributing certain products,
which could materially adversely affect our operating results and financial
condition. In addition, the assertion of such infringement claims could result
in injunctions preventing us from distributing certain products, which could
materially adversely affect our business. If any claims or actions are asserted
against us, we may seek to obtain a license under a third party's intellectual
property rights. However, a license under such circumstances may not be
available on reasonable terms, if at all.
The 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 we believe we have a right to use and
compile such data, copyright, trade secret or other protection may not be
available for such data and information or others may claim rights to it. We are
also obligated to keep certain information regarding networks' and cable
systems' programming services and system technology confidential.
We have licensed in the past and expect that we may license in the future
elements of our technology and trademarks to third parties in the United States,
Japan and other countries. We attempt to ensure that the quality of our brand is
maintained by such business partners. However, such partners may take actions
that could adversely affect the value of our proprietary rights or the
reputation of our technologies.
EMPLOYEES
As of March 31, 1999, we employed 93 full-time equivalents, excluding
temporary personnel and consultants. Of the total number, 49 full-time
equivalents were involved in product development, 14 in sales, marketing and
customer service, seven in accounting, finance and administration and 23 in
operations. We are not subject to any collective bargaining agreements and
believe our relationship with our employees is good. See "Risk Factors -- We
need to manage growth; We are dependent on key personnel."
FACILITIES
Our corporate headquarters and executive offices are in Alameda,
California, where we lease approximately 38,000 square feet of space. The lease
on this facility expires in January 2000. We believe that we will be able to
renew this lease or secure sufficient space on reasonable terms upon expiration
of this lease.
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<PAGE> 48
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND OTHER OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information regarding our directors,
executive officers and other officers and key employees as of May 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
<S> <C> <C>
EXECUTIVE OFFICERS
Mary Agnes Wilderotter..................... 44 Chief Executive Officer, President and
Director
Brian P. Dougherty......................... 42 Chairman of the Board of Directors and
Chief Technical Officer
Howard L. Schrott.......................... 44 Chief Financial Officer and Senior Vice
President
Allan C. Thygesen.......................... 36 Senior Vice President, Programming and
Advertising
Timothy V. Travaille....................... 41 Senior Vice President, Operations and
Deployment
Jeffrey H. Coats(a)........................ 41 Director
Bruce W. Dunlevie(b)....................... 42 Director
Michael Fuchs(a)........................... 52 Director
F. Philip Handy(b)......................... 55 Director
William Schleyer(b)........................ 47 Director
Hidetaka Yamamoto(a)....................... 55 Director
OTHER OFFICERS AND KEY EMPLOYEES
Dante Carpinito............................ 39 Vice President, Business Development
Gregory R. Clark........................... 41 Vice President, Sales
Michael Gannon............................. 44 Vice President, Advertising Sales
Charles McCullough......................... 48 Vice President, Engineering
Patrick Ransil............................. 43 Vice President, Engineering
Reed Spiegel............................... 40 Vice President, Consumer Electronics Sales
Katherine Sullivan......................... 43 Vice President, Marketing
Melinda White.............................. 39 Vice President, Cable Sales
</TABLE>
- ---------------
(a) Member of the Audit Committee.
(b) Member of the Compensation Committee.
Mary Agnes Wilderotter has served as President and Chief Executive Officer
and a director of Wink since January 1997. 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., 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. 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
Airborne Freight Corporation, Gaylord Entertainment Co., American Tower Corp.,
The California Chamber of Commerce, California Cable Television Association,
California Community College Foundation, and Electric Lightwave. Ms. Wilderotter
is also a member of the board of trustees of the College of the Holy Cross. Ms.
Wilderotter received a B.A. degree in Economics and Business Administration from
the College of the Holy Cross.
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<PAGE> 49
Brian P. Dougherty co-founded Wink in October 1994 and served as Chief
Executive Officer of Wink from inception until December 1996. Mr. Dougherty has
also served as the Chairman of the Board of Wink since inception. Mr. Dougherty
also serves as Chief Technical Officer of Wink Communications. Prior to
co-founding Wink Communications, 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 and Geoworks. Mr.
Dougherty received a B.S. degree in Electrical Engineering/Computer Science from
the University of California, Berkeley.
Howard L. Schrott has served as Senior Vice President and Chief Financial
Officer since May 1999. From 1991 to 1999, he was Executive Vice President and
Chief Financial Officer of Emmis Communications Corporation, a diversified media
company. Prior to joining Emmis, Mr. Schrott was a Vice President in the
Communications Lending Group at First Union National Bank, Charlotte, North
Carolina. From 1984 to 1989, Mr. Schrott served as Chief Operating and Executive
Officer for a group of radio stations. Mr. Schrott also spent two years
practicing law in Washington, D.C. and Indianapolis, Indiana, where he
concentrated on matters before the Federal Communications Commission and general
business matters relating to broadcasting and media. Mr. Schrott received a B.S.
degree in Communications and Business from Butler University and a J.D. degree
from Indiana University School of Law -- Indianapolis.
Allan C. Thygesen has served as our Senior Vice President, Programming and
Advertising since March 1998, and 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., 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. Earlier,
Mr. Thygesen served a variety of management positions in finance, sales,
marketing and operations at Pellucid Inc., Everex Systems Inc. and Radiometer
A/S. 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 our Senior Vice President, Operations
and Deployments since March 1998 and served as Vice President, Operations and
Deployments since March 1997. From March 1994 to March 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 Wink since June 1997. Since
April 1996, Mr. Coats has served as Managing Director of GE Capital 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., which filed for bankruptcy in October 1995 and
confirmed a plan of liquidation in December 1997. Mr. Coats is a director of
Krause's Furniture, Inc., autobytel.com, Inc., Valuevision International, Inc.
and The Museum Company, Inc. Mr. Coats holds a B.B.A. in Finance from the
University of Georgia and an M.A. in
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<PAGE> 50
International Management in Finance from the American Graduate School of
International Management.
Bruce W. Dunlevie has served as a director of Wink since March 1996. In May
1995, Mr. Dunlevie founded Benchmark Capital LLC, 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. 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 Wink since June 1998. Since
November 1995, Mr. Fuchs has served as an independent consultant to the cable
television industry. Mr. Fuchs was Chairman and Chief Executive Officer of Home
Box Office, a division of TimeWarner Entertainment Company, L.P., from October
1984 until November 1995, and Chairman and Chief Executive Officer of Warner
Music Group, a division of Time Warner Inc., from May 1995 to November 1995. Mr.
Fuchs is a director of Marvel Entertainment Group, autobytel.com, Inc. and IMAX
Corp. 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.
F. Philip Handy has served as a director of Wink since June 1997. Mr. Handy
is a private investor who is currently in partnership with Equity Group
Investments. Mr. Handy was Managing Director of EGI Corporate Investments, a
diversified management and investment business from June 1997 until December
1998. Previously, he was 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., Chart House Enterprises, Inc., Transmedia Network,
Inc. and Davel Communications. 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 Wink 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 US 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 US 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 serves on the board of directors and
executive committee of Cable Television Laboratories, Inc., a research and
development consortium of cable system operators. He serves on the board of
directors of Rogers Communications, Inc., a Canadian cable operator, and Antec
Corporation, a supplier of goods and services to cable and television
industries. 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 Wink since February
1995. Mr. Yamamoto has been employed by Toshiba Corporation since 1966, most
recently as a General Manager of Toshiba's Information and Industrial Systems
Company. 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.
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<PAGE> 51
BOARD OF DIRECTORS
We currently have 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. Our 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 2000. Class II consists of Ms.
Wilderotter, Mr. Schleyer and Mr. Fuchs, who will serve until the annual meeting
of stockholders to be held in 2001. Class III consists of Mr. Coats, Mr. Handy
and Mr. Yamamoto, who will serve until the annual meeting of stockholders to be
held in 2002. At each annual meeting of stockholders beginning with the 2000
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 Wink and
Wink's subsidiary, including, among other things, the audit and control
functions, the results and scope of the annual audit and other services provided
by our independent accountants and our compliance with legal matters that have a
significant impact on our financial reports. The Audit Committee also consults
with our management and our independent accountants prior to the presentation of
financial statements to stockholders and, as appropriate, initiates inquiries
into aspects of our financial affairs. In addition, the Audit Committee has the
responsibility to consider and recommend the appointment of, and to review fee
arrangements with, our independent accountants. The current members of the Audit
Committee are Mr. Coats, Mr. Fuchs and Mr. Yamamoto.
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 Wink and Wink's subsidiary, including stock
compensation and loans. In addition, the Compensation Committee reviews and
makes recommendations on bonus and stock compensation arrangements for all of
Wink's employees. As part of the foregoing, the Compensation Committee also
administers our 1994 Stock Plan, 1999 Stock Plan and 1999 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 Wink do not receive cash
compensation for their services as directors.
Under our 1999 Director Option Plan, each new non-employee director who
joins Wink after this offering is entitled to receive an option to purchase
40,000 shares of our common stock. 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 1999 Director Option Plan will become
exercisable over a four-year period at the rate of 25% per
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<PAGE> 52
year. The exercise price per share for all options granted under the 1999
Director Option Plan will be equal to the fair market value of the common stock
on the date of grant. See "Management -- Employee Benefit Plans."
In 1998, we granted options under our 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 executive officers. No interlocking relationship
exists between our 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.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain information concerning total
compensation received by our Chief Executive Officer and each person who served
as an executive officer of Wink during the last fiscal year and whose aggregate
salary and bonus for such year exceeded $100,000 (collectively, the "Named
Executive Officers") for services rendered to Wink in all capacities during the
fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ---------------------------
COMPENSATION RESTRICTED SECURITIES
-------------------- STOCK UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) AWARDS(#) OPTIONS(#)
<S> <C> <C> <C> <C>
Mary Agnes Wilderotter......................... $208,333 $25,000(a) 25,000(a)(b) 100,000(a)
President and Chief Executive 21,000
Officer
Brian P. Dougherty............................. 90,000 50,000(a) -- --
Chairman of the Board and 50,000(c)
Chief Technical Officer
Allan C. Thygesen.............................. 123,750 35,000(a)(d) -- 50,000(a)
Senior Vice President, 135,900(c)
Programming and Advertising
Timothy V. Travaille........................... 124,583 30,000(a)(d) -- 50,000(a)
Senior Vice President, 70,000
Operations and Deployment 71,900(c)
Paritosh K. Choksi(e).......................... 175,000 20,000(c) -- --
Former Chief Financial Officer
</TABLE>
- ---------------
(a) Indicates bonuses, restricted stock awards and option grants, as applicable,
paid or granted in 1998 with respect to fiscal 1997.
(b) See "Certain Transactions -- Sales and Option Grants to Executive Officers
and Directors" for additional information regarding Ms. Wilderotter's
restricted stock award.
(c) Indicates bonuses paid or granted in 1999 with respect to fiscal 1998.
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<PAGE> 53
(d) Represents dollar value of stock bonuses issued in lieu of cash bonuses.
Such shares had a fair market value of $4.00 per share as of the date of
issuance, as determined by the Board of Directors, and were fully vested
when issued.
(e) Mr. Choksi resigned in January 1999.
OPTION GRANTS IN 1998
The following table sets forth, as to the Named Executive Officers who have
reportable information, information concerning stock options granted during the
year ended December 31, 1998.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------------ STOCK PRICE
SECURITIES PERCENT OF APPRECIATION FOR
UNDERLYING TOTAL OPTIONS EXERCISE OPTION TERM(D)
OPTIONS IN FISCAL PRICE PER EXPIRATION -------------------
NAME GRANTED(#)(A) YEAR(%)(B) SHARE($) DATE(C) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Mary Agnes Wilderotter.............. 100,000(e) 9.2% $4.00 1/15/08 $251,558 $637,497
21,000(f) 1.9% 8.00 9/24/08 105,654 267,749
Allan C. Thygesen................... 50,000 4.6% 6.00 3/27/08 188,668 478,123
Timothy V. Travaille................ 50,000 4.6% 6.00 3/27/08 188,668 478,123
</TABLE>
- ---------------
(a) Except as otherwise set forth below, 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 our 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 Ms. Wilderotter's options) and 1/48 of the shares per month thereafter.
In determining the fair market value of the common stock, the Board of
Directors considered various factors, including Wink's financial condition
and business prospects, its operating results, the absence of a market for
the common stock and the risks normally associated with technology
companies.
(b) We granted options to purchase 1,092,231 shares of common stock to employees
and consultants in 1998.
(c) 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.
(d) 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 exercise price, which equalled the fair market value on date of grant.
The 5% and 10% assumed annual rates of appreciation are specified in
Commission rules and do not represent our estimate or projection of future
stock price growth. We do 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 our future
performance, overall market conditions and the option holder's continued
employment with us throughout the entire vesting period and option term,
which factors are not reflected in this table.
(e) Such option vests at a rate of 1/48 per month, with accelerated vesting in
the event of certain corporate transactions. See "Certain
Transactions -- Employment Offer Letters and Severance Arrangements."
(f) Such option was fully vested as of the date of grant.
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<PAGE> 54
AGGREGATED OPTION EXERCISES IN 1998 AND DECEMBER 31, 1998 OPTION VALUES
The following table sets forth, as to the Named Executive Officers who have
reportable information, 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, 1998. Also reported are values
for "in-the-money" options, which values represent the positive spread, if any,
between the respective exercise prices of each outstanding stock option and the
fair market value of the common stock as of December 31, 1998 ($8.00 per share).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES DECEMBER 31, 1998 OPTIONS($)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Mary Agnes Wilderotter......... -- -- 43,917 77,083 $ 91,668 $308,332
Allan C. Thygesen.............. -- -- 76,250 113,750 570,000 570,000
Timothy V. Travaille........... -- -- 43,750 106,250 315,000 505,000
</TABLE>
EMPLOYEE BENEFIT PLANS
1999 Stock Plan. Our 1999 Stock Plan was approved by the Board of Directors
in June 1999 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 1999 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, and for the grant to employees, directors and consultants of
nonstatutory stock options and stock purchase rights. Unless terminated sooner,
the 1999 Plan will terminate automatically in 2009. A total of 2,500,000 shares
of common stock are currently reserved for issuance pursuant to the 1999 Plan.
The amount reserved under the 1999 Plan will automatically increase at the end
of each fiscal year by the lesser of (i) 1,000,000 shares, (ii) 4% of
outstanding shares on such date or (iii) a lesser amount determined by the
Board.
The 1999 Plan may be administered by the Board of Directors or a committee
of the Board, 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
stock purchase rights granted, including the exercise price, the number of
shares subject to each option or stock purchase rights, 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 1999
Plan, provided that no such action may affect any share of common stock
previously issued and sold or any option previously granted under the 1999 Plan.
Options and stock purchase rights granted under the 1999 Plan are not
generally transferable by the optionee, and each option and stock purchase right
is exercisable during the lifetime of the optionee only by such optionee.
Options granted under the 1999 Plan must generally be exercised within three
months after the end of optionee's status as an employee or consultant of Wink,
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 stock purchase rights, unless the administrator determines
otherwise, the restricted stock purchase agreement entered into at the time a
stock purchase right is exercised grants us a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's employment or
consulting relationship with us for any reason (including death or disability).
The
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<PAGE> 55
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 us. The repurchase option
lapses at a rate determined by the administrator.
The exercise price of all incentive stock options granted under the 1999
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 stock
purchase rights granted under the 1999 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 our
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 1999 Plan may not exceed
ten years.
The 1999 Plan provides that in the event of a merger of Wink with or into
another corporation, a sale of substantially all of our assets or a like
transaction involving Wink, 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 stock purchase rights will terminate upon the consummation of such
transaction.
1999 Employee Stock Purchase Plan. Our 1999 Employee Stock Purchase Plan
was adopted by the Board of Directors in June 1999 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 250,000 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 August 1 of
each year, except for the first such offering period, which commences on the
date on which the Securities and Exchange Commission declares the registration
statement for this offering effective and ends on the last trading day on or
before January 31, 2000.
Employees are eligible to participate in the Purchase Plan if they are
employed by Wink 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 our stock 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 gross earnings, commissions,
payments for overtime, shift premium payments, incentive compensation, incentive
payments, bonuses and other compensation, but in each case only to the extent
such compensation is paid in cash.
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
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<PAGE> 56
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 Wink.
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 Wink with or into another corporation or a sale of
substantially all of our 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 2009. 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.
1999 Director Option Plan. All non-employee directors are entitled to
participate in the 1999 Director Option Plan. The Director Plan was adopted by
the Board of Directors in June 1999 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 250,000 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 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 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
option granted under the Director Plan 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 Wink, 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 Wink with or
into another corporation, a sale of substantially all of our assets or a like
transaction involving Wink, 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 15 days from the date of such
notice, and all unexercised options will terminate upon the expiration of such
period.
1994 Stock Plan. Our 1994 Stock 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, 1999, options to
purchase an aggregate of 3,127,190 shares of common stock were outstanding under
the 1994 Plan, with a weighted average exercise price of $3.86. Subsequent to
March 31, 1999 and through April 30, 1999, the Board of Directors granted
options to purchase an additional 51,000 shares of common stock under the 1994
Plan. The Board of Directors has
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<PAGE> 57
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 1999 Plan. The 1994 Plan
provides that in the event of a merger of Wink with or into another corporation,
or a sale of substantially all of our 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. Our 401(k) Profit Sharing 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 Wink and have attained
the age of 21 are eligible to participate in the 401(k) Plan.
The 401(k) Plan permits us to make contributions to the Plan which match
employees' eligible contributions, subject to a maximum. To date, we have 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 us will be deductible
by us when and if made.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Our Amended and Restated Certificate of Incorporation limits the liability
of our 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. Our
Bylaws provide that we shall indemnify our directors and officers, and may
indemnify our other employees and agents, to the fullest extent permitted by
Delaware law, including in circumstances in which indemnification is otherwise
discretionary under Delaware law. We intend to enter into indemnification
agreements with each of our officers and directors containing provisions that
requires Wink 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 our
directors and officers under any Wink liability insurance policies applicable to
our directors and officers. We also intend 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 Wink
where indemnification will be required or permitted.
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<PAGE> 58
CERTAIN TRANSACTIONS
The following sets forth certain transactions between Wink and our
directors, executive officers and 5% stockholders and their affiliates. We
believe that each of the transactions described below was on terms no less
favorable to Wink than could have been obtained from unaffiliated third parties.
All future transactions between Wink and any director or executive officer will
be subject to approval by a majority of the disinterested members of the Board.
SERIES B, SERIES C AND SERIES D PREFERRED STOCK FINANCINGS
Between December 21, 1995 and March 29, 1996, we 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 December 2, 1998, we sold an aggregate of 4,322,250
shares of Series C preferred stock at a price per share of $8.00, and, in
connection with such sales, issued warrants to purchase an aggregate of
1,800,000 shares of common stock at exercise prices ranging from $0.80 to $16.00
per share. In May and June 1999, various investors agreed to purchase 2,875,000
shares of Series D preferred stock at $12.00 per share, subject to closing
conditions. In connection with one such purchase, we issued a warrant to
purchase 500,000 shares of common stock at an exercise price of $12.00 per
share. The sale of the Series D preferred stock is expected to close prior to
the date of this offering. The purchasers of Series B preferred stock, Series C
preferred stock, Series D preferred stock and warrants include, among others,
the following entities affiliated with directors and holders of more than five
percent of our voting securities:
<TABLE>
<CAPTION>
SHARES OF SHARES OF SHARES OF WARRANTS TO
SERIES B SERIES C SERIES D PURCHASE
PREFERRED PREFERRED PREFERRED COMMON STOCK
<S> <C> <C> <C> <C>
ENTITIES AFFILIATED WITH DIRECTORS
Venture capital funds affiliated with
Benchmark Capital Partners, L.P. (Bruce
Dunlevie).................................. 375,000 93,750 500,000(a)
Venture capital funds affiliated with
EGI-Wink Investors, L.L.C. (F. Philip
Handy)..................................... -- 625,000 125,000(b)
General Electric Capital Corporation (Jeffrey
Coats)..................................... -- 906,250 550,000(c)
NBC Multimedia, Inc. (Jeffrey Coats)......... -- -- 375,000(c)
Toshiba Corporation (Hidetaka Yamamoto)...... 2,500(d) 250,000 --
OTHER 5% STOCKHOLDERS
General Instrument Corporation............... 600,000 187,500 --
Vulcan Ventures, Incorporated ............... -- 1,162,500 250,000(e)
Microsoft Corporation........................ 2,500,000(f) 500,000(g)
</TABLE>
- ---------------
(a) 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, whereby, in lieu of paying the exercise price in cash, the
holder may instruct us to retain said number of shares that would otherwise
be payable on such exercise which have a fair market value at the time of
exercise equal to the aggregate exercise price.
(b) Warrants expire on the closing of this offering, unless previously
exercised. Warrant exercise price is $0.80 per share. The warrants may be
exercised on a "net" basis.
(c) Warrant exercise price is $8.00 per share. The warrants may be exercised on
a "net" basis. A warrant to purchase 25,000 shares held by General Electric
Capital Corporation expires in August 2003. The other warrants expire in
June 2009. Warrants underlying 300,000 shares of
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<PAGE> 59
common stock were amended in February 1998 to accelerate their
exercisability to become fully exercisable.
(d) Shares purchased by Mr. Yamamoto personally.
(e) See the discussion of these warrants under "-- Commercial Relationships and
Agreements with Principal Stockholders."
(f) In May 1999, Microsoft agreed to purchase 2,500,000 shares of our
convertible preferred stock, subject to closing conditions.
(g) Warrant exercise price is $12.00 per share. The warrant may be exercised on
a "net" basis and expires in May 2004.
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."
COMMERCIAL RELATIONSHIPS AND AGREEMENTS WITH PRINCIPAL STOCKHOLDERS
In September 1997, we entered into with Toshiba Corporation (i) an
Application Server Agreement under which we agreed to develop for and license to
Toshiba certain of our proprietary technology, (ii) a Wink Engine License
Agreement under which we granted Toshiba a worldwide, non-exclusive,
non-transferable right to incorporate the Wink Engine software into certain
Toshiba products, (iii) a Wink Online Server for InterText License Agreement
under which we granted Toshiba the right to use and distribute Wink's Online
Server software. In addition, in October 1997, we entered into with Toshiba
America Consumer Products, Inc. ("Toshiba America"), a subsidiary of Toshiba, a
Wink Engine License Agreement under which we granted Toshiba America a
non-exclusive, non-transferable license to incorporate the Wink Engine software
into certain Toshiba America products. In addition, on January 25, 1999, we
entered into an Agreement of Development of Demonstration Software, as amended
on February 25, 1999, under which we agreed to develop demonstration software
for use in certain Toshiba products. From January 1, 1995 to March 31, 1999,
Toshiba and Toshiba America paid Wink $576,000 in royalties, non-recurring
engineering fees and other payments. Toshiba is a holder of more than 5% of our
outstanding common stock. Hidetaka Yamamoto, a director of Wink, is General
Manager of Toshiba's ADI Business Group.
In June 1997, we entered into a contract with NBC Multimedia, Inc. under
which we licensed certain software and technology to NBC Multimedia in return
for certain programming commitments by NBC Multimedia. Such commitments have
since expired, although NBC continues to air Wink-enhanced programming. In
addition, Wink has agreed to pay to NBC a portion of the revenues Wink receives
relating to responses to Wink-enhanced advertising and programming broadcast
through NBC, if any. NBC Multimedia is affiliated with General Electric Capital
Corporation which is a holder of more than 5% of our outstanding common stock.
Jeffrey Coats, a director of Wink, is the Managing Director of GE Capital Equity
Capital Group, Inc., a wholly owned subsidiary of General Electric Capital
Corporation, which is affiliated with NBC Multimedia. In June 1997, we issued to
NBC Multimedia a warrant to purchase 375,000 shares of common stock.
In June 1995, we entered into a Development and License Agreement with
General Instrument. Under this agreement, as amended, we agreed to develop and
license to General Instrument certain of our proprietary technology. From
January 1, 1995 to March 31, 1999, General Instrument paid Wink $600,000 in
royalties, non-recurring engineering fees and other payments. In connection with
this agreement, General Instrument purchased from Wink 550,000 shares of common
stock at $0.01
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<PAGE> 60
per share (giving effect to a 10-for-1 split of our common stock in June 1995).
General Instrument is a holder of more than 5% of our outstanding common stock.
In June 1998, we entered into a Charter Advertiser Affiliation Agreement
with General Electric Capital Corporation, under which certain affiliates of
General Electric Capital Corporation receive fixed rate pricing for all Wink
products and services during a charter period ending in 1999, in exchange for a
commitment by these affiliates to air specified amounts of Wink-enhanced
advertising. In August 1998, we issued to General Electric Capital Corporation a
warrant to purchase 25,000 shares of common stock in exchange for consulting
service under a letter agreement dated September 1998.
In December 1998, we issued to Vulcan Ventures Incorporated warrants to
purchase up to an aggregate of 250,000 shares of common stock, subject to
certain performance and exercisability conditions. Any exercise of the warrants
is conditioned upon cable television system operators affiliated with Vulcan
deploying set-top boxes containing Wink Engines to at least 200,000 households
between January 1, 1999 and December 31, 2001. Vulcan may exercise the warrants
on or after February 1, 2001 for a number of shares equal to one-fifth the
number of households in which a Wink-enabled set-top box is deployed by a Vulcan
affiliate during calendar 1999, which box remains deployed for at least one year
after deployment. The exercise price for such shares is $12.00 per share. Vulcan
may exercise the warrants on or after February 1, 2002 for an additional number
of shares equal to one-fifth the number of households in which a Wink-enabled
set-top box is deployed during calendar 2000, which box remains deployed for at
least one year thereafter, less the number of shares which became exercisable in
2001, up to the aggregate maximum of 250,000 shares. The exercise price of such
additional shares is $16.00 per share. Vulcan Ventures Incorporated is a holder
of more than 5% of our outstanding stock.
In October 1997, we entered into a Cable Affiliation Agreement with Charter
Communications Inc. under which Charter licensed certain proprietary technology
to enable the delivery of Wink Enhanced Broadcasting to Charter subscribers in
select markets. This Agreement was subsequently amended in March 1999 to include
revenue guarantees to Charter in exchange for a minimum volume commitment for
Wink Engines deployed. See Note 6 to Consolidated Financial Statements. Charter
is affiliated with Vulcan Ventures, Incorporated, which is a holder of more than
5% of our common stock.
In May 1999, we entered into a Stock Purchase Agreement with Microsoft
under which Microsoft has agreed to purchase 2,500,000 shares of our convertible
preferred stock, subject to closing conditions. We also entered into an
agreement with Microsoft pursuant to which Microsoft agreed to collaborate with
us to develop, market and distribute Wink Enhanced Broadcasting. Pursuant to
this agreement, we have agreed to pay Microsoft a portion of the revenues we
receive relating to responses to Wink-enhanced advertising and programming
broadcast through Microsoft's television platforms and to provide Microsoft with
certain minimum revenue guarantees. In addition, in connection with these
agreements, we issued to Microsoft a warrant to purchase 500,000 shares of our
common stock. Microsoft has agreed to purchase in excess of 5% of our
outstanding common stock. See "Business -- Strategic Relationships -- Strategic
Relationship with Microsoft."
CERTAIN SALES AND OPTION GRANTS TO EXECUTIVE OFFICERS AND DIRECTORS
On December 2, 1996, we sold 1,310,000 shares of common stock at a price of
$0.40 per share to Mary Agnes Wilderotter, our President and Chief Executive
Officer and a director of Wink. We have the right to repurchase such shares in
the event Ms. Wilderotter's services to us terminate, which right lapses
progressively over four years after the date of purchase. Ms. Wilderotter paid
for such shares with a full-recourse, ten-year $524,000 promissory note, secured
by the purchased shares
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<PAGE> 61
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 June 30, 1999 was approximately $ .
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. We have the right to repurchase such shares in the
event Ms. Wilderotter's services to us terminate, which right lapses
progressively over four years after the date of purchase. 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 June 30,
1999 was approximately $ .
On January 15, 1998, the Board of Directors granted to each of Jeff Coats,
F. Philip Handy, Bruce Dunlevie and William Schleyer, directors of Wink, 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 Wink, an option to purchase 40,000 shares of common stock at an exercise
price of $6.00 per share. All the options become exercisable over a four-year
period at the rate of 25% per year.
On August 25, 1998, the Board of Directors granted to Mr. Schleyer and Mr.
Fuchs stock purchase rights under the 1994 Plan to purchase 62,500 and 298,500
shares of common stock, respectively, at $8.00 per share. Such stock purchase
rights were exercised in cash.
On May 17, 1999, we sold 250,000 shares of common stock at a price of $8.00
per share to Howard L. Schrott, our Senior Vice President and Chief Financial
Officer. We have the right to repurchase the shares at cost in the event Mr.
Schrott's services to Wink terminate, which right lapses progressively over four
years after the date of purchase. Mr. Schrott paid for the shares with a
full-recourse, ten-year $2,000,000 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 on June 30, 1999 was approximately $ . See "-- Employment
Offer Letters and Severance Arrangements."
EMPLOYMENT OFFER LETTERS AND SEVERANCE ARRANGEMENTS
In October 1996, we entered into an employment offer letter with Ms.
Wilderotter under which, if she is terminated without cause, Ms. Wilderotter
will be entitled to severance compensation at a $300,000 annual salary level for
one year or until Ms. Wilderotter finds new employment. In addition, in the
event Wink 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, Wink's repurchase right will
lapse as to 50% of Ms. Wilderotter's unvested shares.
In May 1999, we entered into an employment offer letter with Mr. Schrott
under which, if he is terminated without cause prior to May 2000, Mr. Schrott
will be entitled to six months of severance compensation equivalent to Mr.
Schrott's base salary, which salary is $175,000 per year. In addition, in the
event Wink is acquired by or merged into another company prior to Mr. Schrott's
shares fully vesting, our repurchase right will lapse as to 50% of Mr. Schrott's
unvested shares.
In October 1997, we entered into an employment offer letter with our
previous chief financial officer, under which, if he were terminated without
cause, he would have been entitled to six months of severance compensation
equivalent to his base salary, which salary was $175,000 per year. At
approximately the same time, the officer purchased 215,000 shares of common
stock at $2.00 per
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share. Wink retained the right to repurchase such shares at cost upon the
officer's termination of employment, which right lapsed progressively over four
years from the start of his employment, provided that, if Wink were acquired by
or merged into another company prior to his shares fully vesting, the repurchase
right would have lapsed as to 50% of the unvested shares. Such arrangement was
amended upon the officer's resignation in January 1999 to provide for
accelerated vesting of shares during a three-month consulting period ended April
3, 1999, at the end of which Wink repurchased 122,292 shares at cost. The
officer also received $87,500 as part of his resignation compensation.
INDEMNIFICATION AGREEMENTS
We have entered into Indemnification Agreements with each of our executive
officers and directors. Such agreements require Wink to indemnify such
individuals to the fullest extent permitted by Delaware law. See
"Management -- Limitation of Liability and Indemnification Matters."
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PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of our common stock as of March 31, 1999, 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 us to own beneficially five percent or more of our
outstanding common stock, (ii) each of the Named Executive Officers, (iii) each
of our current directors, (iv) all directors and executive officers as a group
and (v) each selling stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES
OWNED PRIOR TO NUMBER OF BENEFICIALLY OWNED
OFFERING(A) SHARES TO BE AFTER THE OFFERING
----------------------- SOLD IN -----------------------
NAME NUMBER PERCENTAGE OFFERING NUMBER PERCENTAGE
<S> <C> <C> <C> <C> <C>
Brian P. Dougherty(b)................ 4,312,500 22.6% 100,000 4,212,500
Entities associated with General
Electric Capital Corporation(c).... 1,856,250 9.5% -- 1,856,250
Jeffrey H. Coats
120 Long Ridge Road
Stamford, CT 06927
Entities associated with Benchmark
Capital Partners, L.P.(d).......... 1,245,417 6.4% -- 1,245,417
Bruce W. Dunlevie
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Toshiba Corporation(e)............... 1,502,500 7.9% -- 1,502,500
Hidetaka Yamamoto
1-1 Shibaura 1-Chome
Minato-ku
Tokyo, 105-01 Japan
Vulcan Ventures Incorporated......... 1,412,500 9.5% -- 1,412,500
110 110th Ave. #550
Bellevue, WA 98004
Mary Agnes Wilderotter(f)............ 1,389,333 7.3% 100,000 1,289,333
General Instrument Corporation....... 1,337,500 7.0% -- 1,337,500
101 Tournament Drive
Horsham, PA 19044
Entities associated with EGI-Wink
Investors L.L.C.(g)................ 791,250 4.1% -- 791,250
F. Philip Handy
Two N. Riverside Plaza
Chicago, IL 60606
Allan C. Thygesen(h)................. 113,333 * -- 113,333
Timothy V. Travaille(i).............. 76,250 * -- 76,250
Paritosh K. Choksi(j)................ 215,000 1.1% -- 215,000
Michael Fuchs........................ 337,500 1.8% -- 337,500
William Schleyer..................... 79,500 * -- 79,500
All directors and executive officers
as a group (11 persons)(k)......... 11,685,500 56% 200,000 11,485,500
----------
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
common stock at March 31, 1999.
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<PAGE> 64
(a) Applicable percentage ownership is based on 18,401,259 shares of common
stock and preferred stock (on an as-converted to common stock basis)
outstanding as of March 31, 1999, 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). This number does not include the shares of common stock issuable
upon conversion of Series D preferred stock which we have agreed to issue
prior to the date of the offering. 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 March 31, 1999, 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 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.
(b) Represents shares held of record in the name of Mr. Dougherty's family
trust.
(c) Includes (i) 550,000 shares subject to currently exercisable warrants held
by General Electric Capital Corporation and (ii) 375,000 shares subject to
a currently exercisable warrant held by NBC Multimedia, Inc. Jeffrey Coats,
a director of Wink, is the Managing Director of GE Capital 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.
(d) Represents (i) 638,622 shares held by Benchmark Capital Partners, L.P., (ii)
80,128 shares held by Benchmark Founders' Fund, L.P., (iii) 441,257 shares
subject to a currently exercisable warrant held by Benchmark Capital
Partners, L.P. and (iv) 58,743 shares subject to a currently exercisable
warrant held by Benchmark Founders' Fund, L.P. Each of the foregoing
warrants is expected to be exercised prior to the closing of this offering.
Also includes 16,667 shares which Benchmark has the right to acquire upon
exercise of currently exercisable options granted by Mary Agnes Wilderotter.
Bruce M. Dunlevie, a director of Wink, 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.
(e) 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
Wink, is the General Manager of New Business Development of Toshiba
Corporation and may be deemed to have voting and investment power with
respect to such shares.
(f) At March 31, 1999, 722,646 shares held by Ms. Wilderotter were vested, and
591,354 shares were unvested and subject to a right of repurchase in favor
of Wink, 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. Also includes 21,000 shares
subject to currently exercisable stock options.
(g) 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) 31,250 shares held by SZ
Investments, L.L.C. (iv) 75,000 shares subject to a currently exercisable
warrant held by WC Investors, L.L.C. and (v) 50,000 shares subject to a
currently exercisable warrant held by EGI-Wink Investors, L.L.C. Each of
the
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<PAGE> 65
foregoing warrants is expected to be exercised prior to the closing of this
offering. F. Philip Handy, a director of Wink, 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.
(h) Includes 104,583 shares subject to stock options exercisable within 60 days
of March 31, 1999.
(i) Includes 68,750 shares subject to stock options exercisable within 60 days
of March 31, 1999.
(j) Includes 122,292 shares which were repurchased by Wink in April 1999.
(k) Includes (i) 259,750 shares issuable upon the exercise of stock options
exercisable within 60 days of March 31, 1999, and (ii) 1,550,000 shares
subject to warrants held by entities affiliated with certain directors of
Wink exercisable within 60 days of March 31, 1999.
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<PAGE> 66
DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, our authorized capital stock 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 March 31, 1999, there were 18,401,259 shares of common stock
outstanding (treating all preferred stock as if converted to common stock and
all warrants which expire on the closing of this offering as exercised) held of
record by approximately 205 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 shares of common stock by Wink 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 Wink, 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, all of our then outstanding
preferred stock will automatically convert into common stock on a one-for-one
basis. Accordingly, effective upon the completion of this offering, 5,000,000
shares of undesignated 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 Wink without
further action by the stockholders, may discourage bids for our 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. We have no current plans to issue any shares of preferred stock.
ANTITAKEOVER EFFECTS OF DELAWARE LAW AND CERTAIN PROVISIONS OF OUR CERTIFICATE
OF INCORPORATION AND BYLAWS
We are 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
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<PAGE> 67
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 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.
Our Amended and Restated Certificate of Incorporation provides that, upon
the effective date of this offering, our Board of Directors will be classified
into three classes of directors. See "Management -- Board of Directors." In
addition, our Bylaws do not permit our stockholders to call a special meeting of
stockholders. Only our 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 Wink to
first negotiate with us. However, these and other provisions could have the
effect of making it more difficult to acquire Wink by means of a tender offer,
proxy contest or otherwise or to remove the incumbent officers and directors of
Wink.
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 Wink and the
holders of such registrable securities, if we propose to register any of our
securities under the Securities Act, either for our 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 us to file a
registration statement under the Securities Act at our expense with respect to
their shares of common stock, and we are required to use our best efforts to
effect such registration. Further, holders may require us to file registration
statements on Form S-3 at our expense when such form becomes available for use
by Wink. 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 1,692,500 shares of our common
stock at a weighted average exercise price of $9.73 per share. Of such warrants,
warrants to purchase 17,500 shares expire in September 2002, warrants to
purchase 25,000 shares expire in August 2003, warrants to purchase 500,000
shares expire in May 2004, warrants to purchase 250,000 shares expire in January
2005, and warrants to purchase
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<PAGE> 68
900,000 shares expire in June 2009. All warrants may be exercised on a "net"
basis whereby, in lieu of paying the exercise price in cash, the holder may
instruct us to retain a number of shares that has a fair market value at the
time of exercise equal to the aggregate exercise price.
In addition to the foregoing warrants, we also have outstanding warrants to
purchase an aggregate of 988,200 shares of common stock, at a weighted average
exercise price of $7.24 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.
In December 1998, we issued to Vulcan Ventures Incorporated warrants to
purchase up to an aggregate of 250,000 shares of common stock, subject to
certain performance and exercisability conditions. Any exercise of the warrants
is conditioned upon cable television system operators affiliated with Vulcan
deploying set-top boxes containing Wink technology to at least 200,000
households between January 1, 1999 and December 31, 2001. Vulcan may exercise
the warrants on or after February 1, 2001 for a number of shares equal to
one-fifth the number of households in which a Wink-enabled set-top box is
deployed by a Vulcan affiliate during calendar 1999, which box remain deployed
for at least one year after deployment. The exercise price for such shares is
$12.00 per share. Vulcan may exercise the warrants on or after February 1, 2002
for an additional number of shares equal to one-fifth the number of households
in which a Wink-enabled set-top box is deployed during calendar 2000, which box
remain deployed for at least one year thereafter, less the number of shares
which became exercisable in 2001, up to the aggregate maximum of 250,000 shares.
The exercise price of such additional shares is $16.00 per share.
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.
LISTING
We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the trading symbol "WINK."
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<PAGE> 69
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our common stock.
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 our common stock in the public
market after the restrictions lapse could adversely affect the prevailing market
price and our ability to raise equity capital in the future.
Upon completion of this offering (based on shares outstanding at March 31,
1999), we 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 Wink as that term is defined in Rule 144 under the
Securities Act. The remaining 18,401,259 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 Wink 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 Donaldson, Lufkin & Jenrette Securities Corporation, subject to certain
limited exceptions. Donaldson, Lufkin & Jenrette Securities Corporation
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. When
determining whether or not to release shares from the lock-up agreements,
Donaldson, Lufkin & Jenrette Securities Corporation will consider, among other
factors, the stockholder's reasons for requesting the release, the number of
shares for which the release is being requested and market conditions at the
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 Wink. Under Rule 144(k), a
person who is not deemed to have been an Affiliate
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of Wink 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.
Any employee or consultant to Wink 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.
We 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 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 Donaldson, Lufkin &
Jenrette Securities Corporation, subject to certain limited exceptions.
Following the offering, we intend to file a registration statement on Form
S-8 covering approximately 6,127,190 shares of common stock subject to
outstanding options or reserved for issuance under our employee stock plans
(based on options outstanding as of March 31, 1999). 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 Wink or the contractual restrictions described
above.
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UNDERWRITING
Subject to the terms and conditions contained in an underwriting agreement
dated , 1999, the underwriters named below, who are
represented by Donaldson, Lufkin & Jenrette Securities Corporation, Deutsche
Banc Alex. Brown Inc. and Bear, Stearns & Co. Inc. have severally agreed to
purchase from us the respective number of shares of common stock set forth
opposite their names below.
<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Deutsche Banc Alex. Brown Inc...............................
Bear, Stearns & Co. Inc.....................................
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares of common stock
included in this offering are subject to approval of legal matters by their
counsel and to customary conditions, including the effectiveness of the
registration statement, the continuing correctness of our representations, the
receipt of a "comfort letter" from our accountants, the listing of the common
stock for quotation on the Nasdaq National Market and no occurrence of an event
that would have a material adverse effect on us. The underwriters are obligated
to purchase and accept delivery of all the shares of common stock, other than
those covered by the over-allotment option described below, if they purchase any
of the shares of common stock.
The underwriters propose to initially offer some of the shares of common
stock directly to the public at the initial public offering price set forth on
the cover page of this prospectus and some of the shares of common stock to
dealers (including the underwriters) at the initial public offering price less a
concession not in excess of $ per share. The underwriters may allow, and
such dealers may re-allow, a concession not in excess of $ per share on
sales to other dealers. After the initial offering of the common stock to the
public, the representatives of the underwriters may change the public offering
price and such concessions. The underwriters do not intend to confirm sales to
any accounts over which they exercise discretionary authority.
The following table shows the underwriting fees to be paid to the
underwriters by us in connection with this offering. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares of common stock.
<TABLE>
<CAPTION>
NO FULL
EXERCISE EXERCISE
<S> <C> <C>
Per share................................................... $ $
Total....................................................... $ $
</TABLE>
Wink has granted to the underwriters an option, exercisable for 30 days
after the date of the underwriting agreement, to purchase up to
additional shares of common stock at the initial public offering
price less than the underwriting fees. The underwriters may exercise such option
solely to cover overallotments, if any, made in connection with this offering.
To the extent that the underwriters exercise such option, each underwriter will
become obligated, subject to conditions, to purchase a number of additional
shares approximately proportionate to such underwriter's initial purchase
commitment. We estimate expenses relating to this offering will be $ .
The underwriters and Wink have agreed to indemnify each other against
liabilities, including liabilities under the Securities Act of 1933.
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<PAGE> 72
Each of Wink and our executive officers, directors and some of our
stockholders has agreed that, for a period of 180 days from the date of this
prospectus and subject to certain exceptions, they will not, without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation do either
of the following:
- 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 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 all or a portion
of the economic consequences associated with the ownership of any common
stock.
Either of the foregoing transfer restrictions will apply regardless of
whether a covered transaction is to be settled by the delivery of common stock
or such other securities, in cash or otherwise. In addition, during such period
and subject to certain exceptions, we have agreed not to file any registration
statement with respect to, and each of our executive officers, directors and
some of our stockholders has agreed not to make any demand for, or exercise any
right with respect to, the registration of any shares of common stock or any
securities convertible into or exercisable for common stock without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation.
At our request, the underwriters have reserved up to shares
offered by this prospectus for sale at the initial public offering price to our
employees, officers and directors and other individuals associated with us and
members of their families. Individuals who purchase these reserved shares must
hold such shares for a minimum of three months after this offering. The number
of shares of common stock available for sale to the general public will be
reduced to the extent these individuals purchase or confirm for purchase, orally
or in writing, such reserved shares. Any reserved shares not purchased or
confirmed for purchase will be offered by the underwriters to the general public
on the same basis as the other shares offered by this prospectus.
We intend to apply to list our common stock for quotation on the Nasdaq
National Market under the symbol "WINK."
Other than in the United States, no action has been taken by the
underwriters or us that would permit a public offering of the shares of common
stock included in this offering in any jurisdiction where action for that
purpose is required. The shares of common stock included in this offering may
not be offered or sold, directly or indirectly, nor may this prospectus or any
other offering material or advertisement in connection with the offer and sale
of any shares of common stock be distributed or published in any jurisdiction,
except under circumstances that will result in compliance with the applicable
rules and regulations of such jurisdiction. Persons who receive this prospectus
are advised to inform themselves about and to observe any restrictions relating
to this offering of the common stock and the distribution of this prospectus.
This prospectus is not an offer to sell or a solicitation of an offer to buy any
shares of common stock included in this offering in any jurisdiction in which
that would not be permitted or legal.
STABILIZATION
In connection with this offering, any of the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. The underwriters may bid for and purchase
shares of common stock in the open market to cover such syndicate short position
or to stabilize the price of the common stock. In addition, the underwriting
syndicate may reclaim selling
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concessions from syndicate members and selected dealers if Donaldson, Lufkin &
Jenrette Securities Corporation repurchases previously distributed common stock
in syndicate covering transactions, in stabilization transactions or otherwise
if Donaldson, Lufkin & Jenrette Securities Corporation receives a report that
indicates that the clients of such syndicate members have "flipped" the common
stock. These activities may stabilize or maintain the market price of the common
stock above independent market levels. The underwriters are not required to
engage in these activities, and may end any of these activities at any time.
PRICING OF THIS OFFERING
Prior to this offering, there has been no established market for the common
stock. The initial public offering price for the shares of common stock offered
by this prospectus will be determined by negotiation among the representatives
of the underwriters and Wink. The factors to be considered in determining the
initial public offering price include:
- the history of, and the prospects for, the industry in which we compete;
- our past and present operations;
- our historical results of operations;
- our prospects for future earnings;
- the recent market prices of securities of generally comparable companies;
and
- the general conditions of the securities market at the time of this
offering.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Wink by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Latham & Watkins, Costa Mesa, 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, 1997 and 1998 and
for each of the three years in the period ended December 31, 1998 included in
this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
We have 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 Wink Communications and the common stock,
reference is made to the Registration Statement and the exhibits and schedules
filed as a part thereof. The Registration Statement, including exhibits and
schedules thereto, may be inspected
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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. You may call the Commission at 1-800-SEC-0330
for further information on the operations of the public reference facilities.
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.
Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act of 1934, and,
in accordance therewith, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the
Commission's public reference rooms and the Commission's Web site, which is
described above.
72
<PAGE> 75
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> 76
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Wink Communications, Inc. and its Subsidiary
The Delaware reincorporation described in Note 9 to the consolidated
financial statements has not been consummated at June 7, 1999. 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,
1997 and 1998, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998, 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."
PricewaterhouseCoopers LLP
San Jose, California
February 23, 1999
F-2
<PAGE> 77
WINK COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31, MARCH 31, MARCH 31,
------------------- --------- -------------
1997 1998 1999 1999
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 8,530 $ 16,892 $ 14,294
Short-term investments............................ 5,452 4,441 2,995
Accounts receivable -- related parties............ 128 52 --
Accounts receivable -- third parties.............. -- 187 102
Prepaid expenses and other current assets......... 194 301 235
-------- -------- --------
Total current assets...................... 14,304 21,873 17,626
Property and equipment, net......................... 1,103 1,762 1,798
Other assets........................................ 222 285 311
-------- -------- --------
$ 15,629 $ 23,920 $ 19,735
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 286 $ 995 $ 818
Accrued expenses.................................. 663 1,243 635
Deferred revenue -- related parties............... 650 671 688
Deferred revenue -- third parties................. 991 1,119 1,136
Current portion of capital lease obligations...... 347 402 417
-------- -------- --------
Total current liabilities................. 2,937 4,430 3,694
-------- -------- --------
Capital lease obligations, less current portion..... 767 365 255
-------- -------- --------
Commitments and contingencies (Note 6)
Stockholders' equity:
Convertible Preferred Stock, $0.001 par value,
issuable in series; aggregate liquidation
amount $45,512; 8,001 shares authorized; 5,675,
7,806 and 7,806 (unaudited) shares issued and
outstanding; no shares issued and outstanding
pro forma (unaudited).......................... 6 8 8 $ --
Common Stock, $0.001 par value; 30,000 shares
authorized; 9,816, 10,517 and 10,595
(unaudited) shares issued and outstanding;
18,401 shares issued and outstanding pro forma
(unaudited).................................... 10 11 11 19
Additional paid-in capital........................ 30,610 51,890 53,972 53,972
Stockholder notes receivable...................... (984) (1,046) (1,046) (1,046)
Unearned compensation............................. (494) (479) (403) (403)
Accumulated deficit............................... (17,223) (31,259) (36,756) (36,756)
-------- -------- -------- --------
Total stockholders' equity................ 11,925 19,125 15,786 $ 15,786
-------- -------- -------- ========
$ 15,629 $ 23,920 $ 19,735
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 78
WINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------- -------------------
1996 1997 1998 1998 1999
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues:
Licenses -- related parties.................... $ -- $ 384 $ 174 $ 40 $ 71
Licenses -- third parties...................... -- -- 224 2 89
Services -- related parties.................... 155 148 -- -- 179
Services -- third parties...................... 193 87 119 99 --
------- ------- -------- ------- -------
Total revenues......................... 348 619 517 141 339
------- ------- -------- ------- -------
Costs and expenses:
Cost of services -- related parties............ 323 162 -- -- 90
Cost of services -- third parties.............. 235 376 513 70 --
Research and development....................... 2,595 4,313 6,345 1,256 1,931
Sales and marketing............................ 2,263 3,198 4,732 788 1,127
General and administrative..................... 1,064 1,771 2,366 332 847
Stock-based costs and expenses................. 4 455 1,256 530 2,056
------- ------- -------- ------- -------
Total costs and expenses............... 6,484 10,275 15,212 2,976 6,051
------- ------- -------- ------- -------
Loss from operations............................. (6,136) (9,656) (14,695) (2,835) (5,712)
Interest and other income........................ 279 684 813 219 242
Interest expense................................. (27) (194) (154) (40) (27)
------- ------- -------- ------- -------
Net loss......................................... $(5,884) $(9,166) $(14,036) $(2,656) $(5,497)
======= ======= ======== ======= =======
Net loss per share:
Basic and diluted.............................. $ (0.91) $ (1.25) $ (1.57) $ (0.33) $ (0.55)
======= ======= ======== ======= =======
Weighted average shares outstanding............ 6,432 7,337 8,954 8,031 9,906
Pro forma net loss per share (unaudited):
Basic and diluted.............................. $ (0.92) $ (0.31)
======== =======
Weighted average shares outstanding............ 15,198 17,712
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 79
WINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL STOCKHOLDER
--------------- --------------- PAID-IN NOTES UNEARNED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE COMPENSATION
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
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 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..................... 2,131 2 -- -- 16,732 -- --
Exercise of Common Stock
options........................ -- -- 287 -- 207 -- --
Issuance of Common Stock
for cash....................... -- -- 389 1 3,000 -- --
Issuance of Common Stock
for stockholder note........... -- -- 25 -- 100 (100) --
Unearned compensation............ -- -- -- -- 600 -- (600)
Amortization of unearned
compensation................... -- -- -- -- -- -- 615
Collection of stockholder note
receivable..................... -- -- -- -- -- 38 --
Issuance of warrants for
services....................... -- -- -- -- 641 -- --
Net loss......................... -- -- -- -- -- -- --
----- -- ------ --- ------- ------- -----
BALANCE AT DECEMBER 31, 1998..... 7,806 8 10,517 11 51,890 (1,046) (479)
Exercise of Common Stock options
(unaudited).................... -- -- 78 -- 102 -- --
Issuance of warrants for services
(unaudited).................... -- -- -- -- 1,980 -- --
Amortization of unearned
compensation (unaudited)....... -- -- -- -- -- -- 76
Net loss (unaudited)............. -- -- -- -- -- -- --
----- -- ------ --- ------- ------- -----
BALANCE AT MARCH 31, 1999
(UNAUDITED).................... 7,806 $8 10,595 $11 $53,972 $(1,046) $(403)
===== == ====== === ======= ======= =====
<CAPTION>
TOTAL
ACCUMULATED STOCKHOLDERS'
DEFICIT EQUITY
(IN THOUSANDS)
<S> <C> <C>
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 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..................... -- 16,734
Exercise of Common Stock
options........................ -- 207
Issuance of Common Stock
for cash....................... -- 3,001
Issuance of Common Stock
for stockholder note........... -- --
Unearned compensation............ -- --
Amortization of unearned
compensation................... -- 615
Collection of stockholder note
receivable..................... -- 38
Issuance of warrants for
services....................... -- 641
Net loss......................... (14,036) (14,036)
-------- --------
BALANCE AT DECEMBER 31, 1998..... (31,259) 19,125
Exercise of Common Stock options
(unaudited).................... -- 102
Issuance of warrants for services
(unaudited).................... -- 1,980
Amortization of unearned
compensation (unaudited)....... -- 76
Net loss (unaudited)............. (5,497) (5,497)
-------- --------
BALANCE AT MARCH 31, 1999
(UNAUDITED).................... $(36,756) $ 15,786
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 80
WINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- -----------------
1996 1997 1998 1998 1999
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss..................................... $(5,884) $ (9,166) $(14,036) $(2,656) $(5,497)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization........... 360 543 710 157 239
Stock-based costs and expenses.......... 4 455 1,256 530 2,056
Changes in assets and liabilities:
Accounts receivable -- related
parties............................ -- (78) 76 -- 52
Accounts receivable -- third
parties............................ -- -- (187) (171) 85
Prepaid expenses and other current
assets............................. (26) (122) (107) (6) 66
Other assets......................... (90) (124) (63) (14) (26)
Accounts payable..................... -- 208 709 330 (177)
Accrued expenses..................... 174 430 580 (376) (608)
Deferred revenues -- related
parties............................ (80) 80 21 15 17
Deferred revenues -- third parties... 213 778 128 77 17
------- -------- -------- ------- -------
Net cash used in operating activities.......... (5,329) (6,996) (10,913) (2,114) (3,776)
------- -------- -------- ------- -------
Cash flows from investing activities:
Purchase of short-term investments........... -- (20,739) (8,060) -- (2,016)
Proceeds from sale of short-term
investments............................... -- 15,287 9,071 -- 3,462
Property and equipment purchases............. (1,321) (381) (1,369) (396) (275)
------- -------- -------- ------- -------
Net cash provided by (used in) investing
activities................................... (1,321) (5,833) (358) (396) 1,171
------- -------- -------- ------- -------
Cash flows from financing activities:
Proceeds from Preferred Stock issuances,
net....................................... 6,484 17,438 16,734 1,990 --
Proceeds from Common Stock issuances......... 1 65 3,208 37 102
Proceeds from stockholder note receivable.... -- -- 38 -- --
Proceeds from lease financing transaction.... 1,421 -- -- -- --
Principal payments on capital lease
obligations............................... (8) (298) (347) (82) (95)
Repurchase of Common Stock................... -- (3) -- -- --
------- -------- -------- ------- -------
Net cash provided by financing activities...... 7,898 17,202 19,633 1,945 7
------- -------- -------- ------- -------
Net increase (decrease) in cash and cash
equivalents.................................. 1,248 4,373 8,362 (565) (2,598)
Cash and cash equivalents at beginning of
period....................................... 2,909 4,157 8,530 8,530 16,892
------- -------- -------- ------- -------
Cash and cash equivalents at end of period..... $ 4,157 $ 8,530 $ 16,892 $ 7,965 $14,294
======= ======== ======== ======= =======
Supplemental cash flow information:
Cash paid for interest....................... $ 27 $ 194 $ 154 $ 40 $ 27
======= ======== ======== ======= =======
Supplemental noncash activities:
Common Stock issued for stockholder note..... $ 524 $ 430 $ 100 $ 100 $ --
======= ======== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 81
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY
Wink Communications, Inc. (the "Company") was incorporated in California on
October 7, 1994 and offers an enhanced television broadcasting system that adds
interactivity and electronic commerce opportunities to traditional television
programming and advertising. See Note 9 -- Subsequent Events.
For periods prior to January 1, 1997, the Company was considered to be in
the development stage.
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 of such instruments.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, including cash and cash equivalents,
accounts receivable, deposits and accounts payable are carried at cost, which
approximates fair value because of the short-term nature 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. Purchased
internal-use
F-7
<PAGE> 82
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
software consists primarily of amounts paid to third parties for software
applications that support the Wink response network and the Company's computer
equipment. Purchased internal-use software is depreciated over its useful life,
generally three years.
REVENUE RECOGNITION
The Company's historical revenues have been derived from license fees
relating to royalties earned from the Wink Engine software, license fees
relating to Wink Studio 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. License fees from
Wink Studio software are recognized monthly over the term of the subscription
agreement, generally one year. 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 expects that in future periods, revenues will also be derived
from the Wink response network, Wink Server Studio and Wink Broadcast Server.
Revenues from the Wink response network will be generated by charging
transaction fees to advertisers for each information request or purchase order
obtained from viewers or on a fixed fee basis. All advertising agreements in
place as of May 1999 provide for a fixed fee to be paid to the Company without
any per transaction fees. These fees are recognized ratably over the life of the
agreement. Revenues derived from the Wink Server Studio and Wink Broadcast
Server software applications will be recognized monthly based upon the
applicable subscription fee. These applications are 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 events. The Company's business model 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.
F-8
<PAGE> 83
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SALES TO SIGNIFICANT CUSTOMERS
During the years ended December 31, 1996, 1997 and 1998, sales to customers
comprising 10 percent or more of the Company's total revenues for the periods
indicated were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
CUSTOMER 1996 1997 1998
<S> <C> <C> <C>
A -- related party................................... 10% 0% 0%
B -- related party................................... 34% 21% 0%
C -- related party................................... 0% 62% 43%
D -- third party..................................... 32% 14% 0%
E -- third party..................................... 24% 0% 40%
F -- third party..................................... 0% 0% 15%
</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 are not
collateralized. The Company limits its exposure to credit loss by placing its
cash and cash equivalents with financial institutions that management believes
are credit worthy and by placing its short-term investments in corporate
commercial paper issues of various entities. Concentrations of credit risk with
respect to trade accounts receivable are considered to be limited due to the
assessed 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. At December 31,
1997, one related party customer accounted for the entire accounts receivable
balance. At December 31, 1998, five customers individually accounted for more
than 10% of the entire accounts receivable balance. These five customers, in
aggregate, accounted for 76% of the total accounts receivable balance at
December 31, 1998. One of these five customers was a related party and accounted
for 22% of the total accounts receivable balance at December 31, 1998.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred in accordance with
Statement of Financial Accounting Standards No. 2 ("SFAS No. 2"), "Accounting
for Research and Development Costs."
SOFTWARE DEVELOPMENT COSTS
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.
F-9
<PAGE> 84
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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, 1996, 1997 and 1998 totaled $210,000, $147,000
and $904,000, respectively. Advertising costs for the three months ended March
31, 1998 and 1999 totaled $43,000 (unaudited) and $111,000 (unaudited),
respectively.
FOREIGN CURRENCY TRANSLATION
The functional currency of the consolidated foreign subsidiary in Japan is
its local currency. Accordingly, all assets and liabilities of this entity are
translated at the current exchange rates at each balance sheet date. To date,
the subsidiary in Japan has not recognized revenues or expenses. In the event
that the subsidiary has revenue and expense components in future periods, such
amounts will be translated at weighted average exchange rates in effect during
the year. Gains and losses resulting from foreign currency translation have not
been material to the consolidated financial statements through December 31, 1998
and through March 31, 1999 (unaudited). To the extent these gains or losses are
recognized in future periods, such amounts will be recorded directly into a
separate component of stockholders' equity and comprehensive income. Foreign
currency transaction gains and losses are included in the determination of net
income or loss. During the years ended December 31, 1996, 1997 and 1998 and
during the three months ended March 31, 1998 (unaudited) and 1999 (unaudited),
net foreign currency transaction gains and losses did not have a material impact
on the consolidated financial statements.
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 No. 123
("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 consensus reached by the Emerging Issues Task Force in Issue No.
96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in conjunction with Selling, Goods or 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 earlier of the date on which there first
exists a firm commitment for performance by the provider of goods or services or
on the date performance is complete using the Black-Scholes pricing model.
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
F-10
<PAGE> 85
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
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 potential common shares outstanding.
Potential common shares consist of the incremental number of common shares
issuable upon conversion of Convertible Preferred Stock (using the if-converted
method) and common shares issuable upon the exercise of stock options and
warrants (using the treasury stock method). Potential common 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 the
Securities and Exchange Commission Staff Accounting Bulletin ("SAB") No. 98.
Weighted average potential common shares, which are excluded from the
determination of basic and diluted net loss per share as their effect is
anti-dilutive, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------ ------------------
1998 1999
(UNAUDITED)
<S> <C> <C>
Convertible Preferred Stock........................... 6,243,808 7,806,000
Common Stock options.................................. 2,536,986 2,970,417
Convertible Preferred Stock warrants.................. 17,500 17,500
Common Stock warrants................................. 1,588,200 2,000,700
Common Stock subject to repurchase.................... 1,118,236 649,742
------------ -----------
11,504,730 13,444,359
============ ===========
</TABLE>
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 and 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 an initial public offering
as if such conversion occurred on January 1, 1998, 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 potential common shares
outstanding. Pro forma potential common shares consist of Common Stock subject
to repurchase and stock options and warrants (using the treasury stock method).
Pro forma potential common shares have been excluded from the computation as
their effect is antidilutive.
PRO FORMA STOCKHOLDERS' EQUITY (UNAUDITED)
Effective upon the closing of an initial public offering, the outstanding
shares of Series A, Series B and Series C Convertible Preferred Stock will
automatically convert into 1,250,000, 2,233,700 and 4,322,250 shares,
respectively, of Common Stock. In addition, warrants to purchase 17,500 shares
of Series B Convertible Preferred Stock will convert into warrants to purchase
17,500 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, 1999.
F-11
<PAGE> 86
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED INTERIM RESULTS
The accompanying interim consolidated financial statements at March 31,
1999, and for the three months ended March 31, 1998 and 1999, are unaudited. The
unaudited interim consolidated financial statements have been prepared on the
same basis as the annual consolidated financial statements and, in the opinion
of management, reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the Company's financial position,
results of operations and cash flows as of March 31, 1999 and for the three
months ended March 31, 1998 and 1999. 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, 1999 are
not necessarily indicative of the results to be expected for the year ended
December 31, 1999.
SEGMENT INFORMATION
Effective January 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 establishes standards
for the way companies report information about operating segments in financial
statements. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. In accordance with the
provisions of SFAS No. 131, the Company has determined that it operates in only
one operating segment.
COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting comprehensive income
and its components in financial statements. Comprehensive income, as defined,
includes all changes in equity (net assets) during a period from nonowner
sources. To date, the Company's comprehensive net loss has not varied materially
from the reported net loss.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. As issued, SFAS 133 is effective for
all fiscal quarters of all fiscal years beginning after June 15, 1999, with
earlier application encouraged. In May 1999, the FASB delayed the effective date
of SFAS 133 for one year, to fiscal quarters of all fiscal years beginning after
June 15, 2000. The Company does not currently nor does it intend in the future
to use derivative instruments and therefore does not expect that the adoption of
SFAS 133 will have any impact on its financial position or results of
operations.
In December 1998, the AICPA issued Statement of Position No. 98-9,
"Modification of SoP No. 97-2, Software Revenue Recognition, With Respect to
Certain Transactions" ("SoP 98-9"), which is effective for transactions entered
into in fiscal years beginning after March 15, 1999. SoP 98-9 amends SoP 97-2
and extends the effective date of SoP No. 98-4 "Deferral of the Effective Date
of a Provision of SoP 97-2, Software Revenue Recognition" ("SoP 98-4"), and
provides additional interpretive guidance. The adoption of SoP 97-2 has not had
and the adoption of SoP 98-4
F-12
<PAGE> 87
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
and SoP 98-9 are not expected to have a material impact on the Company's results
of operations, financial position or cash flows.
NOTE 3 -- RELATED PARTY TRANSACTIONS
The Company has entered into various agreements with certain holders of the
Company's Preferred and Common Stock. These agreements consist primarily of
royalties derived from the sale of Wink enabled products and non-recurring
engineering services. Revenues and related costs of revenues together with
deferred revenues and accounts receivable from these related parties are
separately disclosed in the statement of operations and balance sheet.
NOTE 4 -- BALANCE SHEET COMPONENTS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------- -----------
1997 1998 1999
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Property and equipment, net:
Computer equipment.................................. $1,050 $ 1,521 $ 1,775
Office furniture and equipment...................... 526 575 577
Leasehold improvements.............................. 357 358 358
Purchased internal-use software..................... 161 1,009 1,028
------ ------- -------
2,094 3,463 3,738
Less accumulated depreciation and amortization...... (991) (1,701) (1,940)
------ ------- -------
$1,103 $ 1,762 $ 1,798
====== ======= =======
</TABLE>
Assets acquired under capital lease obligations are included in property
and equipment and totaled $1,421, $1,421 and $1,421 (unaudited), with related
accumulated depreciation of $674, $1,046 and $1,139 (unaudited) at December 31,
1997 and 1998 and March 31, 1999, respectively.
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------- -----------
1997 1998 1999
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Accrued expenses:
Compensation and benefits.......................... $455 $1,083 $553
Deferred rent...................................... 117 72 57
Other.............................................. 91 88 25
---- ------ ----
$663 $1,243 $635
==== ====== ====
</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, 1996, 1997 and 1998 and for the three
months ended March 31, 1998 (unaudited) and 1999 (unaudited), as the Company has
incurred net operating losses and has no carryback potential.
At December 31, 1998, the Company had federal and state net operating loss
carryforwards of approximately $27,000,000 available to reduce future taxable
income. At March 31, 1999, the
F-13
<PAGE> 88
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Company had federal and state net operating loss carryforwards of approximately
$30,500,000 (unaudited) 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 $6,700,000 per year. Net deferred tax
assets are composed of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------- -----------
1997 1998 1999
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Net operating loss carryforwards................. $ 5,750 $ 10,700 $12,000
Deferred revenues................................ 600 700 700
Other............................................ 150 100 100
------- -------- -------
Gross deferred tax assets........................ 6,500 11,500 12,800
Deferred tax asset valuation allowance........... (6,500) (11,500) (12,800)
------- -------- -------
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 $5,000,000 from December 31, 1997
to December 31, 1998. The valuation allowance increased by $1,300,000
(unaudited) from December 31, 1998 to March 31, 1999.
NOTE 6 -- COMMITMENTS AND CONTINGENCIES
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, 1998:
<TABLE>
<CAPTION>
YEAR ENDING OPERATING CAPITAL
DECEMBER 31, LEASES LEASES
(IN THOUSANDS)
<S> <C> <C>
1999...................................................... $743 $ 490
2000...................................................... 62 387
---- -----
$805 877
====
Less amount representing interest........................... (110)
-----
Present value of capital lease obligations.................. 767
Less current portion........................................ (402)
-----
Long-term portion........................................... $ 365
=====
</TABLE>
F-14
<PAGE> 89
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Rent expense on noncancelable operating leases for the years ended December
31, 1996, 1997 and 1998, totaled $573,000, $694,000 and $714,000, respectively.
Rent expense on noncancelable operating leases for the three months ended March
31, 1998 and 1999, totaled $175,000 (unaudited) and $177,000 (unaudited).
REVENUE SHARING AND OTHER COMMITMENTS
The Company has entered into a number of agreements with cable operators,
direct broadcast satellite operators ("DBS 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. For
certain cable and DBS operators, the Company has provided a minimum revenue
guarantee if the operator makes a minimum volume commitment for Wink Engines
deployed. If these minimum volume requirements are met, and Wink Enhanced
Broadcasting fails to generate sufficient revenue to meet the guaranteed amount
per Wink subscriber, the Company is obligated to pay the difference between the
guaranteed amount and the amount earned by the operator. The Company's agreement
with a major DBS operator calls for the Company to guarantee revenue per enabled
subscriber household of $2.50 per year for three years, if that operator enables
at least 1,000,000 homes during a specific time period. In addition, the
potential future liability to cover the minimum revenue guarantees in other
agreements with certain cable operators is estimated to be approximately
$760,000 at December 31, 1998 and March 31, 1999 (unaudited). Such costs, if and
when incurred, shall be recorded as cost of revenues.
The Company has also agreed to provide marketing and technical development
funds to certain cable and digital broadcast satellite operators, contingent
upon the commercial launch of Wink enhanced broadcasting. The Company has agreed
to provide development funds at the rate of $1.00 per subscriber with a
guaranteed minimum of $1,000,000 to a major digital broadcast satellite
provider. Additional marketing development funds committed to in contractual
agreements with cable operators total approximately $495,000 at December 31,
1998 and March 31, 1999 (unaudited). These costs, if and when incurred, shall be
recorded as sales and marketing expense.
See Note 9 -- Subsequent Events.
LEGAL PROCEEDING
A patent claim arising in the ordinary course of business, seeking monetary
damages and other relief is pending. The amount of liability, if any, from such
claim can not be determined with certainty; however, in the opinion of
management, the ultimate liability for such claim will not have a material
adverse effect on the Company's financial position, results of operations or
cash flows.
F-15
<PAGE> 90
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
Convertible Preferred Stock consists of the following:
<TABLE>
<CAPTION>
SHARES ISSUED
AND OUTSTANDING DECEMBER 31, 1998 MARCH 31, 1999
--------------------------- ---------------------- ----------------------
SHARES DECEMBER 31, MARCH 31, GROSS LIQUIDATION GROSS LIQUIDATION
AUTHORIZED 1997 1998 1999 PROCEEDS AMOUNT PROCEEDS AMOUNT
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series A.................... 1,250 1,250 1,250 1,250 $ 2,000 $ 2,000 $ 2,000 $ 2,000
Series B.................... 2,251 2,234 2,234 2,234 8,936 8,936 8,936 8,936
Series C.................... 4,500 2,191 4,322 4,322 34,576 34,576 34,576 34,576
----- ----- ----- ----- ------- ------- ------- -------
8,001 5,675 7,806 7,806 $45,512 $45,512 $45,512 $45,512
===== ===== ===== ===== ======= ======= ======= =======
</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
$10,000,000, exclusive of underwriting commissions and offering expenses.
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.
F-16
<PAGE> 91
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
COMMON STOCK
REPURCHASE RIGHTS
The Company has the right to repurchase the unvested portion of 3,072,916
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. At December 31, 1998, 830,954 shares were subject to repurchase
rights of the Company. At March 31, 1999, 590,822 shares (unaudited) were
subject to repurchase rights of the Company.
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 a fully exercisable warrant to purchase
Common Stock to two companies affiliated with a director of the Company in
connection with the issuance of Series B Preferred Stock. The warrant enables
the holders to purchase 441,257 and 58,743 shares of Common Stock, respectively,
at $6.00 per share and expires in July 2001. The warrant had an immaterial fair
value on the date of grant.
In September 1996, the Company granted a fully exercisable warrant to
purchase Series B Preferred Stock to a company providing property and equipment
lease financing. The warrant enables the holder to purchase 17,500 shares of
Series B Preferred Stock at $4.00 per share and expires in September 2002. The
warrant and related services had an immaterial fair value on the date of grant.
In April 1997, the Company granted a fully exercisable warrant to purchase
Common Stock to certain holders of Series C Preferred Stock providing business
development services. The warrant enables the holders to purchase 75,000 shares
of Common Stock at $0.80 per share and expires in April 2007. The warrant and
related services had an immaterial fair value on the date of grant.
In June 1997, the Company granted a fully exercisable warrant to purchase
Common Stock in connection with the issuance of Series C Preferred Stock. The
warrant enables the holders to purchase 525,000 shares of Common Stock at $8.00
per share and expires in June 2009. The estimated fair value of the warrant
totaled $142,000 and is included in additional paid-in capital.
In June 1997, the Company granted a warrant to purchase Common Stock to a
broadcasting company that agreed to use its reasonable best efforts to develop
and air Wink-enhanced programming over an approximate 18 month period. The
broadcasting company is affiliated with a holder of the Company's Series C
Preferred Stock. The warrant enables the holder to purchase 375,000 shares of
Common Stock at $8.00 per share and expires in June 2009. On the date of grant,
the warrant was exercisable with respect to 75,000 shares (the "fixed shares")
and was exercisable with respect to the remaining 300,000 shares (the "variable
shares") contingent upon the completion of specified future performance
obligations of the broadcasting company. The grant date fair value of the
warrant relating to the fixed shares totaled $20,000, which was charged to
stock-based costs and expenses. The fair value of the warrant relating to the
variable shares on December 31, 1997, totaled $726,000. Of this amount, $220,000
was recognized as stock-based costs and expenses during the year
F-17
<PAGE> 92
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ended December 31, 1997. On February 1, 1998, the Company amended the terms of
the warrant to eliminate any future performance obligation of the broadcasting
company. The fair value of the warrant relating to the variable shares on the
date the performance obligation was eliminated had not changed from the
estimated fair value on December 31, 1997. Accordingly, the unamortized value of
the warrant totaling $506,000 was recognized as stock-based costs and expenses
during the year ended December 31, 1998 over the period in which the Company
received benefits from the broadcaster's services.
In November 1997, the Company granted a fully exercisable warrant to
purchase Common Stock to a company providing business development services. The
warrant enables the holder to purchase 38,200 shares of Common Stock at $4.00
per share and expires in November 2009. The warrant and related services had an
immaterial fair value on the date of grant.
In January 1998, the Company granted a fully exercisable warrant to
purchase Common Stock in connection with the issuance of Series C Preferred
Stock. The warrant enables the holder to purchase 50,000 shares of Common Stock
at $0.80 per share and expires in January 2008. The estimated fair value of the
warrant totaled $226,000 and is included in additional paid-in capital.
In August 1998, the Company granted a fully exercisable warrant to purchase
Common Stock to a holder of Series C Preferred Stock providing consulting
services. The warrant enables the holder to purchase 25,000 shares of Common
Stock at $8.00 per share and expires in August 2003. The estimated fair value of
the warrant totaled $135,000 and is included in stock-based costs and expenses.
In December 1998, the Company granted a warrant to purchase Common Stock to
a cable operator company that is a holder of Series C Preferred Stock as
consideration for the future deployment of Wink-enabled technology to at least
200,000 households. The warrant enables the holder to purchase 250,000 shares of
Common Stock at either $12.00 or $16.00 per share, contingent upon achieving the
deployment criteria and the timing of such achievement. In the event the $12.00
exercise price is earned, the warrant will expire in January 2004. In the event
the $16.00 exercise price is earned, the warrant will expire in January 2005. At
December 31, 1998, the lowest aggregate fair value of the warrant totaled
$1,218,000. At March 31, 1999, the lowest aggregate fair value of the warrant
totaled $1,553,000 (unaudited). This amount will be remeasured at each reporting
date until the deployment of Wink-enabled technology to the specified number of
cable subscribers is achieved. When and if it becomes probable that the
performance criteria will be achieved, the Company will record the then fair
value associated with the units meeting the performance criteria as a charge to
stock-based costs and expenses.
OTHER
Through December 31, 1998, no dividends on either the Preferred or Common
Stock have been declared by the Board of Directors.
See Note 9 -- Subsequent Events.
NOTE 8 -- EMPLOYEE BENEFIT PLANS
STOCK OPTION PLAN
The 1994 Stock Plan (the "Plan") provides for the issuance of up to
4,500,000 shares of Common Stock in connection with incentive and non-statutory
stock option awards granted to
F-18
<PAGE> 93
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 a period up to
five years. The Company has certain repurchase rights and rights of first
refusal on shares purchased under the Plan.
During the year ended December 31, 1997 and 1998 and the three months ended
March 31, 1998 and 1999, the Company recognized unearned compensation totaling
$700,000, $600,000, $600,000 (unaudited) and $0 (unaudited), respectively, with
respect to certain stock option grants and sales of restricted stock to
employees. These expenses are being amortized over the respective four-year
vesting periods. Amortization of unearned compensation totaled $215,000,
$615,000, $117,000 (unaudited) and $76,000 (unaudited) for the year ended
December 31, 1997 and 1998 and for the three months ended March 31, 1998 and
1999, respectively, and has been recognized as stock-based costs and expenses.
See Note 9 -- Subsequent Events.
Had compensation cost for the Company's stock-based compensation plan been
determined based on the fair value at the grant dates for the awards under the
minimum value method prescribed by SFAS No. 123, the Company's net loss would
have been as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------- ------------------
1996 1997 1998 1998 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net loss:
As reported......................... $(5,884) $(9,166) $(14,036) $(2,656) $(5,497)
Pro forma........................... $(5,905) $(9,235) $(14,342) $(2,698) $(5,824)
Basic and diluted net loss per share:
As reported......................... $ (0.91) $ (1.25) $ (1.57) $ (0.33) $ (0.55)
Pro forma........................... $ (0.92) $ (1.26) $ (1.60) $ (0.34) $ (0.59)
</TABLE>
Under SFAS No. 123, the minimum value of each option grant is estimated on
the grant date using the minimum value method with the following weighted
average assumptions used for grants made:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ --------------
1996 1997 1998 1998 1999
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Expected lives, in years........................ 5 5 5 5 5
Risk free interest rates........................ 6.30% 6.30% 5.00% 6.70% 5.26%
Dividend yield.................................. 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
F-19
<PAGE> 94
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes information about stock option transactions
under the Plan:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------- -----------------
1996 1997 1998 1999
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year............................ 793 $0.05 1,759 $0.23 2,122 $1.06 2,813 $2.90
Granted........................... 980 0.37 1,099 1.82 1,092 5.66 584 8.00
Exercised......................... (14) 0.05 (537) 0.13 (287) 0.62 (78) 1.28
Canceled.......................... -- -- (199) 0.44 (114) 2.59 (192) 3.61
----- ----- ----- -----
Outstanding at end of year........ 1,759 0.23 2,122 1.06 2,813 2.90 3,127 3.86
----- ----- ----- -----
Options vested at year end........ 431 289 971 1,117
----- ----- ----- -----
Weighted-average fair value of
options granted during the
year............................ 0.15 0.67 1.23 1.48
</TABLE>
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, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS VESTED
------------------------------------ -----------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE VESTED PRICE
(IN THOUSANDS, EXCEPT YEARS AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
$ 0.01 - $0.25 372 6.8 year $ 0.12 236 $ 0.12
0.40 - $0.80 565 7.9 0.50 287 0.47
1.00 - $2.00 627 8.4 1.46 220 1.44
4.00 - $6.00 1,006 9.4 4.92 199 4.01
8.00 218 9.6 8.00 21 8.00
12.00 25 9.8 12.00 8 12.00
----- ---
2,813 8.55 2.90 971 1.59
===== ===
</TABLE>
F-20
<PAGE> 95
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes information about stock options outstanding
at March 31, 1999 (unaudited):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS VESTED
------------------------------------ ----------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE VESTED PRICE
<S> <C> <C> <C> <C> <C>
$ 0.01 - $0.25 305 6.6 year $0.12 220 $ 0.12
0.40 - $0.80 553 7.7 0.50 313 0.47
1.00 - $2.00 535 8.2 1.43 296 1.30
4.00 - $6.00 953 9.2 4.88 248 4.27
8.00 756 9.4 8.00 25 8.00
12.00 25 9.6 12.00 15 12.00
----- -----
3,127 8.3 3.86 1,117 1.78
===== =====
</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, 1998.
NOTE 9 -- SUBSEQUENT EVENTS (UNAUDITED)
DELAWARE REINCORPORATION
In February 1999, the Company's Board of Directors authorized the
reincorporation of the Company in the State of Delaware to be effective prior to
the Company's initial public offering. As a result of the reincorporation, the
Company will be authorized to issue 100,000,000 shares of $0.001 par value
Common Stock and 5,000,000 shares of $0.001 par value Preferred Stock. The Board
of Directors has the authority to issue the undesignated Preferred Stock in one
or more series and to fix the rights, preferences, privileges and restrictions
thereof.
WARRANTS
In February 1999, the Company granted a fully exercisable warrant to
purchase Common Stock to a company affiliated with a broadcasting company as an
incentive for signing a definitive software licensing agreement with the
broadcasting company. The warrant enables the holder to purchase 200,000 shares
of Common Stock at $12.00 per share, subject to adjustment, and expires in
February 2004. The exercise price is subject to adjustment in the event that the
Company completes a qualified equity financing with a per share issuance price
of less than $12.00 per share prior to an initial public offering by the
Company. The maximum exercise price is $12.00 per share. The fair value of the
warrant on the measurement date totaled $1,220,000 (unaudited) and was
recognized as stock-based costs and expenses as there was no remaining
performance obligation on behalf of the warrant holder and no significant
license revenues are expected to be derived from the agreements.
F-21
<PAGE> 96
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In March 1999, the Company granted a fully exercisable warrant to purchase
Common Stock to a separate broadcasting company as an incentive for signing a
definitive software licensing agreement. The warrant enables the holder to
purchase 125,000 shares of Common Stock at $12.00 per share, subject to
adjustment, and expires in March 2004. The exercise price is subject to
adjustment in the event that the Company completes a qualified equity financing
with a per share issuance price of less than $12.00 per share prior to an
initial public offering by the Company. The maximum exercise price is $12.00 per
share. The fair value of the warrant on the measurement date totaled $760,000
(unaudited) and was recognized as stock-based costs and expenses as there was no
remaining performance obligation on behalf of the warrant holder and no
significant license revenues are expected to be derived from the agreement.
In May 1999, the Company granted a fully exercisable warrant to purchase
Common Stock to Microsoft Corporation in connection with a 10 year definitive
software distribution agreement. The warrant enables the holder to purchase
500,000 shares of Common Stock at $12.00 per share, subject to adjustment, and
expires in May 2004. The exercise price is subject to adjustment in the event
that the Company completes a qualified equity financing with a per share
issuance price of less than $12.00 per share prior to an initial public offering
by the Company. The maximum exercise price is $12.00 per share. The fair value
of the warrant on the measurement date totaled $4,050,000 (unaudited) and will
be recognized as stock-based costs and expenses ratably over the expected useful
life of the underlying software.
1999 STOCK PLAN
In June 1999, the 1999 Stock Plan (the "1999 Plan") was adopted by the
Board of Directors and will be submitted to the stockholders for their approval
prior to the date of the Company's initial public offering, to become effective
on the date of the initial public offering. The 1999 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 grants to
employees, directors and consultants of nonstatutory stock options and stock
purchase rights. Unless terminated sooner, the 1999 Plan will terminate
automatically in 2009. A total of 2,500,000 shares of Common Stock have been
reserved for issuance pursuant to the 1999 Plan. The amount reserved under the
Plan will automatically increase at the end of each year by the lesser of (1)
1,000,000 shares, (2) 4% of outstanding shares on such date or (3) a lesser
amount determined by the Board of Directors.
1999 EMPLOYEE STOCK PURCHASE PLAN
In June 1999, the 1999 Employee Stock Purchase Plan (the "Purchase Plan")
was adopted by the Board of Directors and will be submitted to the stockholders
for their approval prior to the date of the Company's initial public offering,
to become effective on the date of the initial public offering. 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 in any calendar year. A total of
250,000 shares of Common Stock have been reserved for issuance pursuant to the
Purchase Plan. The amount reserved under the Plan will automatically increase at
the end of each year by the lessor of (1) 75,000 shares, (2) 0.3% of outstanding
shares on such date or (3) a lesser amount determined by the Board of Directors.
1999 DIRECTOR OPTION PLAN
In June 1999, the 1999 Director Option Plan (the "Director Plan") was
adopted by the Board of Directors and will be submitted to the stockholders for
their approval prior to the date of the Company's initial public offering, to
become effective on the date of the initial public offering. The
F-22
<PAGE> 97
WINK COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Director Plan provides for the automatic grant of a nonstatutory option to
purchase 40,000 shares of Common Stock to each new non-employee director who
becomes a director after the date of the Company's initial public offering on
the date that 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 on the fourth anniversary of the date of grant
of his or her last option if he or she served on the Board of Directors
continuously during such period. A total of 250,000 shares of Common Stock have
been reserved for issuance pursuant to the Director Plan.
CONTRACT TERMINATION AGREEMENT
In May 1999, the Company and a third party executed an agreement that
terminated a development and license agreement dated April 1998. Under this
termination agreement, the third party has agreed to pay the Company $1,100,000,
which was included in other income in May 1999. The Company has no material
remaining obligations under these agreements.
COMMON STOCK
In May 1999, the Company entered into an employment agreement with a member
of the management team. In connection with this employment agreement, the
Company sold 250,000 shares of Common Stock at a price of $8.00 per share in
exchange for a full-recourse, ten-year $2,000,000 promissory note. The note
bears interest at a rate of 6.40% per annum. The Company has the right to
repurchase the shares at original issuance cost of $8.00 per share. These
repurchase rights lapse progressively over a four-year period. In connection
with the sale of these shares, the Company recognized unearned compensation
totaling $700,000 (unaudited), which will be amortized over the four-year
vesting period.
DISTRIBUTION AGREEMENT
In May 1999, the Company entered into a 10 year definitive software
distribution agreement with Microsoft Corporation (the "distributor") that
entitles the distributor to share a portion of revenues, if any, the Company
generates from viewer responses to Wink Enhanced Broadcasting. The Company has
also provided a minimum revenue guarantee ranging from $2 to $4 per year, per
Wink-enabled device. If Wink Enhanced Broadcasting fails to generate sufficient
revenue to meet the guaranteed amount per Wink subscriber, the Company is
obligated to pay the difference between the guaranteed amount and the amount
earned by the distributor. Such costs, if and when incurred, shall be recorded
as cost of revenues.
SERIES D CONVERTIBLE PREFERRED STOCK FINANCING
Through June 3, 1999, the Company signed agreements with two investors for
the sale of an aggregate of 2,875,000 shares of Series D Convertible Preferred
Stock at $12.00 per share for gross proceeds totaling $34,500,000, subject to
closing conditions.
STOCK OPTIONS
Subsequent to March 31, 1999 and through April 30, 1999, options to
purchase 1,000 shares of Common Stock were exercised at a weighted average
exercise price of $0.40 per share and the Company granted additional options to
purchase an aggregate of 51,000 shares of Common Stock under the 1994 Stock Plan
at a weighted average exercise price of $8.00 per share. In connection with the
grant of these options, the Company recognized unearned compensation totaling
$143,000 (unaudited) during the three months ended June 30, 1999, which will be
amortized over the four year vesting period.
F-23
<PAGE> 98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1999
[INSERT WINK LOGO]
SHARES OF COMMON STOCK
------------------------------
P R O S P E C T U S
------------------------------
DONALDSON, LUFKIN & JENRETTE
DEUTSCHE BANC ALEX. BROWN
BEAR, STEARNS & CO. INC.
- --------------------------------------------------------------------------------
Until , 1999 (25 days after the date of this prospectus), all
dealers that affect transactions in these securities may be required to deliver
a prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter in this offering and when selling
previously unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
<PAGE> 99
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........................................ $
NASD filing fee.............................................
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 Registrant's Amended Restated
Certificate of Incorporation (Exhibit 3.3 hereto) and Article VI of the
Registrant's Bylaws (Exhibit 3.5 hereto) provide for indemnification of the
Registrant's directors, officers, employees and other agents to the maximum
extent permitted by the DGCL. The Registrant maintains insurance covering its
directors and officers against certain liabilities incurred by them in their
capacities as such. The Registrant 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 Registrant and the Underwriters with respect to
certain matters, including matters arising under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since January 1, 1996, the Registrant has sold and issued the following
unregistered securities (all numbers reflect a ten-for-one stock split effective
July 24, 1995):
- Between January 1, 1996 and May 31, 1999, the Registrant sold and issued
1,330,447 shares of common stock to a total of 63 employees, five
non-employee directors and 10 consultants at purchase prices ranging from
$0.01 to $8.00 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.
II-1
<PAGE> 100
- 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.
- 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 three institutional
investors, three corporate investors and 20 individuals affiliated with
us or our employees or 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 December 2, 1998, the Registrant sold and
issued an aggregate of 4,322,250 shares of Series C preferred stock at a
purchase price of $8.00 per share to a total of nine institutional
investors, three corporate investors and 25 individuals affiliated with
us or our employees or 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.
II-2
<PAGE> 101
- 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. The consideration for the issuance of such
warrant was $20,000 in cash. 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.
- 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.
- On August 27, 1998, the Registrant issued a warrant to purchase 25,000
shares of common stock with an exercise price of $8.00 per share to
General Electric Capital Corporation. Such issuance was made in reliance
upon an exemption from registration provided by Section 4(2) of the
Securities Act.
- On December 2, 1998, the Registrant issued warrants to purchase up to an
aggregate of 250,000 shares of common stock with exercise prices ranging
from $12.00 to $14.00 per share to Vulcan Ventures Incorporated. Such
issuances were made in reliance upon an exemption from registration
provided by Section 4(2) of the Securities Act.
- On February 25, 1999, the Registrant issued a warrant to purchase up to
200,000 shares of common stock with an exercise price of $12.00 per share
to The Walt Disney Company. Such issuance was made in reliance upon an
exemption from registration provided by Section 4(2) of the Securities
Act.
- On March 23, 1999, the Registrant issued a warrant to purchase 125,000
shares of common stock with an exercise price of $12.00 per share to CBS
Corporation. Such issuance was made in reliance upon an exemption from
registration provided by Section 4(2) of the Securities Act.
- On May 17, 1999, the Registrant issued 250,000 shares of common stock at
a purchase price of $8.00 per share to an officer of the Registrant. Such
sale was made in reliance upon an exemption from registration provided by
Section 4(2) of the Securities Act.
- On May 26, 1999, the Registrant issued a warrant to purchase 500,000
shares of common stock with an exercise price of $12.00 per share to
Microsoft Corporation. Such issuance was made in reliance upon an
exemption from registration provided by Section 4(2) of 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
Registrant's California predecessor.
3.2 Certificate of Incorporation of the Registrant.
3.3* Amended and Restated Certificate of Incorporation of the
Registrant.
3.4 Form of Second Amended and Restated Certificate of
Incorporation of the Registrant to be filed following the
closing of the offering.
</TABLE>
II-3
<PAGE> 102
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
<C> <S>
3.5 Bylaws of the Registrant.
4.1* Specimen Common Stock Certificate.
4.2* Fourth Investor Rights Agreement dated as of June , 1999
between the Registrant 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 Registrant and
each of its officers and directors.
10.2 1994 Stock Plan and form of agreement thereunder.
10.3* 1999 Stock Plan and form of agreement thereunder.
10.4* 1999 Director Stock Option Plan and form of agreement
thereunder.
10.5* 1999 Employee Stock Purchase Plan and form of agreement
thereunder.
+10.6 Charter Programmer Affiliation Agreement dated February 23,
1999 between the Registrant and ABC, Inc.
+10.7 Charter Programmer Affiliation Agreement dated March 23,
1999 between the Registrant and CBS Corporation.
10.8 Equity Side Letter dated March 23, 1999 between the
Registrant and CBS Corporation and warrant issued to CBS
Corporation dated March 23, 1999.
+10.9 Letter Agreement dated June 3, 1997 between the Registrant
and NBC Multimedia, Inc. dba NBC Interactive Media.
+10.10 Cable Affiliation Agreement dated October 8, 1997 between
the Registrant and Charter Communications, Inc., as amended
on March 16, 1998 and March 12, 1999.
+10.11 Cable Affiliation Agreement dated December 10, 1998 between
the Registrant and Comcast Programming.
10.12 Cable Affiliation Agreement dated January 15, 1999 between
the Registrant and Coxcom, Inc. d/b/a Cox Communications
Palos Verdes.
+10.13 Master Affiliation Agreement dated December 22, 1998 between
the Registrant and DirecTV, Inc., as amended on December 22,
1998.
+10.14 Master Cable Affiliation Agreement dated September 23, 1998
between the Registrant and Time Warner Cable.
+10.15 Development and License Agreement dated June 8, 1995 between
the Registrant and General Instrument Corporation of
Delaware, as amended on January 24, 1997 and August 18,
1997.
+10.16 Development and License Agreement dated January 15, 1996
between the Registrant and Scientific-Atlanta, Inc., as
amended on January 27, 1998.
+10.17 Application Server License Agreement dated September 30,
1997 between the Registrant and Toshiba Corporation, as
amended on September 30, 1997 and December 31, 1998.
+10.18 Engine License Agreement dated September 30, 1997 between
the Registrant and Toshiba Corporation, as amended on
September 30, 1997 and December 31, 1998.
+10.19 Engine License Agreement dated October 6, 1997 between the
Registrant and Toshiba America Consumer Products, Inc.
10.20 ATVEF Adapter License Agreement dated November 9, 1998
between the Registrant and INTEL Corporation.
10.21 Development and License Agreement dated May 17, 1999 between
the Registrant and Thomson Consumer Electronics, Inc.
10.22 Personnel Services Agreement dated November 10, 1997 between
GE Information Services, Inc. and the Registrant.
</TABLE>
II-4
<PAGE> 103
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
<C> <S>
10.23 Letter Agreement dated September 10, 1998 between Registrant
and General Electric Capital Corporation.
10.24 Agreement dated January 1, 1999 between Registrant and
Satellite Services, Inc.
10.25 Master Service Agreement dated June 8, 1998 between the
Registrant and Softbank Services Group.
+10.26 System Addendum dated November 25, 1998 between the
Registrant and Time Warner Cable of New York City.
10.27 Agreement of Development of Demonstration Software dated
January 25, 1999 between the Registrant and Toshiba
Corporation.
10.28 Equity Side Letter dated February 23, 1999 between the
Registrant and The Walt Disney Company.
+10.29* Agreement dated May 25, 1999 between the Registrant and
Microsoft Corporation.
10.30 Sublease by and between Computer Associates International,
Inc. and the Registrant dated November 28, 1995, as amended
on March 21, 1996.
10.31 Loan Agreement dated as of September 18, 1996 between the
Registrant and Venture Lending & Leasing, Inc.
10.32 Warrant issued to GE Capital Corporation dated June 18,
1997.
10.33 Amended and Restated Warrant issued to NBC Multimedia, Inc.
dated June 18, 1997.
10.34 Warrant issued to Venture Lending and Leasing, Inc. dated
September 18, 1996.
10.35 Warrant issued to GE Capital Corporation dated August 27,
1998.
10.36* Warrants issued to Vulcan Ventures Incorporated dated
December 2, 1998.
10.37 Warrant issued to The Walt Disney Company dated February 25,
1999.
10.38 Restricted Stock Purchase Agreement dated December 2, 1996
between the Registrant and Mary Agnes Wilderotter.
10.39 Restricted Stock Purchase Agreement dated January 15, 1998
between the Registrant and Mary Agnes Wilderotter.
10.40* Restricted Stock Purchase Agreement dated May 17, 1999
between the Registrant and Howard Schrott.
10.41 Employment Letter from the Registrant to Mary Agnes
Wilderotter dated October 21, 1996.
10.42 Employment Letter from the Registrant to Howard L. Schrott
dated May 6, 1999.
11.1 Statement regarding computation of historical and pro forma
net loss per share.
21.1 List of Subsidiaries.
23.1 Consent of PricewaterhouseCoopers 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
II-5
<PAGE> 104
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-6
<PAGE> 105
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 8th day of June 1999.
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, Howard L. Schrott and Allan C. Thygesen 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 8, 1999
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/ HOWARD L. SCHROTT Chief Financial Officer; Senior Vice President
- --------------------------------------------------- (principal financial officer and principal
Howard L. Schrott 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
</TABLE>
II-7
<PAGE> 106
<TABLE>
<CAPTION>
SIGNATURE TITLE
<C> <S>
/s/ HIDETAKA YAMAMOTO Director
- ---------------------------------------------------
Hidetaka Yamamoto
/s/ F. PHILIP HANDY Director
- ---------------------------------------------------
F. Philip Handy
/s/ JEFFREY COATS Director
- ---------------------------------------------------
Jeffrey Coats
/s/ WILLIAM SCHLEYER Director
- ---------------------------------------------------
William Schleyer
/s/ MICHAEL FUCHS Director
- ---------------------------------------------------
Michael Fuchs
</TABLE>
II-8
<PAGE> 107
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
Registrant's California predecessor.
3.2 Certificate of Incorporation of the Registrant.
3.3* Amended and Restated Certificate of Incorporation of the
Registrant.
3.4 Form of Second Amended and Restated Certificate of
Incorporation of the Registrant to be filed following the
closing of the offering.
3.5 Bylaws of the Registrant.
4.1* Specimen Common Stock Certificate.
4.2* Fourth Investor Rights Agreement dated as of June , 1999
between the Registrant 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 Registrant and
each of its officers and directors.
10.2 1994 Stock Plan and form of agreement thereunder.
10.3* 1999 Stock Plan and form of agreement thereunder.
10.4* 1999 Director Stock Option Plan and form of agreement
thereunder.
10.5* 1999 Employee Stock Purchase Plan and form of agreement
thereunder.
+10.6 Charter Programmer Affiliation Agreement dated February 23,
1999 between the Registrant and ABC, Inc.
+10.7 Charter Programmer Affiliation Agreement dated March 23,
1999 between the Registrant and CBS Corporation.
10.8 Equity Side Letter dated March 23, 1999 between the
Registrant and CBS Corporation and warrant issued to CBS
Corporation dated March 23, 1999.
+10.9 Letter Agreement dated June 3, 1997 between the Registrant
and NBC Multimedia, Inc. dba NBC Interactive Media.
+10.10 Cable Affiliation Agreement dated October 8, 1997 between
the Registrant and Charter Communications, Inc., as amended
on March 16, 1998 and March 12, 1999.
+10.11 Cable Affiliation Agreement dated December 10, 1998 between
the Registrant and Comcast Programming.
10.12 Cable Affiliation Agreement dated January 15, 1999 between
the Registrant and Coxcom, Inc. d/b/a Cox Communications
Palos Verdes.
+10.13 Master Affiliation Agreement dated December 22, 1998 between
the Registrant and DirecTV, Inc., as amended on December 22,
1998.
+10.14 Master Cable Affiliation Agreement dated September 23, 1998
between the Registrant and Time Warner Cable.
+10.15 Development and License Agreement dated June 8, 1995 between
the Registrant and General Instrument Corporation of
Delaware, as amended on January 24, 1997 and August 18,
1997.
+10.16 Development and License Agreement dated January 15, 1996
between the Registrant and Scientific-Atlanta, Inc., as
amended on January 27, 1998.
+10.17 Application Server License Agreement dated September 30,
1997 between the Registrant and Toshiba Corporation, as
amended on September 30, 1997 and December 31, 1998.
+10.18 Engine License Agreement dated September 30, 1997 between
the Registrant and Toshiba Corporation, as amended on
September 30, 1997 and December 31, 1998.
+10.19 Engine License Agreement dated October 6, 1997 between the
Registrant and Toshiba America Consumer Products, Inc.
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
<C> <S>
10.20 ATVEF Adapter License Agreement dated November 9, 1998
between the Registrant and INTEL Corporation.
10.21 Development and License Agreement dated May 17, 1999 between
the Registrant and Thomson Consumer Electronics, Inc.
10.22 Personnel Services Agreement dated November 10, 1997 between
GE Information Services, Inc. and the Registrant.
10.23 Letter Agreement dated September 10, 1998 between Registrant
and General Electric Capital Corporation.
10.24 Agreement dated January 1, 1999 between Registrant and
Satellite Services, Inc.
10.25 Master Service Agreement dated June 8, 1998 between the
Registrant and Softbank Services Group.
+10.26 System Addendum dated November 25, 1998 between the
Registrant and Time Warner Cable of New York City.
10.27 Agreement of Development of Demonstration Software dated
January 25, 1999 between the Registrant and Toshiba
Corporation.
10.28 Equity Side Letter dated February 23, 1999 between the
Registrant and The Walt Disney Company.
+10.29* Agreement dated May 25, 1999 between the Registrant and
Microsoft Corporation.
10.30 Sublease by and between Computer Associates International,
Inc. and the Registrant dated November 28, 1995, as amended
on March 21, 1996.
10.31 Loan Agreement dated as of September 18, 1996 between the
Registrant and Venture Lending & Leasing, Inc.
10.32 Warrant issued to GE Capital Corporation dated June 18,
1997.
10.33 Amended and Restated Warrant issued to NBC Multimedia, Inc.
dated June 18, 1997.
10.34 Warrant issued to Venture Lending and Leasing, Inc. dated
September 18, 1996.
10.35 Warrant issued to GE Capital Corporation dated August 27,
1998.
10.36* Warrants issued to Vulcan Ventures Incorporated dated
December 2, 1998.
10.37 Warrant issued to The Walt Disney Company dated February 25,
1999.
10.38 Restricted Stock Purchase Agreement dated December 2, 1996
between the Registrant and Mary Agnes Wilderotter.
10.39 Restricted Stock Purchase Agreement dated January 15, 1998
between the Registrant and Mary Agnes Wilderotter.
10.40* Restricted Stock Purchase Agreement dated May 17, 1999
between the Registrant and Howard Schrott.
10.41 Employment Letter from the Registrant to Mary Agnes
Wilderotter dated October 21, 1996.
10.42 Employment Letter from the Registrant to Howard L. Schrott
dated May 6, 1999.
11.1 Statement regarding computation of historical and pro forma
net loss per share.
21.1 List of Subsidiaries.
23.1 Consent of PricewaterhouseCoopers 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 3.2
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.
-2-
<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
-3-
<PAGE> 1
EXHIBIT 3.4
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
WINK COMMUNICATIONS, INC.
a Delaware corporation
Wink Communications, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of Delaware (the "Corporation"),
does hereby certify as follows:
FIRST: The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of Delaware on April 13, 1998.
SECOND: This Second Amended and Restated Certificate of Incorporation
has been duly adopted in accordance with the provisions of Section 242 and 245
of General Corporation Law of the State of Delaware by the Board of Directors of
the Corporation.
THIRD: This Second Amended and Restated Certificate of Incorporation was
approved by written consent of the stockholder of the Corporation pursuant to
Section 228 of the General Corporation Law of the State of Delaware.
FOURTH: The Amended and Restated Certificate of Incorporation of this
Corporation is amended and restated in its entirety to read as follows:
"I.
The name of the Corporation is Wink Communications, Inc. (hereinafter
sometimes referred to as the "Corporation").
II.
The address of the registered office of the Corporation in the State of
Delaware is 15 East North Street, Dover, Delaware 19903-0899, County of Kent.
The name of its registered agent at such address is Incorporating Services, Ltd.
III.
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 Delaware.
<PAGE> 2
IV.
The Corporation is authorized to issue a total of 105,000,000 shares of
stock in two classes designated respectively "Preferred Stock" and "Common
Stock." The total number of shares of Preferred Stock the Corporation shall have
authority to issue is 5,000,000, par value $0.001 per share, and the total
number of shares of Common Stock the Corporation shall have authority to issue
is 100,000,000, par value $0.001 per share.
The shares of Preferred Stock authorized by this Second Amended and
Restated Certificate of Incorporation may be issued from time to time in one or
more series. For any wholly unissued series of Preferred Stock, the Board of
Directors is hereby authorized to fix and alter the dividend rights, dividend
rates, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption prices, liquidation preferences,
the number of shares constituting any such series and the designation thereof,
or any of them.
For any series of Preferred Stock having issued and outstanding shares,
the Board of Directors is further authorized to increase or decrease (but not
below the number of shares of such series then outstanding) the number of shares
of such series when the number of shares of such series was originally fixed by
the Board of Directors, but such increase or decrease shall be subject to the
limitations and restrictions stated in the resolution of the Board of Directors
originally fixing the number of shares of such series, if any. If the number of
shares of any series is so decreased, then the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
V.
The following provisions are inserted for the management of the business
and the conduct of the affairs of the Corporation, and for further definition,
limitation and regulation of the powers of the Corporation and of its directors
and stockholders:
1. The business of the Corporation shall be managed by or under
the direction of the Board of Directors.
2. Special meetings of stockholders of the Corporation may be
called only by the President or the Chairman of the Board or by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented to the
Board for adoption).
<PAGE> 3
VI.
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
If the Delaware General Corporation Law is hereafter amended to
authorize corporate action further eliminating or limiting the personal
liability of a director, then the liability of a director of the Corporation,
without any further corporate action on the part of the Corporation, shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing provisions of this Article
VI by the stockholders of the Corporation shall not adversely affect any right
or protection of a director of the Corporation existing at the time of such
repeal or modification.
VII.
The number of directors shall be fixed from time to time by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented to the
Board for adoption). The directors shall be divided into three classes, as
nearly equal in number as possible, with the term of office of the first class
to expire at the first annual meeting of stockholders after the Corporation is
subject to the Securities Exchange Act of 1934, as amended, the term of office
of the second class to expire at the second annual meeting of stockholders and
the term of office of the third class to expire at the third annual meeting of
stockholders. At each annual meeting of stockholders following such initial
classification and election, directors elected to succeed those directors whose
terms expire shall be elected to serve three-year terms and until their
successors are elected and qualified, so that the term of one class of directors
will expire each year. When the number of directors is changed, any newly
created directorships, or any decrease in directorships, shall be apportioned
among the classes so as to make all classes as nearly equal as possible,
provided that no decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
Vacancies occurring on the Board of Directors for any reason may be
filled by vote of a majority of the remaining members of the Board of Directors,
although less than a quorum, at any meeting of the Board of Directors or by
unanimous written consent of the Board of Directors. A person so elected by the
Board of Directors to fill a vacancy shall hold office until the next succeeding
annual meeting of stockholders of the Corporation and until his or her successor
shall have been duly elected and qualified.
<PAGE> 4
VIII.
The Board of Directors is expressly empowered to adopt, amend or repeal
Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the
Corporation by the Board of Directors shall require the approval of a majority
of the total number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any resolution
providing for any such adoption, amendment or repeal is presented to the Board).
The stockholders shall also have power to adopt, amend or repeal the Bylaws of
the Corporation.
IX.
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as said court directs. If a majority in number representing three-fourths
in value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of the Corporation as a
consequence of such compromise or arrangement, said compromise or arrangement
and said reorganization shall, if sanctioned by the court to which said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
Corporation, as the case may be, and also on this Corporation.
X.
Stockholders of the Corporation may not take action by written consent
in lieu of a meeting but must take any actions at a duly called annual or
special meeting.
XI.
Pursuant to Section 203(b) of the Delaware General Corporation Law, the
stockholders of this Corporation expressly elect not to be governed by Section
203(a) of the Delaware General Corporation Law.
<PAGE> 5
XII.
Notwithstanding any other provision of this Second Amended and Restated
Certificate of Incorporation or any provision of law that might otherwise permit
a lesser vote or no vote, but in addition to any affirmative vote of the holders
of the capital stock required by law or this Second Amended and Restated
Certificate of Incorporation, the affirmative vote of the holders of at least
two-thirds (2/3) of the combined voting power of all of the then-outstanding
shares of the Corporation entitled to vote shall be required to alter, amend or
repeal Articles VII, X, XI or XII or any provision thereof.
XIII.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Second Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
<PAGE> 6
IN WITNESS WHEREOF, the undersigned Mary Agnes Wilderotter and Howard L.
Schrott have signed this Second Amended and Restated Certificate of
Incorporation as President and Secretary, respectively, of said Wink
Communications, Inc. this _____ day of _____________, 1999.
------------------------------------
Mary Agnes Wilderotter, President
------------------------------------
Howard L. Schrott, Secretary
<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>
-i-
<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>
-ii-
<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>
-iii-
<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.
-1-
<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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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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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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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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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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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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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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<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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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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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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IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
WINK COMMUNICATIONS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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 MAY 17, 1999)
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 7,000,000 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.
-4-
<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:
- ---------------------------------- ------------------------------------
- ---------------------------------- ------------------------------------
-5-
<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.
-2-
<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:
-------------------------------
-3-
<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 23rd day of February, 1999 ("Effective Date"),
by and between Wink Communications, Inc., a California corporation ("Wink"),
whose address is 1001 Marina Village Parkway, Alameda, CA 94501, and ABC, Inc.,
a NY corporation ("Programmer"), whose address is 77 West 66th Street, New York,
NY 10023.
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 2.0 and 2.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 and possessions, including
Puerto Rico, and Canada and on U.S. registered aircraft and vessels
(the "Licensed Territory"). Programmer shall have the further right
to use the Wink Software to distribute Interactive Wink Programs to
viewers located outside the Licensed Territory upon monetary terms to
be negotiated in good faith, which shall not be higher than Wink's
prevailing rates for most favored 'customers in the applicable
markets. Unauthorized reception and viewing of Programmer's
Interactive Wink Programs outside the Licensed Territory shall not be
deemed a distribution outside the Licensed Territory.
1.2. "Updates" shall mean updates containing error corrections or minor
enhancements to the Wink Software 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 Wink Software
designated by changes in the version number to the left of the
decimal point, unless such major enhancements occur prior to the
First Air Date (as defined below). Wink shall provide a license to
all Updates (and major enhancements created prior to the First Air
Date) at no charge to Programmer during the term of this Master
Agreement and Programmer, in its sole discretion, shall have the
option to utilize such Updates in providing Interactive Wink Programs
to Programmer subscribers. "New Release" shall mean a major release
of the Wink Software which occurs subsequent to the First Air Date,
which contains significant new functionality and/or major
enhancements, and which is designated by a change in the digit or
digits to the left of the decimal point in the version number. Wink
shall offer to Programmer a license to all New Releases created by
Wink during the Term on terms that are as favorable or more favorable
than the terms of any agreement Wink has entered into with other
broadcast and cable networks in the Licensed Territory, for the
CONFIDENTIAL - PAGE 1
<PAGE> 2
provision of the New Releases, provided, however, that in no event
shall Programmer's decision not to license any New Release have any
impact whatsoever on the functionality of the current Wink Software
or Programmer's ability to provide Interactive Wink Programs to
Programmer viewers throughout the Term, and provided that Programmer
shall be under no obligation to license or launch such New Releases.
If a New Release has not been made available to other parties, Wink
agrees to offer to Programmer a license to such New Release at a
one-time fee equal to Wink's costs (on a Time and Materials basis) in
developing and testing the New Release, which estimate shall be made
by .Wink in it's sole and reasonable discretion, and documented in
writing to Programmer. Notwithstanding the foregoing, if Programmer
elects not to license any New Releases on the terms offered by Wink,
Programmer shall nevertheless have the right at its election to
license such New Releases at the applicable price specified in
Exhibit C for existing Wink Software (i.e. at no cost beyond what
would have been paid for the existing Wink Software) through the next
Termination Option Date (as defined below). If such New Release is
created after the last Termination Option Date, then the foregoing
usage rights will apply through the end of the Term. Upon reaching
such Termination Option Date, Programmer shall discontinue use of the
New Releases unless agreement has been reached with Wink for
continued use (Programmer shall not, however, be required to
discontinue use of any earlier versions of Wink Software).
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, except to
an entity in control of, controlled by or in common control with
either party.
1.4 Programmer can only use the Wink software to provide Interactive Wink
Programs with the video programming services described 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 and with such notice will also provide the
Technical Information specified in Exhibit A for such service.
Programmer further agrees to provide Wink with 30 days notice of any
changes in such Technical Information Exhibit A. Programmer will
provide the Contact Information set forth in Exhibit A for the first
Programming Service within a reasonable time after the Effective
Date.
2. TERM
2.1 The term of this Agreement (the "Term") shall commence on the date of
execution of this Agreement and terminate eight years 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"). The parties agree that the First Air Date shall be the
first day that Programmer airs Interactive Wink Programs on the First
Programming Service (as defined in Exhibit A), and
CONFIDENTIAL - PAGE 2
<PAGE> 3
\
commercial cable subscriber households (not employees of System
Operators, as defined below) are able to receive such Interactive
Wink Programs. Broadcasts of Interactive Wink Programs to test
transmission and reception reliability shall not qualify as the First
Air Date.
2.2 The parties agree that Programmer may unilaterally terminate this
Agreement on any of the following dates: twelve (12) months after the
Effective Date, three years after the Effective Date, and five years
after the Effective Date (each referred to as a "Termination Option
Date"). Programmer must provide Wink with notice of Programmer's
decision to terminate at least 30 days prior to the each Termination
Option Date. If such notice is not provided in writing by this date,
the applicable termination option shall have lapsed.
3. INTEGRATION AND PROGRAMMING
3.1 Programmer agrees to ensure that Programmer's Interactive Wink
Programs are passed through to viewers unchanged by Programmer's
owned stations ("Programmer Owned Stations "), to the extent that
they clear the ABC Network programs carrying the Interactive Wink
Programs and Interactive Wink Programs can be carried without signal
degradation, and to use its reasonable commercial efforts to ensure
such passage by local affiliates with whom Programmer has an
affiliate agreement and which are not owned by Programmer ("Other
Programmer Affiliates").
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 the primary East and West
video signal feeds for the First Programming Service and for the
Second Programming Service (if Programmer's chooses to exercise it's
option to add the Disney Channel as the Second Programming Service),
including but not limited to the equipment listed on Exhibit E
hereto. At whatever point this agreement terminates for any reason,
Wink will have the right to regain custody and ownership of all such
equipment.
3.3 Programmer agrees to have at least two staff members trained in the
usage of Wink Software to develop and schedule Interactive Wink
Programs within sixty (60) days of execution of this Agreement. Wink
agrees to provide such training at no charge to Programmer as defined
in Exhibit C.
3.4 Programmer agrees to use its reasonable efforts to commence
transmission of Interactive Wink Programs on the First Programming
Service on the later of May 31, 1999 and ninety (90) days after the
Effective Date (the "Target Date"). Wink understands and accepts that
this Target Date is contingent upon a successful installation of the
Wink Software and associated hardware, and
CONFIDENTIAL - PAGE 3
<PAGE> 4
upon completion of training of Programmer staff. If Wink fails to
accomplish the milestones within ninety (90) days of the Target Date,
Programmer may in its sole discretion terminate this Agreement upon
written notice
3.5 Programmer agrees to cooperate with Wink in the development and
deployment of a Wink Server Module which would enable the automatic
suspension of non-advertising related Interactive Wink Programs
during advertising breaks and the automatic triggering of the
insertion of Interactive Wink Programs related to ads on the First
Programming Service ("Automation Server Module" or "ASM") The parties
agree that Wink is solely responsible for the development of the
Automation Server Module, and that Programmer's obligations under
this Agreement are solely to make technical staff and documentation
readily available to Wink for the specification, development and
integration of such module into Programmer's operations. The parties
further agree that Wink's inability to deliver an Automation Server
Module shall not be considered a material breach under this
Agreement.
3.6 Wink agrees to provide software to enable Programmer to parse
Programmer's existing HTML content for use in Wink applications. The
software used to author such parsing routines is referred to as "Wink
Server Studio", and the software used to execute such parsing
routines on the Wink Broadcast Server is referred to as the "Wink
Server Module" throughout this Agreement.
3.7 For the first twelve months following the First Air Date, Wink agrees
to provide Programmer daily standard reports on all Interactive Wink
Programs featuring Wink polls that are originated by Programmer. The
fees for such poll reports will be subject to a weekly maximum of
$500, regardless of the number of responses generated by Programmer's
polls or the number of different polls aired. 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 in Wink's good
faith judgment becomes commercially infeasible.
3.8 For purposes of this Agreement, the following definitions shall
apply:
(a) A "Wink-enabled Viewer" is any television viewer which is
able to receive and interact with Interactive Wink
Programs.
(b) A "Wink Response" is any response data generated by a
Wink-enabled Viewer when using an Interactive Wink Program
and collected electronically by Wink.
(c) A "Wink Revenue Response" is a Wink Response in which the
Wink-enabled Viewer requests products or services through
the Interactive
CONFIDENTIAL - PAGE 4
<PAGE> 5
Wink Program, whether such products and services are
either provided at no charge to the Wink-enabled Viewer or
require payment by the Wink-enabled Viewer, and where the
fulfillment of that request requires the release of
Wink-enabled Viewer specific information, such as name and
address.
Commencing on the First Air Date and throughout the remainder of the
Term, Wink shall, no later than Wednesday of each week, provide to
Programmer standard weekly reporting, at no charge to Programmer, of
all Wink Responses generated by Interactive Wink Programs aired on
Programmer's networks or affiliates during the previous week.
Programmer accepts Wink's terms for all other reporting regarding
Wink Responses, as defined in Exhibit B, and as amended in section
4.7 below. Wink warrants and represents that such terms are as
favorable or more favorable than the terms of any agreement Wink has
entered into with other United States programmer, for the provision
of the same or similar services. Wink further agrees to promptly
notify Programmer in writing, should Wink decide to enter into new
agreements or amend existing agreements with any United States
programmer to include more favorable terms for services similar to
those defined in Exhibit B and to immediately offer such terms to
Programmer. Wink agrees to provide all reports described above in
hard copy or electronic form, per Programmer's instructions. In
addition, Wink agrees that it shall provide Programmer with any
improvements or additions to the amount and type of data that Wink
generally provides to any other programmer with respect to Wink
Responses or Wink Revenue Responses. All Wink Responses and Wink
Revenue Responses shall be undertaken by Wink or its agents in
accordance with applicable law, including, without limitation, truth
in advertising and customer privacy laws.
3.9 During the Term of this Master Agreement, Wink shall pay to
Programmer, on a monthly basis, [ * ] percent of the fees on each
Wink Response or Wink Revenue Response (including fees which have
been paid by Programmers and its related entities) that is generated
by Interactive Wink Programs airing on the First Programming Service.
Such payments will be made with 30 days of the end of each calendar
quarter, and will be accompanied by a detailed report showing Wink
Revenue Responses by Interactive Wink Program, and the revenues
generated by Wink's Data Center from each Interactive Wink Program.
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 Wink shall be liable for
all reasonable costs and expenses (including, without limitation,
reasonable court costs and attorneys' fees) incurred by Programmer in
collecting any past due payments. Programmer agrees that no interest
shall be due if the parties have a bona fide dispute over payments.
In the event Wink offers a revenue sharing arrangement to any other
programmer relating to distribution of Interactive Wink Programs on
platforms other than an over-the-air broadcast network,
- -------------
* 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 5
<PAGE> 6
Wink will offer such arrangement to Programmer for any Programming
Service hereunder distributed on similar platforms.
3.10. Beginning on the First Air Date, Programmer agrees to distribute
Interactive Wink Programs at least [ * ] hours a week on the First
Programming Service, and agrees to increase such programming to [ * ]
hours a week within 90 days of the First Air Date. For the purposes
of this Agreement, references to the number of hours in this context
shall mean that an Interactive Wink Program is inserted at least once
every thirty (30) minutes during such hours of programming and that
the Interactive Wink Program is offered to distribution media that
reach in the aggregate at least 70% of the television households in
the United States (i.e., provided Programmer has offered these
programs to this percentage of distribution media and has otherwise
adhered to its obligations in Paragraph 3.1. Programmer will have
fulfilled the distribution obligation even if the programs are not
actually broadcast by these media). Programmer will solely determine
which shows include Interactive Wink Programs. Programmer will have
complete editorial control and approval of the form, nature and scope
of the Interactive Wink Programs and may suspend any individual
Interactive Wink Program at any time and for any reason. In addition,
Wink shall provide Programmer with the ability to control whether
third party advertisements and commercials are broadcast with related
Interactive Wink Programs through the Wink Broadcast Server.
Interactive Wink Programs for cable programming services must be
related to the content, nature and intended audience of the video
programming with which they are broadcast. Wink's sole remedy in the
event Programmer does not offer the foregoing minimum number of hours
of Interactive Wink Programs will be to terminate this Agreement.
Such notice of termination must be given in writing 30 days before
the effective date of termination and within the 30 day notice
period, Programmer will have the opportunity to cure by distributing
enough additional Interactive Wink Programs to reach the minimum
requirement. In the event of such "cure", the termination notice will
be deemed rescinded.
3.11. Programmer is responsible for payment to third party rights holders,
including but not limited to studios, acting, on-air and other
talent, news and sports data providers, professional and college
sports leagues or teams, and all other entities necessary to enable
the creation or transmission of Interactive Wink Programs.
3.12. The parties agree that the Interactive Wink Programs will require
bandwidth equivalent to one dedicated line of VBI on each programming
service. Notwithstanding the above, Programmer may utilize this VBI
line for other purposes, provided that such usage does not in any way
interfere with the transmission of Interactive Wink Programs, or
reduce Programmer's ability to transmit Interactive Wink Programs
related to Programmer's video programming and advertising. Programmer
may elect to use additional VBI lines in its sole discretion.
Programmer has the right to terminate this
- -------------
* 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 6
<PAGE> 7
Agreement if Programmer's Interactive Wink Programs cause any
degradation in Programmer's video signal quality or ability to
distribute its signal.
3.13. Wink agrees that any Interactive Wink Programs created by or for
Programmer will be the sole property of Programmer and Programmer
shall own the copyright and all other interests therein. To the
extent Wink staff members assist in the creation of the Interactive
Wink Programs, their contributions will be deemed "works for hire"
prepared for audiovisual works and such contributions will be deemed
the intellectual property of Programmer. Programmer may use and
exploit the Interactive Wink Programs in any and all media throughout
the world in perpetuity as it elects. In particular, Wink agrees that
Programmer may license the Interactive Wink Programs (or derivatives
thereof) that Programmer creates, with or without the help of Wink,
to third parties on any terms that the Programmer and the third party
can mutually agree upon. Programmer cannot sub-license Wink Software,
or act as an agent for Wink.
3.14. Subject to Programmer's prior written request, Wink agrees to
collaborate with Programmer in the development of specifications for
a full screen graphics and text channel based on electronic content
provided by Programmer or other entities affiliated with the Wait
Disney Company ("Programmer Virtual Channel") for distribution by
System Operators (as defined below). Upon mutual agreement on the
specification of the Programmer Virtual Channel, Wink-agrees to
create and deliver in final electronic form, at its sole cost and
expense, the Programmer Virtual Channel.
4. RATES, DEPLOYMENT AND OTHER PROGRAMMING SERVICES
4.1. Programmer agrees to remit the license fees and other payments as
described in Exhibit C on a timely basis. The parties agree that it
is optional for Programmer to license the Automation Server Module.
4.2. Programmer agrees to provide the Interactive Wink Programs to any
multi-channel video operator in the United States or Canada with whom
Programmer then has an agreement for carriage or re-transmission of
Programmer's video programming ("System Operators"), pursuant to the
terms of such agreement. In the case of Interactive Wink Programs
associated with cable or other non-broadcast programming, Programmer
will provide the Interactive Wink Programs to System Operators under
the terms described in Exhibit D, if such terms are not already
contained in its carriage agreement with the System Operator. The
terms in this section will not apply to the First Programming Service
(the ABC Network) or to Interactive Wink Programs broadcast by any
Programmer Owned Station or Other Programmer Affiliate unless the
terms duplicate such entities' re-transmission agreements with the
System Operators or required by law. With respect only to Interactive
Wink Programs contained in
CONFIDENTIAL - PAGE 7
<PAGE> 8
non-broadcast services, Wink may also supply System Operators with a
copy of Exhibit D as evidence of Programmer's agreement to supply the
Interactive Wink Programs under such terms.
4.3 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 programmer
for the same products and services.
4.4 Programmer can elect to add additional programming services which are
(a) wholly-owned or partially owned by Programmer or the Walt Disney
Company (minimum 20% equity stake) or (b) Other Programmer Affiliates
during the term of this Agreement. Such additional programming
services are eligible for pricing as follows:
The Disney Channel - Exhibit C
Programmer O&O Affiliates - Exhibit F
Other Programmer Affiliates, cable network partially owned by
Programmer or the Walt Disney Company - Exhibit G
4.5 Programmer understands and accepts that any network or affiliate
(other than the ABC Network) wishing to take advantage of the
applicable pricing in section 4.4 must commit to providing
Interactive Wink Programs for at least 10 hours of programming per
week. Notwithstanding 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.
4.6 Programmer also understands and accepts that Wink is not obligated
under this Agreement to:
(a) provide equipment to any other programming service other
than the First Programming Service, the Second Programming
Service, the Programmer Owned Stations and Other
Programmer Affiliates at the prices (or free of charge) as
provided in the applicable Exhibits herein.
(b) provide the transaction revenue share offered to
Programmer in section 3.9 to any programming service other
than the First Programming Service, except as provided in
such section.
(c) provide Wink poll reporting under terms other than those
defined in Exhibit B (The parties agree that the weekly
maximum on poll charges defined in section 3.7 and
referenced in Exhibit B are not applicable to other
programming services).
CONFIDENTIAL - PAGE 8
<PAGE> 9
4.7 Notwithstanding anything to the contrary herein, Wink shall provide
Programmer and entities in which the Walt Disney Company has at least
a 50% interest and, in addition, the Arts and Entertainment, History,
and E! channel with preferred pricing for Purchase Responses (as
defined in Exhibit B) that is the lower of the following:
(a) a [ * ] discount on the pricing quoted in Exhibit B
(b) [ * ]/response, regardless of volume
(c) the most favorable pricing extended for Purchase Responses
to any other broadcast or cable network, or to any third
party advertiser which has contracted with Wink for the
capturing and routing of Purchase Responses. This most
favorable pricing protection shall also extend to the "RFI
Responses" described in Exhibit B.
The preferred pricing described in sections (a) through (c) above
shall be extended for any Purchase Response (and, in the case of (c),
RFI Responses) generated by Interactive Wink Programs aired on the
First Programming Service or the Second Programming Service, provided
such Purchase Responses are in responses to offers for merchandise or
services sold by or on behalf of entities wholly owned by the Walt
Disney Company.
4.8 Wink may provide System Operators with a listing of VBI lines used
for transmission of Interactive Wink Programs by Programmer,
Programmer Owned Stations and Other Programmer Affiliates
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 will send invoices for all payments due hereunder, 30 days in
advance of the due date. Wink's failure, for any reason, to send an
invoice for a particular monthly payment due in years two through
eight of the Term for the Broadcast Server, Server Module Engine,
Automation Server Module or Tech Support shall not relieve Programmer
of its obligation to make these payments 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 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.
- -------------
* 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 9
<PAGE> 10
6. PROMOTION AND RESEARCH
6.1 Programmer acknowledges Wink's intent to issue a press release
announcing this Agreement within 30 days of the Effective Date. This
press release shall be subject to Programmer's prior written
approval. Programmer agrees to use reasonable efforts to provide
quotes from an executive of Programmer or The Walt Disney Company for
such press release.
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, if requested and approved by Programmer, promote and
feature Programmer's Interactive Wink Programs as prominently as any
other 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 its marketing objectives in materials
prepared by third parties, such as equipment manufacturers, retailers
and cable operators. Programmer agrees to advise Programmer Owned
Stations and Other Programmer Affiliates of its use of the Wink
Software and the availability to them of preferred terms for
licensing Wink Software within sixty (60) days of the Effective Date.
6.4 Wink, equipment manufacturers, retailers 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. Programmer,
the Programming Services, Programmer Owned Stations and Other
Programmer Affiliates may use and authorize the use of Wink's name,
logo and related elements (collectively "Wink's Marks") in the
production and distribution of Interactive Wink Programs and in
advertising and publicity therefor. Each party must submit materials
containing the other's Marks to the other party for review and
written approval prior to distribution. The other party agrees to use
reasonable efforts to respond promptly to such requests for approval,
and retains sole discretion over such approvals, if any. 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 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
CONFIDENTIAL - PAGE 10
<PAGE> 11
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. Likewise, Programmer hereby acknowledges that
Wink is the sole owner of all right, title and interest in and to the
Wink's Marks and any marks, notices or designations utilized by Wink
in connection with Wink's business, and that no rights or ownership
are intended to be or shall be transferred to Programmer. All uses of
the Wink's Marks shall inure to the benefit of Wink. Upon any
expiration or termination of this Agreement, Programmer shall delete
and discontinue all use of the Wink's Marks. At no time during or
after the term of this Agreement shall Programmer challenge or assist
others to challenge the Wink'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 Wink'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, provided
Programmer is permitted to do so under applicable agreements with
research services and can do so at no cost, in conducting such
research with respect to Programmer's viewers. Programmer agrees that
Wink may use all such research regarding the deployment, launch, and
usage of Wink service by Programmer viewers, subject to applicable
consumer privacy laws, only for internal purposes unless Wink has
received prior written-approval from Programmer. 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 Wink Responses to the Interactive Wink Programs to System
Operator(s) for Wink Responses that originate from System Operator's
subscribers, to equipment manufacturers for Wink Responses that
originate from Wink-enabled equipment sold by such manufacturers, and
to advertisers and other parties, authorized by Programmer, for Wink
Responses that originate from Interactive Wink Programs paid for or
sponsored by such parties (collectively, the "Recipients"). Such
reports to Recipients shall be restricted to aggregate reports about
Wink Responses , and detailed reports on individual Wink Revenue
Responses, which shall only be forwarded to the Recipient fulfilling
such viewer requests, or such party's designated agent. Wink agrees
that reports providing specific data regarding viewer responses to,
usage of, and/or exposure to Programmer's Interactive Wink Programs,
including data on Wink viewer responses to advertising on Programmer
owned or affiliated programming services, will not be made available,
except in aggregated form that does not identify Programmer or
specific Programmer viewer data, to any third party except Recipients
pursuant to this paragraph. Wink acknowledges and agrees that any
reports provided to Recipients or other third parties must adhere to
applicable consumer privacy laws. Information regarding the nature
CONFIDENTIAL - PAGE 11
<PAGE> 12
of Winks Responses or the Wink Viewers shall not be used for any
other purpose without the express consent of Programmer.
[ * ]
- -------------
* 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 12
<PAGE> 13
[ * ]
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 (e.g. Wink's published
specifications for the Interactive Communications Application
Protocol, as updated by Wink, and Wink's then current documentation
and manuals), in accordance with the criteria defined in Exhibit H
and as demonstrated to Programmer prior to this Agreement. 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, except for the "Berman" claim. Wink
further represents that the Wink Software (and subsequent revisions
and upgrades to same provided by Wink to Programmer) is Year 2000
compliant.
7.2 Wink hereby warrants and represents that the terms contained herein
for licensing of Wink software, provision of Wink services, sharing
of Wink's revenues from routing of Wink Revenue Responses 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 broadcast and cable programming
entities.
7.3 Wink warrants and represents that the terms and conditions in Exhibit
D are as favorable to Programmer as any agreement Wink has caused or
allowed other programmers to enter into with System Operators. If
Wink causes or allows any. other broadcast or cable 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, 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 assume such more favorable terms and amend Exhibit D
accordingly.
7.4 Wink hereby warrants and represents that the terms contained herein
for licensing of Wink software, provision of Wink services, and the
Programmer Owned Stations' 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 broadcast programming
entities for their owned affiliate stations.
- -------------
* 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 13
<PAGE> 14
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 Wink's representations and
warranties or any of Wink's other material obligations stated herein
or the use of any technology or equipment provided by Wink to
Programmer hereunder. Notwithstanding the above, the parties agree
that Wink is specifically not liable or obligated to indemnify
Programmer or other parties for:
(a) any and all expenses arising out of claims or causes of
action related to the content, nature or form of the
Interactive Wink Programs.
(b) any and all expenses arising out of claims or causes of
action in which it is alleged that the Interactive Wink
Programs created a malfunction or other technical problem
on a Wink-enabled television set or multi-channel set top
receiver, and in which Programmer has been negligent in
testing such Interactive Wink Programs or otherwise have
failed (unless through the fault of Wink) to adhere to
Wink's standard Criteria for Compliant Interactive-Wink
Programs, as defined in Exhibit D, Attachment 1.
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.
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 delivery,
CONFIDENTIAL - PAGE 14
<PAGE> 15
addressed, to the addresses provided in the first paragraph of this
Agreement, and to the attention of:
If to Wink:
Allan C. Thygesen
Senior Vice President, Programming and Advertising
If to Programmer:
Saul Shapiro
ABC, Inc.
46 West 66th Street
New York, NY 10023
With a copy to:
Charles Stanford
Vice President, Cable and New Media
Legal Department
ABC, Inc.
77 West 66th Street
New York, NY 10023
and to:
Kevin Mayer
Senior Vice President, Strategic Planning
The Walt Disney Company
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 SOFTWARE
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.
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
CONFIDENTIAL - PAGE 15
<PAGE> 16
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 NY; (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 and specifically identified in writing as "Confidential"
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. Also, "Confidential
Information" shall not include information which, (a) is or becomes
publicly known through no act or failure to act on the part of the
recipient, (b) was rightfully in the recipient's possession prior to
disclosure by the disclosing party, (c) becomes rightfully known to
the recipient from a third party not subject to any independent
confidential or proprietary restriction, (d) is approved by the
disclosing party for disclosure without restriction, in a written
document that is signed by a duly authorized officer of that party,
(e) is disclosed after the termination of the recipient's duty of
confidentiality as specified herein or (f) is or was developed
independently by the recipient without use of or reference to any of
the Confidential Information and without violation of any
confidentiality restriction. The parties agree to keep the terms of
this Agreement confidential, but acknowledge that certain disclosures
may be required by law.
CONFIDENTIAL - PAGE 16
<PAGE> 17
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. The
parties agree that Wink's failure to perform materially any services
or provide any technology or equipment in accordance to this
Agreement shall be considered a material breach. The parties also
agree that failure by Programmer to make timely payments of license
fees and other fees due Wink under this Agreement, and failure by
Wink to make timely payments of Programmer's share of Wink's gross
revenues, net of returns, refunds and credits, from Wink Revenue
Responses shall be considered material breaches, and that the
terminating party's termination of this Agreement 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.
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 (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.
14. GENERAL
(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.
CONFIDENTIAL - PAGE 17
<PAGE> 18
(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. ABC INC.
By: By:
Name: Maggie Wilderotter Name: Charles Stanford
Title: President/CEO Title: Vice President
CONFIDENTIAL - PAGE 18
<PAGE> 19
EXHIBIT A: PROGRAMMING SERVICES
Description of Each Programming Service
FIRST PROGRAMMING SERVICE
ABC Television Network (all analogue feeds)
SECOND PROGRAMMING SERVICE *
The Disney Channel
OTHER PROGRAMMING SERVICES *
ABC Owned Stations
Other Programming Affiliates as described in Paragraph 4.4
*Programmer is under no obligation to include programming services other than
ABC in this Agreement
TECHNICAL INFORMATION TO BE PROVIDED FOR EACH PROGRAMMING SERVICE**
1. Commencement Date for Wink Programming
2. VBI line Location
3. Virtual Channel
4. Insertion Point
CONTACT INFORMATION**
1. Nature of Issue (Operation, Programming or Marketing)
2. Address
3. Contact Person(s)
4. Phone
5. Fax/Email
ADDITIONAL INFORMATION
Operations (site visits, VBI/MPEG insertion, etc.)
TBD**
Programming (development and scheduling of Interactive Wink Programs, reports,
etc.)
TBD**
Marketing (affiliate marketing, approvals of promotional materials)
TBD**
**All to be determined by Programmer, in its sole discretion
CONFIDENTIAL- PAGE 19
<PAGE> 20
EXHIBIT B: WINK RESPONSE CENTER SERVICES
All products and services are billed Net/45. A Purchase Response shall be
defined as any Wink Revenue Response which constitutes an agreement to purchase
a product or service, regardless of the method of payment. An RFI Response shall
be defined as any other Wink Revenue Response. A Poll Response shall be defined
as a Wink Response generated by a Wink "vote/poll" script. Programmer shall have
no liability for payment for Reports, Polls, Wink Responses or Wink Purchase
Responses commissioned by third parties such as advertisers on the Programming
Services hereunder. These will be subject to separate agreement between the
third parties and Wink.
<TABLE>
<CAPTION>
PRICE/WINK TRANSACTION
WINK TRANSACTIONS/MO. $[*] min./mo. per Interactive Wink Program
PURCHASE RESPONSES creating Purchase Responses
<S> <C>
1-5,000 [*]
5,001 - 25,000 [*]
25,001 - 100,000 [*]
100,001 - 250,000 [*]
250,001 - 500,000 [*]
500,001 + [*]
</TABLE>
<TABLE>
<CAPTION>
$[*] min./mo. per Interactive Wink Program
RFI RESPONSES creating RFI Responses
<S> <C>
1-5,000 [*]
5,001 -25,000 [*]
25,001 - 100,000 [*]
100,001 - 250,000 [*]
250,001 - 500,000 [*]
500,001 + [*]
</TABLE>
<TABLE>
<CAPTION>
Polls -report only $[*] min./mo. per Interactive Wink Program
creating Poll Responses
<S> <C>
1-250,000 Wink Responses [*]
250,001 + [*]
</TABLE>
1. Minimum monthly charges per application include UIC (Universal ICAP code)
registration.
2. All volume price breaks are based on Programmer's monthly transaction
volume by response category. The price breaks are based on the "average"
for the month. That is, the lowest price applies to all transactions for
the month.
3. For purposes of minimum charges, if an Interactive Wink Program is part of
a program "Series", the minimum shall be deemed to apply to the Series, not
each episode in the Series.
PURCHASE AND REQUEST RESPONSE FEES INCLUDE;
1. Daily name & address lists delivered by fax, e-mail, or electronic FTP or
mailbox.
2. UIC and application registration.
3. Standard report showing number of Wink Responses per day per Interactive
Wink Program per city.
CONFIDENTIAL - PAGE 20
- -------------
* 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> 21
POLLS
The fixed charge includes UIC and application registration, and a standard
reporting that summarizes all Poll responses by type by city. If the application
asks the viewer for telephone prefix or zip code, the summary includes those
totals.
CUSTOM USAGE REPORTS OR OTHER CUSTOM REPORTING Custom reports are quoted by the
Wink Response Center.
CONFIDENTIAL - PAGE 21
<PAGE> 22
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE
This pricing is available to 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 First Yrs 2-8
or one- year Price/
time costs Price Network
<S> <C> <C> <C>
Broadcast Server On-going Free $48,000
Server Module Engine On-going Free $12,000
Automation Server Module (3) On-going Free $24,000
Tech Support On-going Free $ 6,000
SUBTOTAL ON-GOING $0 $90,000
Server hardware (4) One-time Free N/A
Data Insert. Unit (4) One-time Free N/A
Set-top box, misc. (4) One-time Free N/A
SUB-TOTAL ONE-TIME $0 N/A
Installation and integration (2) One-time Free N/A
Studio site license (5 seats) One-time Free N/A
Svr Studio license (5 seats) One-time Free N/A
Training (3x2days) (1) (2) One-time Free N/A
SUBTOTAL ONE-TIME $0 N/A
TOTAL BOTH $0 $90,000
</TABLE>
(1) 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.
(2) Travel expenses are billed separately at cost
(3) Optional after the first year
(4) Provided free by Wink, per Exhibit E.
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
<TABLE>
<S> <C>
Custom interface work (ad insertion and traffic systems, etc.) $1,000/day
Phone training and consulting beyond standard package $125/hr
Application development $2,500 min., $125/hr
</TABLE>
CONFIDENTIAL - PAGE 22
<PAGE> 23
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE WINK PROGRAMS
OTHER THAN RETRANSMISSION OF OVER-THE-AIR BROADCASTS
Programmer:
Programming Services:
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 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 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
Programmer's execution of this IWP Carriage Agreement. The parties acknowledge
that Programmer has an agreement with Wink for distribution of Interactive Wink
Programs (the "Charter Programmer Affiliation Agreement") for eight years after
the first transmission of Interactive Wink Programs by Programmer. The terms and
conditions of this IWP Carriage Agreement shall govern during the entire term of
the Charter Programmer Affiliation Agreement, 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 use its best efforts to ensure that the Interactive Wink
Programs meet Wink's criteria for compliant Interactive Wink Programs (See
Attachment 1). Programmer agrees that each Interactive Wink 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 is not responsible for any
malfunction of the Interactive Wink Programs that can not be detected by
adhering to the criteria in Attachment 1.
CONFIDENTIAL - PAGE 23
<PAGE> 24
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 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, but 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 of the Charter. Programmer
Affiliation Agreement between Programmer and Wink and amendments to same, as
provided to System Operator. 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.
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 to generates viewer responses to two-way Interactive Wink
Programs.
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
CONFIDENTIAL - PAGE 24
<PAGE> 25
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. If Programmer
fails to adhere to its' obligations in sections 3 and 5 of this Agreement,
System Operator sole remedy shall be to decline carriage or retransmission of
the Interactive Wink Programs. This Agreement may be updated from time to time
only by express written consent of Programmer.
PROGRAMMER
By:
Name:
Title:
Date:
CONFIDENTIAL - PAGE 25
<PAGE> 26
EXHIBIT D, ATTACHMENT 1: CRITERIA FOR COMPLIANT INTERACTIVE WINK PROGRAMS
- - All Interactive Wink Programs must be registered and contain a unique
universal ICAP code (UIC) prior to being broadcast.
- - Registered Interactive Wink Programs have passed a standard set of tests
which validate:
- that the Interactive Wink Programs can be delivered through the VBI,
will arrive as appropriate, and can be decoded in the Wink engine.
- that the Interactive Wink Programs does not generate error messages.
- that the Interactive Wink Programs receives scheduled updates, if
applicable.
- that the Interactive Wink Programs passes minimum acceptable latency
standards.
- that the Interactive Wink Programs does not cause System Operator
technical or operational problems.
- that the Interactive Wink Programs, if two-way, generates the
appropriate routing address and usage data.
CONFIDENTIAL - PAGE 26
<PAGE> 27
EXHIBIT E: EQUIPMENT TO BE PROVIDED BY WINK
- - Sun Ultra server hardware, configured to support Wink Broadcast Server 2.x,
two Ethernet LAN cards, dial-up modem for remote diagnostic use
- - 3 Norpak TES-3 data insertion units with software module for 1 VBI line,
one each for the main East Coast and West Coast feeds and one for in-house
testing
- - 2 GI CFT-2200 advanced analog cable set tops for development and test
ABC will provide cabling and Pentium PC running Windows 95 or Windows NT for the
Broadcast Server User Interface, Wink Studio and Wink Server Studio. These
applications may reside on one or several PCs, none of which need to be
dedicated to the Wink software. Each PC must be connected to the Broadcast
Server via an Ethernet LAN interface.
CONFIDENTIAL - PAGE 27
<PAGE> 28
EXHIBIT F: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 2
Subject to the other terms and conditions of this agreement, this pricing is
available to Programmer Owned Stations.
On-going annual fees are paid one twelfth each month, and are due the first of
the month.
<TABLE>
<CAPTION>
ON-GOING FIRST YEARS 2-8
OR ONE- YEAR PRICE/
TIME COSTS PRICE NETWORK
---------- -------- --------
<S> <C> <C> <C>
Broadcast Server On-going $ 48,000 $ 48,000
Server Module On-going Free $ 12,000
Tech Support On-going Free $ 6,000
SUBTOTAL ON-GOING $ 48,000 $ 66,000
Server hardware One-time $ 9,500 N/A
Data Insert. Unit (1) One-time $ 5,600 N/A
Set-top box, misc One-time $ 700 N/A
SUB-TOTAL ONE-TIME $ 15,800 N/A
Installation and One-time $ 15,000 N/A
integration (2)
Studio site license (5 One-time Free N/A
seats)
Server Studio site One-time Free N/A
license (5 seats)
Studio/Server training One-time Free N/A
(3x2days) (2)
SUBTOTAL ONE-TIME $ 15,000 N/A
TOTAL BOTH $ 78,800 $ 66,000
</TABLE>
(1) One required per network. More than one VBI line per network requires an
additional license from Norpak in the amount of $1,500/VBI line.
(2) Travel expenses are billed separately at cost.
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.
OPTIONAL SERVICES
<TABLE>
<S> <C>
Automation Server Module $24,000 annual license
Custom interface work (ad insertion and traffic systems, etc.) $1,000/day
Phone training and consulting beyond standard package $125/hr
Application development $2,500 min., $125/hr
</TABLE>
CONFIDENTIAL - PAGE 28
<PAGE> 29
EXHIBIT G: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 3
This pricing is subject to the terms of the Agreement, and is available to all
Other Programmer Affiliates, and to programming Services in which Programmer or
the Walt Disney Corporation owns at least a 20% stake. On-going annual fees are
paid one twelfth each month, and are due the first of the month.
<TABLE>
<CAPTION>
ON-GOING FIRST YEARS 2-8
OR ONE- YEAR PRICE/
TIME COSTS PRICE NETWORK
---------- -------- --------
<S> <C> <C> <C>
Broadcast Server On-going $ 62,000 $ 62,000
Server Module On-going $ 12,000 $ 12,000
Tech Support On-going $ 6,000 $ 6,000
SUBTOTAL ON-GOING $ 80,000 $ 80,000
Server hardware One-time $ 9,500 N/A
Data Insert. Unit (1) One-time $ 5,600 N/A
Set top, misc One-time $ 700 N/A
SUB-TOTAL ONE-TIME $ 15,800 N/A
Installation and One-time $ 20,000 N/A
integration (2)
Studio site license (5 One-time $ 3,000 N/A
seats)
Server Studio site One-time $ 5,000 N/A
license (5 seats)
Studio/Srvr training One-time $ 6,000 N/A
(3x2days) (2)
Subtotal One-time $ 39,000 N/A
TOTAL BOTH $134,800 $ 80,000
</TABLE>
(1) One required per network. More than one VBI line per network requires an
additional license from Norpak in the amount of $1,500NBI line.
(2) Travel expenses are billed separately at cost.
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.
OPTIONAL SERVICES
<TABLE>
<S> <C>
Automation Server Module $36,000 annual license
Custom interface work (ad insertion and traffic systems, etc.) $1,000/day
Phone training and consulting beyond standard package $125/hr
Application development $2,500 min., $125/hr
</TABLE>
CONFIDENTIAL - PAGE 29
<PAGE> 30
EXHIBIT H: PERFORMANCE STANDARDS FOR WINK SOFTWARE AND SERVICES
The parties agree that Wink Software and Services must meet the following
standards:
1) Programmer can create Interactive Wink Programs that adhere to Exhibit D,
Attachment 1: "Criteria for Compliant Interactive Wink Programs" using
Wink Studio and Wink Server Studio.
2) Programmer can schedule Interactive Wink Programs to be inserted into
Programmer's analog video programming using the Wink Broadcast Server and
the associated PC-based user interface programs provided by Wink.
3) Programmer can insert Interactive Wink Programs into Programmer's analog
video programming using the Wink Broadcast Server, VBI data insertion
units and other software hardware and services provided by Wink. Such
insertion shall have no effect on the visible portion of the Programmer's
video signal.
4) Programmer can parse Programmer's existing standard HTML content for use
in Interactive Wink Programs using Wink Server Studio and standard LAN
connections between the Wink Broadcast Server and the Programmer's web
servers.
5) Programmer can create, schedule and insert Interactive Wink Programs that
are capable of generating Wink Revenue Responses.
Subject to availability of a live connection to either two-way cable plant or
other return path, and to System Operator's reasonable support and operational
readiness, Wink can:
6) collect Wink Revenue Responses from viewer homes,
7) prepare aggregate reports of subscriber usage of the Interactive Wink
Programs
8) forward Wink Revenue Responses to the party having registered the
Interactive Wink Program with Wink's Response Center (subject to billing
system interface or other means of capturing subscriber address and
payment information).
CONFIDENTIAL - PAGE 30
<PAGE> 1
EXHIBIT 10.7
CHARTER PROGRAMMER AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 23rd day of March 1999, (the "Effective Date")
by and between Wink Communications, Inc., a California corporation ("Wink"),
whose address is 1001 Marina Village Parkway, Alameda, CA 94501, and CBS
Corporation, a Pennsylvania corporation ("Programmer"), whose principal business
address is 51 West 52nd Street, New York, NY 10019.
1. THIS SECTION INTENTIONALLY LEFT BLANK
2. GRANT OF LICENSE
2.1 Wink hereby grants to Programmer the non-exclusive license to use Wink
Studio, Server Studio, Wink Broadcast Server, Automation Server Module
and Wink provided Server Modules version 2.0 and 2.x updates
(hereinafter collectively referred to as "Wink Software") and to use any
other Wink software necessary to create and deliver interactive
program(s) (as demonstrated to Programmer prior to entering into this
Agreement) 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 and possessions, including Puerto Rico, Canada, Bermuda, and
on U.S. registered aircraft and vessels. Wink agrees to provide
Programmer with a copy of the current specification for the interactive
communications application protocol within one week of the Effective
Date. Such specification shall be considered Confidential Information
under this Agreement (as defined in section 13 below).
2.2 "Updates" shall mean updates containing error corrections or minor
enhancements to the Wink Software 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 Wink Software designated by
changes in the version number to the left of the decimal point. Wink
shall provide a license to all Updates at no charge to Programmer during
the term of this Master Agreement and Programmer, in its sole
discretion, shall have the option to utilize such Updates in providing
Interactive Wink Programs to Programmer subscribers. "New Release" shall
mean a major release of the Wink Software which occurs subsequent to the
Effective Date, which contains significant new functionality and/or
major enhancements, and which is designated by a change in the digit or
digits to the left of the decimal point in the version number. Wink
shall offer to Programmer a license to all New Releases created by Wink
during the Term on terms that are as favorable or more favorable than
the terms of any agreement Wink has entered into with other United
States broadcast and cable networks, for the provision of the New
Releases; provided, however, that in no event shall Programmer's
decision not to license any New Release have
CONFIDENTIAL - PAGE 1
<PAGE> 2
any impact whatsoever on the functionality of the current Wink Software
or Programmer's ability to provide Interactive Wink Programs to
Programmer viewers throughout the Term, and provided that Programmer
shall be under no obligation to license or launch such New Releases. If
a New Release has not been made available to other parties, Wink agrees
to offer to Programmer a license to such New Release at a one-time fee
equal to Wink's costs (on a Time and Materials basis) in developing and
testing the New Release, which estimate shall be made by Wink and
documented in writing to Programmer. In the event that actual costs of
developing and testing any such New Release are lower than said
estimated costs, Wink agrees to so notify Programmer and adjust the cost
of such license accordingly. Wink warrants and represents that the
definition of "New Releases" is at least as favorable to Programmer as
that provided to any other broadcaster or cable programmer and that Wink
did not include in any license of the Wink Software to any other
broadcaster or cable programmer a license of any New Releases as part of
the initial license consideration. Wink further agrees promptly to
notify Programmer in writing should Wink agree in any future agreements
or amendments to any more favorable terms and to immediately offer such
terms to Programmer.
2.3 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, provided,
however, that Programmer shall have the right to freely assign this
Agreement to any entity acquiring all or substantially all of
Programmer's assets. Wink agrees that Programmer shall have the right to
assign this Agreement to any subsidiary or affiliated entity, provided
that Programmer shall remain liable for the performance of all of its
obligations hereunder. Wink agrees to provide notice to Programmer of
any change of control of Wink in which any broadcast network gains a
controlling interest in Wink. In such event, Programmer shall have the
immediate right to terminate this Agreement without further obligation
hereunder and Wink agrees to refund a pro-rated portion of any license
fees or other charges paid by Programmer.
2.4 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 provide notice to Wink of the
technical information required by 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 Programmer.
2.5 Wink hereby acknowledges that this Agreement is non-exclusive and in no
way prohibits Programmer from entering into any agreement with third
party providers for the same or similar services ("Other Providers") at
any time during the Term hereof, including, without limitation,
providers of software and/or
CONFIDENTIAL - PAGE 2
<PAGE> 3
hardware enabling the creation and/or delivery of interactive
enhancements to commercial cable subscriber households or other
Programmer viewers. Wink represents and warrants that the installation
and integration of the Wink Hardware and Wink Software into Programmer's
facilities contemplated hereunder shall in no way prevent or inhibit
Other Providers from using Programmer's facilities to create and deliver
interactive enhancement programs.
3. TERM
3.1 The Term of this Agreement (the "Term") shall commence on the date of
execution of this Agreement and terminate eight years 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"). The parties agree that the First Air Date shall be the first day
that Programmer includes an Interactive Wink Program on a program airing
the First Programming Service (as defined in Exhibit A), and transmits
the signal on feeds intended to reach at least 70% of the television
household in the United States, Broadcasts of Interactive Wink Programs
to test transmission and reception reliability shall not qualify as the
First Air Date.
3.2 The parties agree that Wink shall provide notice to Programmer that it
has "enabled the system" as defined in paragraph 4.4 below. If Wink
fails to "enable the system" within one hundred twenty (120) days of the
Effective Date then subject to a sixty (60) day cure period, Programmer
shall have the right to terminate this agreement without any further
obligations (whether payment or otherwise) hereunder. In such event Wink
shall refund any and all fees paid by Programmer.
3.2 The parties agree that Programmer may unilaterally terminate this
Agreement on any of the following dates: eighteen (18) months from the
earlier of First Air Date or 30 days from the Effective Date, forty two
(42) months from the earlier of the First Air Date or 30 days from the
Effective Date, and sixty six (66) months from the earlier of First Air
Date or 30 days from the Effective Date (each referred to as a
"Termination Option Date"). Programmer must provide Wink with notice of
Programmer's decision to terminate at least 30 days prior to the each
Termination Option Date. If such notice is not provided in writing by
this date, the applicable termination option shall have lapsed. Wink
warrants and represents that no broadcast or cable programmer has a
license agreement with Wink for Wink Software with a longer term or with
more Termination Option Dates.
4. INTEGRATION AND PROGRAMMING; REVENUE PARTICIPATION; ADVERTISER
AGREEMENTS
CONFIDENTIAL - PAGE 3
<PAGE> 4
4.1 Programmer agrees to ensure, except in the event of force majeure, or
other customary program suspension or interruption, that the First
Programming Service's Interactive Wink Programs are passed through to
viewers unchanged by Programmer's owned stations ("Programmer Owned
Stations "), to the extent (i) that Programmer Owned Stations clear the
CBS Network programs carrying the Interactive Wink Programs; (ii) that
such Owned Stations receive a network feed which includes the
Interactive Wink Programs; (iii) that Interactive Wink Programs can be
carried without signal degradation and without causing any other
technical or operational incompatibility, interference or impairment;
and (iv) that carriage is not inconsistent with any obligations or
rights of such Programmer Owned Stations under contract, law or
otherwise or will otherwise cause an adverse financial impact on
Programmer. Programmer agrees to use its reasonable commercial efforts
(which Wink hereby acknowledges does not include, in any event, the
obligation to incur any costs, make any payments or to provide any other
form of compensation) to encourage such passage by local affiliates with
whom Programmer has an affiliation agreement and which are not owned by
Programmer ("Other Programmer Affiliates"). Wink's sole remedy in the
event Programmer does not fulfill its obligations hereunder will be to
terminate this Agreement. Such notice of termination must be given in
Writing 30 days before the effective date of termination and within the
30 days period Programmer shall have the opportunity to cure. In the
event of such "cure" the notice will be deemed rescinded.
4.2 Wink agrees to; (i) "enable the system", (ii) ensure the reliable
transmission of the Interactive Wink Programs, (iii) maintain all Wink
Software and Wink Hardware (as defined below) and (iv) complete the
tailoring and deployment of the Automation Server Module (as defined in
section 4.5 below); all at the sole cost and expense of Wink. Programmer
agrees to cooperate with Wink in connection with Wink's installation and
maintenance responsibilities set forth above. 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 the primary East and West video signal feeds for the First
Programming Service (as defined in Exhibit A), including but not limited
to the equipment listed as "Wink Hardware" on Exhibit E ("Wink
Hardware"), and with the exception that standard Microsoft Windows based
PCs are to be provided by Programmer, as described in Exhibit E.
Programmer agrees to pay Wink $27,000 upon delivery and acceptance of
the equipment, and $25,000 upon acceptance of the installation of the
Wink Software and having Wink "enabled the system". The parties agree
that Wink shall be solely responsible for any additional software,
hardware (including installation and integration) equipment and
equipment related expense that exceeds this payment by Programmer (and
other payments set forth in the attached Exhibits) and is required to
meet Wink's obligations under this Agreement.
4.3 Programmer agrees to make at least two of its personnel available to
complete Wink's basic training in the usage of Wink Software to develop
and schedule
CONFIDENTIAL - PAGE 4
<PAGE> 5
Interactive Wink Programs within sixty (60) days of the Effective Date
of this Agreement. In addition, Wink agrees to provide an additional
training day for such personnel within sixty (60) days prior to the
schedule First Air Date. Wink agrees to provide such training at no
charge to Programmer as defined in Exhibit C. Programmer agrees to
assign a project coordinator who has completed the training referenced
in this section to serve as a contact point for Wink, and to assign
resources equivalent to a full time staff member to work exclusively on
creating and scheduling Interactive Wink Programs within forty-five (45)
days of the last party's execution of this Agreement.
4.4 Programmer agrees to use its reasonable efforts to commence transmission
of Interactive Wink Programs on the First Programming Service on the
later of one hundred twenty (120) days after the Effective Date and
forty-five (45) days after Wink has "enabled the system". Wink shall
have "enabled the system" upon the last to occur of the following: (i)
successful installation and integration at Programmer's facility of all
Wink Software and Wink Hardware necessary to produce and deliver
Interactive Wink Programs to commercial cable subscriber households,
without signal degradation and without causing any other technical or
operational incompatibility, interference, or impairment, (ii)
satisfactory completion of testing of all Wink Software and Wink
Hardware, to be performed by Wink subsequent to installation and
integration of Wink Software and Wink Hardware into Programmer
facilities, (iii) training of Programmer personnel in the use and
operation of Wink Software and Wink Hardware, and (iv) reception
capacity by commercial cable subscriber households. Programmer agrees to
use reasonable efforts to identify video programming for which
Interactive Wink Programs can be developed and broadcast and to
facilitate demonstrations and presentations by Wink staff to appropriate
executives selected by Programmer from its major programming
departments.
4.5 Programmer agrees to cooperate with Wink in tailoring and deployment of
a Wink Server Module specific to Wink's Programmer which would enable
the automatic suspension of program enhancements during advertising
breaks and the automatic triggering of the insertion of Interactive Wink
Programs related to ads on the First Programming Service ("Automation
Server Module" or "ASM"). The parties agree that Wink is solely
responsible for the tailoring of the Automation Server Module, and that
Programmer's obligations under this agreement are solely to make
technical staff and documentation readily available to Wink for the
specification, development and integration of such module into
Programmer's operations. Once Wink has delivered a functional Automation
Server Module, Programmer agrees to use reasonable efforts (at no cost
to Programmer) to test the airing of Interactive Wink Programs related
to advertisements bought by third party advertisers.
4.6 Wink agrees to provide software to enable Programmer to parse
Programmer's existing HTML content for use in Wink applications. The
software used to author such parsing routines is referred to as "Wink
Server Studio", and the
CONFIDENTIAL - PAGE 5
<PAGE> 6
software used to execute such parsing routines on the Wink Broadcast
Server is referred to as the "Wink Server Module" throughout this
Agreement.
4.7 For purposes of this Agreement, the following definitions shall apply:
(a) A "Wink-enabled Viewer" is any television viewer which is able
to receive and interact with Interactive Wink Programs.
(b) A "Wink Response" is any response data generated by a
Wink-enabled Viewer when using an Interactive Wink Program and collected
electronically by Wink.
(c) A "Wink Revenue Response" is a Wink Response in which the Wink-
enabled Viewer request products or services through the Interactive Wink
Program, whether such products and services are provided at no charge to
the Wink-enabled Viewer or require payment by the Wink-enabled Viewer,
and where the fulfillment of that request requires the release of
Wink-enabled Viewer specific information, such as name and address.
Commencing on the First Air Date and throughout the remainder of the
Term, Wink shall, no later than Wednesday of each week, provide to
Programmer standard weekly reporting, at no charge to Programmer, of all
Wink Responses generated by Interactive Wink Programs aired on
Programmer's networks or affiliates during the previous week. Programmer
accepts Wink's terms for all other reporting regarding Wink Responses,
as defined in Exhibit B. Wink warrants and represents that Exhibit B and
each and all of its terms are as favorable or more favorable than the
terms of any agreement relating to the licensing of Wink software Wink
has entered into with other United States programmer. Wink further
agrees to promptly notify Programmer in writing, should Wink decide to
enter into new agreements or amend existing agreements with any United
States programmer to include one or more more favorable terms than those
defined in Exhibit B and to immediately offer such terms to Programmer.
Wink agrees to provide all reports described above in hard copy or
electronic form, per Programmer's instructions. All Wink Revenue
Responses and Wink Responses shall be undertaken by Wink or its agents
in accordance with applicable law, including, without limitation, truth
in advertising and customer privacy laws. In addition, Wink agrees that
it will correctly route all Wink Revenue Responses and all attendant
information on a timely basis in accordance with the instructions of the
entity sponsoring the enhancement and agrees to indemnify and hold
Programmer harmless from and against any claims arising out of any
breach or alleged breach of that obligation.
Upon no less than two (2) weeks notice to Wink, Programmer shall have
the right to appoint a third party auditor, who shall be permitted,
during regular business hours, to inspect all of Wink's books and
records, whether electronic or otherwise, relating to Wink Responses,
Wink Revenue Responses, and all other revenues generated by Wink's Data
Center from Interactive Wink Programs sourced to Programmer under this
Agreement. Programmer shall
CONFIDENTIAL - PAGE 6
<PAGE> 7
also have the right to audit all "most favored nations provisions"
hereunder, provided that Programmer shall require that its auditors
shall not disclose any terms of Wink's agreements with other broadcast
and cable programmers to Programmer, except when directly related to the
most favored nations clauses in this Agreement and then only in a form
that does not identify by name the holder of such more favorable term.
4.8 During the Term of this Master Agreement, Wink shall pay to Programmer,
on a monthly basis, [ * ] percent of Attributable Revenue. Attributable
Revenue shall be defined as the gross fees earned by Wink directly
sourced to Interactive Wink Programs airing on the First Programming
Service, including, without limitation, Wink Revenue Responses and Wink
Response fees and fees from third party reports (less only amounts
refunded or credited for return), regardless of whether such Interactive
Wink Programs are paid for or sponsored by a third party or Programmer.
Wink warrants and represents that the definition of Attributable Revenue
(i.e. the revenue base) is as beneficial to Programmer as any definition
which Wink has provided to any other entity for purposes of calculating
revenue share for such entity. Wink further warrants and represents that
if it enters into any agreements or amendments offering a more favorable
revenue base definition, it will notify Programmer and Programmer shall
have the right to substitute that definition for the definition
hereunder. Such payments will be made within thirty (30) days of the end
of each month, and will be accompanied by a detailed report showing Wink
Revenue Responses by Interactive Wink Programs, and all revenues
generated by Wink's Data Center from all Wink Revenue Responses
generated by Interactive Wink Program aired on the First Programming
Service (and any other revenues for which Wink is obligated to share
revenue with Programmer according to this Agreement) . Past due payments
shall bear interest at a rate equal to the lesser of (i) one and
one-half percent (11/2%) per month or (ii) the maximum legal rate
permitted under law, and Wink shall be liable for all reasonable costs
and expenses (including, without limitation, reasonable court costs and
attorneys' fees) incurred by Programmer in collecting any past due
payments. Programmer agrees that no interest shall be due if the parties
have a bona fide dispute over payments. In the event Wink offers a
revenue sharing arrangement to any other programmer relating to
distribution of Interactive Wink Programs on platforms other than an
over-the-air broadcast network, Wink will offer such arrangement to
Programmer for any Programming Service hereunder distributed on similar
platforms.
4.9 Beginning within 14 days on the First Air Date, Programmer agrees to use
reasonable efforts to enhance at least ten (10) hours a week of
programming broadcast by the First Programming Service with Interactive
Wink Programs and to offer the "Enhanced Programming" to distribution
outlets that reach in the aggregate at least 70% of the television
households in the United States
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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.
CONFIDENTIAL - PAGE 7
<PAGE> 8
(the "Programming Commitment"). "Enhanced Programming" shall be defined
as programming which includes Interactive Wink Program(s) in the First
Programming Service's VBI or an MPEG private data stream concurrently
with the corresponding signal for the programming. Enhanced Programming
shall count toward fulfillment of the Programming Commitment based on
the broadcast time of the "Enhanced Programming". Wink hereby
acknowledges that the Programming Commitment is subject to the
following: (i) Any Programmer agreements affected by or otherwise
limiting Programmer's opportunities and/or ability to fulfill the
Programming Commitment including, without limitation, agreements with
advertisers, licensors, affiliates, cable system operators and/or other
transmitters or re-transmitters of Programmer's signal (ii) all
collective bargaining agreements to which Programmer is a party and
(iii) all laws and/or regulations pertaining to any performance of the
obligations contemplated under this Agreement (subsections (i) - (iii)
above are collectively referred to herein as the "Restrictive
Obligations")In the event that the Restrictive Obligations render
fulfillment of the Programming Commitment unreasonable or impracticable
(e.g. the available hours of programming in which to deliver the
Interactive Wink Programs are substantially reduced), the Programming
Commitment shall be reduced accordingly to the number of hours per week
that is reasonable ("Revised Programming Commitment") and Programmer
shall be obligated to use reasonable efforts to broadcast Interactive
Wink Programs on the First Programming Service according to the Revised
Programming Commitment. Programmer has the sole right to select, in its
sole discretion, the programs to be enhanced toward fulfillment of the
Programming Commitment. Fulfillment of the Programming Commitment shall
be measured by determining at the end of each calendar month the average
weekly broadcast time of Enhanced Programming over the previous eight
(8) weeks. It is understood and agreed that if Programmer has offered
the Enhanced Programming as set forth herein and has otherwise adhered
to its obligations in Paragraph 4.1, Programmer will have fulfilled its
obligations hereunder even if the Interactive Wink Programs are not
actually broadcast (or transmitted) by these media outlets or
distributors. Programmer has the sole and absolute control and approval
of the Interactive Wink Programs, including, without limitation, the
content, nature, form, scope and placement of the Interactive Wink
Programs, and may suspend any individual Interactive Wink Program at any
time and for any reason. Interactive Wink Programs for cable programming
services must be related to the content, nature and intended audience of
the video programming with which they are broadcast. Wink's sole remedy
in the event Programmer does not meet the foregoing Programming
Commitment Will be to terminate this Agreement. Such notice of
termination must be given in writing 30 days before the effective date
of termination and within the 30 day notice period, Programmer will have
the opportunity to cure by distributing sufficient Enhanced Programming
to reach the minimum requirement. In the event of such "cure", the
termination notice will be deemed rescinded.
CONFIDENTIAL - PAGE 8
<PAGE> 9
4.10 Programmer is responsible for payment of third party fees and royalties
arising out of the content of the Interactive Wink Programs aired by
Programmer, including but not limited to fees and royalties owed to
studios, on-air and other talent, news and sports data providers and
professional and college sports leagues or teams. Wink shall be
responsible for all third party fees and royalties arising out of
Programmer's use of the Wink Hardware and/or Software, excluding such
fees and royalties owed by Programmer hereunder.
4.11 The parties agree that the Interactive Wink Programs will require
bandwidth equivalent to both fields of one dedicated line of VBI on each
programming service. Programmer may elect to use additional VBI lines in
its sole discretion. Programmer has the right, without limiting its
rights or remedies, immediately to suspend its obligations (including
without limitation payment obligations and the Programming Commitment)
and to terminate this Agreement if Programmer's Interactive Wink
Programs cause any degradation in Programmer's (or any transmitter's or
retransmitter's) video signal quality, or cause any other technical or
operational incompatibility, impairment or interference. Programmer
agrees that such termination shall be subject to the thirty (30) day
cure period defined in section 14.1 below.
4.12. Wink agrees that Programmer shall own all rights (including copyright)
in any Interactive Wink Programs created by Programmer, with or without
the assistance of Wink staff members. 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.
4.13. [*]
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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.
CONFIDENTIAL - PAGE 9
<PAGE> 10
[*]
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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.
CONFIDENTIAL - PAGE 10
<PAGE> 11
[*]
5. RATES, DEPLOYMENT AND OTHER PROGRAMMING SERVICES
5.1 Programmer and Wink each agree to remit the license fees and other
payments under this Agreement on a timely basis, on or before the 30th
day following each month of the Term.
5.2 Programmer agrees to provide the Interactive Wink Programs to any
multi-channel video operator in the United States or Canada with whom
Programmer then has an agreement for carriage or re-transmission of the
First Programming Service's video programming as carried by Programmer's
Owned Stations ("System Operators"), to the extent that the terms of
such carriage or retransmission are not inconsistent with this
Agreement, but only if, in so doing, Programmer is not subject to any
additional obligations under any such agreements. Programmer shall not
be required to contest in any legal proceeding or otherwise a
determination by a System Operator that it is not required to pass
through to its subscribers Wink Interactive Programs carried by any
Programmer Owned Stations.
5.3 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 and the lowest rate offered any programmer for
the same products and services.
5.4 Wink agrees to extend the following license rights to programming
entities which are owned by Programmer or affiliated with the First
Programming Service:
(a) Programmer can elect to license the Wink Software for Programmer
Owned Stations at any time during the Term, subject to the license and
other fees in Exhibit F, and acknowledging that such license terms are
subject to a 10-hour "Programming Commitment" per week (as defined in
4.9 above) for Interactive Wink Programs. Programmer acknowledges and
agrees that the equipment, installation and integration charges will be
invoiced to Programmer on a time and material basis for Wink's
verifiable, direct, out-of-pocket costs, not to exceed the amount set
forth in Exhibit F. Notwithstanding the foregoing, if Programmer elects
instead to provide any equipment or to use its appropriately trained
personnel to install and integrate the applicable Wink system, then the
one-time equipment, installation and integration charges will be reduced
accordingly.
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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.
CONFIDENTIAL - PAGE 11
<PAGE> 12
(b) Programmer can elect to license the Wink Software for its cable
programming services at any time during the Term, subject to the license
and other fees in Exhibit G, and acknowledging that such license terms
are subject to a 10-hour "Programming Commitment" per week (as defined
in 4.9 above) for Interactive Wink Programs and to the execution of
Exhibit D. Notwithstanding the foregoing, Wink has agreed that, with
respect to Country Music Television, if it elects to become Wink
enhanced and provided Wink's agreement with the The Nashville Network is
still in effect, Wink will (a) provide all licenses of software free of
charge for a one-year period; and (b) will install and integrate the
system on a time and materials basis for Wink's verifiable, direct,
out-of-pocket costs not to exceed $16,000.
(c) [*]
(d) Wink agrees to offer a license of Wink Software to any Other
Programmer Affiliate at prices no less favorable then those contained in
Exhibit H1, provided however that such license terms shall be subject to
a commitment to air Interactive Wink Programs for at least 10 'hours of
programming per week. Wink acknowledges that Programmer has no authority
to and does not hereby make any commitments on behalf of Other
Programmer Affiliates. At Programmer's request, Wink agrees to train
Programmer's personnel to enable Programmer to install and integrate
Wink Software and Hardware and thereby reduce otherwise applicable
installation and integration fees. Programmer also understands and
accepts that Wink is not obligated under this Agreement to provide the
transaction revenue share offered to Programmer in section 4.8 to any
programming service other than the First Programming Service.
- -------------
* 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 12
<PAGE> 13
Except as noted above, if Programmer elects to exercise its right to
license Wink Software and Hardware for any of its Owned Stations or its
cable programming services all terms and conditions of this Agreement
which are applicable to a programming service of such nature shall
apply.
6. PAYMENT TERMS
6.1 Wink will send invoices for all payments due hereunder, 30 days in
advance of the due date. Wink's failure, for any reason, to send an
invoice for a particular monthly payment due in years two through eight
of the Term for the Broadcast Server, Server Module Engine, Automation
Server Module or Tech Support shall not relieve Programmer of its
obligation to make these payments in a timely manner consistent with the
terms of this Agreement. Failure by Programmer to make such payments in
the absence of an invoice shall not be considered a material breach
under 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.
7. PROMOTION AND RESEARCH
7.1 The parties agree to use good faith efforts to issue a joint press
release after execution of this agreement subject to written approval by
both parties announcing this Agreement within fourteen (14) days of the
Effective Date of this Agreement. Wink shall be solely responsible for
providing a draft for Programmer's review on a timely basis.
7.2 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.
7.3 Subject to the approvals of 7.4: Wink agrees to promote and feature
Programmer's Interactive Wink Programs as prominently as any other
programming service in Wink's promotion, advertisements and/or marketing
materials (in any and all media), 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 equipment
manufacturers, retailers and cable operators. At its election,
Programmer shall have the right to promote its participation as a
charter Wink programmer to cable operators, and upon
CONFIDENTIAL - PAGE 13
<PAGE> 14
written approval to serve as a press reference for Wink during the
effective term of the agreement.
7.4 Wink, equipment manufacturers, retailers 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. Programmer,
the Programming Services, Programmer Owned Stations and Other Programmer
Affiliates may use and authorize the use of Wink's name, logo and
related elements (collectively Wink's Marks") in the production and
distribution of Interactive Wink Programs and in advertising and
publicity therefor. Each party must submit materials containing the
other's Marks to the other party for review and written approval prior
to distribution. The other party agrees to use reasonable efforts to
respond promptly to such requests for approval, and retains sole
discretion over such approvals, if any. 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 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. Likewise, Programmer hereby
acknowledges that Wink is the sole owner of all right, title and
interest in and to the Wink's Marks and any marks, notices or
designations utilized by Wink in connection with Wink's business, and
that no rights or ownership are intended to be or shall be transferred
to Programmer. All uses of the Wink's Marks shall inure to the benefit
of Wink. Upon any expiration or termination of this Agreement,
Programmer shall delete and discontinue all use of the Wink's Marks. At
no time during or after the term of this Agreement shall Programmer
challenge or assist others to challenge the Wink'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 Wink's Marks.
7.5 Programmer understands and accepts that Wink will be providing reports
on Wink Responses to the Interactive Wink Programs to System Operator(s)
for Wink Responses that originate from System Operator's subscribers, to
equipment manufacturers for Wink Responses that originate from Wink-
enabled equipment sold by such manufacturers, and to advertisers and
other parties, authorized by Programmer, for Wink Responses that
originate from Interactive Wink Programs paid for or sponsored by such
parties (collectively, the "Recipients"). Such reports to Recipients
shall be restricted to aggregate
CONFIDENTIAL - PAGE 14
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reports about Wink Responses, and detailed reports on individual Wink
Revenue Responses, which shall only be forwarded to the Recipient
fulfilling such viewer requests, or such party's designated agent. Wink
agrees that reports providing specific data regarding viewer responses
to, usage of, and/or exposure to Programmer's Interactive Wink Programs,
including data on Wink viewer responses to advertising on Programmer
owned or affiliated programming services, will not be made available,
except in aggregated form that does not identify Programmer or specific
Programmer viewer data, to any third party except Recipients pursuant to
this paragraph. Wink acknowledges and agrees that any reports provided
to Recipients or other third parties must adhere to applicable consumer
privacy laws. Information regarding the nature of Winks Responses or the
Wink Viewers shall not be used for any other purpose without the express
consent of Programmer. Notwithstanding the foregoing, Wink agrees that
it shall not include in any of its standard and/or customized reports
any information other than raw data, including aggregate and accumulated
data, program ratings, demographic data, the number of applicable Wink
viewers and other similar "objective" data. [ * ]
8. WARRANTY
8.1 Wink hereby represents and warrants to Programmer that the Wink Software
and Wink Hardware (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 (e.g. Wink's
published specifications for the Interactive Communications Application
Protocol, as updated by Wink, and Wink's then current documentation and
manuals), in accordance with the criteria defined in Exhibit H2 and as
demonstrated to Programmer prior to this Agreement. 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, except for the "Berman" claim. Wink further
represents that the Wink Software (and subsequent revisions and upgrades
to same provided by Wink to Programmer) is Year 2000 compliant.
8.2 Wink hereby warrants and represents that the terms contained herein for
licensing of Wink software, provision of Wink services (excluding
one-time deployment charges), sharing of Wink's revenues and for
Programmer's commitment for Interactive Wink Programs, including without
limitation the terms of Exhibits B and C, (collectively, the "Major
Provisions") are as favorable to Programmer as any other agreement Wink
has entered into with other broadcast and cable programming entities.
Wink further agrees to promptly notify Programmer in writing, should
Wink decide to enter into new agreements or amend existing agreements
with any United States programmer to include more favorable Major
Provisions. Programmer shall have the right during the
- -------------
* 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 15
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next 60 days after its receipt of said notice to assume such new Major
Provisions in their entirety, effective as of the date such Major
Provisions were first agreed to with another Programmer, and amend this
Agreement accordingly. Wink acknowledges and agrees that to obtain the
benefits of such new Major Provisions, Programmer shall only be required
to meet those terms relating to comparable Programmer assets. If
Programmer has no comparable assets, Wink agrees to negotiate in good
faith to determine if other' Programmer assets could be substituted to
allow Programmer to benefit from the terms related to such un-comparable
assets.
8.3 Wink warrants and represents that the terms and conditions in Exhibit D
are as favorable to Programmer as any agreement Wink has caused or
allowed other cable programmers to enter into with System Operators. If
Wink causes or allows any other cable 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, 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 assume
such more favorable terms and amend Exhibit D accordingly.
8.4 Wink hereby warrants and represents that the terms contained herein for
licensing of Wink software, provision of Wink services and equipment,
and the Programmer Owned Stations' commitment for Interactive Wink
Programs, including without limitation the terms of Exhibit F,
(collectively, "Owned Stations' Major Provisions") are as favorable as
any other similar agreement Wink has entered into with other broadcast
programming entities for their owned and affiliated stations. Wink
further agrees to promptly notify Programmer in writing, should Wink
decide to enter into new agreements or amend existing agreements with
any United States broadcast network to include more favorable Owned
Stations' Major Provisions for such network's owned stations. Programmer
shall have the right during the next 60 days after its receipt of said
notice to assume such Owned Stations' Major Provisions in their
entirety, effective as of the date such Owned Stations' Major Provisions
were first agreed to with another broadcast programming entity, and
amend this Agreement accordingly.
8.5 [*]
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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.
CONFIDENTIAL - PAGE 16
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Section 13 - Confidentiality
Section 14 - Termination
[*]
9. INDEMNIFICATION
9.1 Wink will indemnify and hold harmless Programmer, its parent and
subsidiary companies and Programmer's affiliated television stations
carrying Interactive Wink Programs and each of their respective
employees, directors, agents, and 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 Wink's
representations and warranties or any of Wink's other obligations stated
herein or the use of any software, technology or equipment provided by
Wink to Programmer hereunder (including without limitation the Wink
Software and Hardware), or any of Wink's other business activities
directly related to Programmer or this Agreement. Notwithstanding the
above, the parties agree that Wink is specifically not liable or
obligated to indemnify Programmer or other parties for:
(a) any and all expenses arising out of claims or causes of action
related to the content, nature or form of the Interactive Wink Programs.
(b) any and all expenses arising out of claims or causes of action
in which it is alleged that the Interactive Wink Programs created a
malfunction or other technical problem on a Wink-enabled television set
or multi-channel set top receiver, but only to the extent that the
malfunction or problem is caused by Programmer's negligent testing of
such Interactive Wink Programs or other negligent failure to adhere to
Wink's standard Criteria for Compliant Interactive Wink Programs, as
defined in Exhibit D, Attachment 1.
9.2 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 obligations stated herein, or any of Programmer's other
business activities directly related to Wink or 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.
CONFIDENTIAL - PAGE 17
<PAGE> 18
9.3. 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 party 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. Notwithstanding the foregoing,
the indemnified party shall have the right, with respect to any claim or
litigation, to retain its own counsel (in addition to counsel retained
by the indemnifying party on the indemnified party's behalf), at its own
expense, and counsel for the indemnified party shall cooperate fully
with the counsel of the indemnified party. Nothing contained herein
shall give the indemnifying party any right, as part of any compromise
or settlement, to impose any obligations upon the indemnified party.
9.4. Wink shall, at its expense, use best efforts to obtain and maintain for
such length of time as is necessary to cover any and all claims arising
in connection with this Agreement, the following insurance policies
acceptable to Programmer: Comprehensive General Liability, including,
without limitation, contractual, product and completed operations
insurance, having a combined single limit (contractual and property
damage) of at least [ * ]; and Professional Liability Insurance,
specifically insuring against any claims, causes of action, damages and
all other related expenses arising pursuant to paragraph 9.1 of this
Agreement, having a combined single limit (contractual and property
damage) of at least [ * ]. Each of the policies required herein shall
include a provision requiring the insurance company to give Programmer
prompt notice, of at least 30 days, of any revision, modification or
cancellation thereof. No revision, modification or cancellation of such
policies which may affect Programmer's rights hereunder shall be made by
Wink without first obtaining the prior written approval of Programmer.
Promptly after securing such policies, Wink shall furnish Programmer
with copies of the certificates of insurance and, at Programmer's
request, copies of the insurance policies. CBS Corporation and CBS
Broadcasting Inc. shall be included as additional insureds in all
policies of insurance (except Workers' Compensation) obtained by Wink in
compliance with this paragraph and all such insurance shall be primary
and not contributing with any similar insurance in effect in the name of
and for the benefit of CBS Broadcasting Inc. or CBS Corporation. Wink
further agrees to maintain Workers' Compensation and Employer's
Liability Insurance according to the requirements of California State
Law.
10. 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.
- -------------
* 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 18
<PAGE> 19
addressed, to the addresses provided in the first paragraph of this
Agreement, and to the attention of:
if to Wink:
Senior Vice President, Programming
with a copy to:
Chief Financial Officer
If to Programmer: Chief Financial Officer
with a copy to: 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.
11. WINK SOFTWARE
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.
12. REPRESENTATION
12.1 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; (iv) it has all rights necessary to grant the licenses and
rights granted hereunder; and (v) Programmer's exercise of its license
and rights hereunder will not infringe upon the rights of any third
party entity(ies).
12.2 Programmer represents and warrants to Wink that (i) Programmer is a
corporation duly organized and validly existing under the laws of the
State of Pennsylvania; (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.
13. CONFIDENTIALITY
13.1 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
CONFIDENTIAL - PAGE 19
<PAGE> 20
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 13. 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 nontechnical 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. Also,
"Confidential Information" shall not include information which, (a) is
or becomes publicly known through no act or failure to act on the part
of the recipient, (b) was rightfully in the recipient's possession prior
to disclosure by the disclosing party, (c) becomes rightfully known to
the recipient from a third party not subject to any independent
confidential or proprietary restriction, (d) is approved by the
disclosing party for disclosure without restriction, in a written
document that is signed by a duly authorized officer of that party, (e)
is disclosed after the termination of the recipient's duty of
confidentiality as specified herein or (f) is or was developed
independently by the recipient without use of or reference to any of the
Confidential Information and without violation of any confidentiality
restriction. 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.
14. TERMINATION
14.1 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. The
parties agree that Wink's failure to perform materially any services or
provide any technology or equipment in accordance with this Agreement
shall be considered a material breach. The parties also agree that
failure by Programmer to make timely payments of license fees and other
fees due Wink under this Agreement, and failure by Wink to make timely
payments of Programmer's share of Wink's Attributable Revenue shall be
considered material breaches, and that the terminating party's
termination of this
CONFIDENTIAL - PAGE 20
<PAGE> 21
Agreement 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.
14.2 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 (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, excluding Wink Hardware (which
removal shall be done with as little disturbance as possible to
Programmer's business operations at Wink's sole expense), (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.
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) Except pursuant to paragraph 2.3, 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.
CONFIDENTIAL - PAGE 21
<PAGE> 22
(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. CBS CORPORATION
Name: Name:
Title: Title:
CONFIDENTIAL - PAGE 22
<PAGE> 23
Exhibit A: Programming Services
Description of Programming Services:
<TABLE>
<S> <C> <C> <C> <C> <C>
NAME Start of Wink Video VBI line Virtual Insertion
Programming (A/D) Location Ch? Point
First Programming Service
CBS First Air Date Analog TBD TBD New York
Television
Network
Other Programming Services *
CBS Owned
Stations TBD TBD TBD TBD TBD
* Programmer is under no obligation to include programming services other than
the CBS Television Network in this Agreement
Contact Information:
Issue Address Contact(s) Phone /Fax/E-mail
Operations (site visits, VBI insertion, etc.)
TBD
Programming (development and scheduling of Interactive Wink Programs, reports,
etc.)
TBD
Marketing (affiliate marketing, approvals of promotional materials)
TBD
</TABLE>
CONFIDENTIAL - PAGE 23
<PAGE> 24
EXHIBIT B: WINK RESPONSE CENTER. SERVICES
All products and services are billed Net/45. A Purchase Response shall be
defined as any Wink Revenue Response which constitutes an agreement to purchase
a product or service, regardless of the method of payment. An RFI Response shall
be defined as any other Wink Revenue Response. A Poll Response shall be defined
as a Wink Response generated by a Wink "vote/poll" script. Programmer shall have
no liability for payment for Reports, Polls, Wink Responses or Wink Purchase
Responses commissioned by third parties such as advertisers on the Programming
Services hereunder. These will be subject to separate agreement between the
third parties and Wink, unless Programmer exercises Its election to contract
directly with Wink on any such advertiser enhancement. All Wink Transaction Fees
will be charged net of credits, refunds and returns.
<TABLE>
<S> <C>
Wink Transactions/mo. Price/Wink Transaction
Purchase Responses $[*] min./mo. per Interactive Wink Program
creating Purchase Responses
1-5,000 [*]
5,001 - 25,000 [*]
25,001 - 100,000 [*]
100,001 - 250,000 [*]
250,001 - 500,000 [*]
500, 001 + [*]
RFI Responses $[*] min./mo. per Interactive Wink Program
creating RFI Responses
1-5,000 [*]
5,001 - 25,000 [*]
25,001 - 100,000 [*]
100,001 - 250,000 [*]
250,001 - 500,000 [*]
500, 001 + [*]
Polls - report only $[*] min./mo. per Interactive Wink Program creating Poll Responses
1-250,000 Wink Responses [*]
250,001 + [*]
</TABLE>
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on Programmer's monthly transaction
volume by response category. 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 RESPONSE FEES INCLUDE;
1. Daily name & address lists delivered by fax, e-mail, or electronic FTP
or mailbox.
2. UIC and application registration.
3. Standard report showing number of Wink Responses per day per Interactive
Wink Program per city.
POLLS
The fixed charge includes UIC and application registration, and a standard
reporting that summarizes all Poll responses by type by city. If the application
asks the viewer for telephone prefix or zip code, the summary includes those
totals.
Custom Usage Reports or other Custom Reporting
Custom reports are quoted by the Wink Response Center.
New Fee Structure
CONFIDENTIAL - PAGE 24
- -------------
* 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> 25
Wink agrees to provide a new Wink Transaction fee structure for Purchase and RFI
Responses within 60 days of the Effective Date of the Agreement. Programmer is
and will continue to be on a "most favored nations" basis with all broadcasters
and cable networks on all terms contained in this Exhibit B.
CONFIDENTIAL - PAGE 25
<PAGE> 26
EXHIBIT C: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 1
This pricing is available to the CBS TV Network 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 First Yrs 2-8
or one- year Price/
time costs Price network
<S> <C> <C> <C>
Broadcast Server On-going Free $48,000
Server Module Engine On-going Free $12,000
Automation Server Module On-going Free $24,000
Tech Support On-going Free $6,000
Subtotal On-going $0 $90,000
Server hardware One-time $9,500 N/A
Data Insert. Unit(2) One-time $16,800 N/A
Set-top boxes, misc. One-time $700 N/A
Sub-total One-time $27,000 N/A
Installation and integration One-time $25,000 N/A
Studio site license (5 seats) One-time Free N/A
Svr Studio license (5 seats) One-time Free N/A
Training (3days)(1) One-time Free N/A
Subtotal One-time $0 N/A
TOTAL (3) Both $52,000 $90,000
</TABLE>
(1) This base training package provides training on the Wink Software and
Hardware 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.
(2) Three units and software modules for one VBI line each.
The above pricing for installation and integration covers all work necessary to
enable scheduling and transmission of program and/or commercial enhancements.
OPTIONAL SERVICES
<TABLE>
<S> <C>
Custom interface work (ad insertion and traffic systems, etc.) $1,000/day
Phone training and consulting beyond standard package $125/hr
Application development $2,500 min., $125/hr
</TABLE>
CONFIDENTIAL - PAGE 26
<PAGE> 27
EXHIBIT D: PROGRAMMER'S TERMS FOR CARRIAGE OF INTERACTIVE WINK PROGRAMS
OTHER THAN RETRANSMISSION OF OVER-THE-AIR BROADCASTS
Programmer: CBS Corporation
Programming Services:
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 multi-channel video operator in the United States or
Canada with whom Programming Service already has an agreement for carriage of
Programming Service's video programming ("System Operator").
1. BACKGROUND
Programming Service's 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 Programming Services 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 Programming Services' 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
Programming Services' execution of this IWP Carriage Agreement. The parties
acknowledge that Programming Services has an agreement with Wink for
distribution of Interactive Wink Programs (the "Charter Programmer Affiliation
Agreement") for eight years after the first transmission of Interactive Wink
Programs by Programming Services. The terms and conditions of this IWP Carriage
Agreement shall govern during the entire term of the Charter Programmer
Affiliation Agreement, unless Programming Services and Wink terminate their
Charter Programmer Affiliation Agreement earlier in accordance with the terms of
that agreement.
3. INTEGRITY OF INTERACTIVE WINK PROGRAMS
Programming Services will ensure that the Interactive Wink Programs meet Wink's
criteria for compliant Interactive Wink Programs (See Attachment 1). Programming
Services agrees that each Interactive Wink Program shall have been either
successfully tested by Programming Services or certified as compliant by Wink
prior to the Delivery to System Operator for distribution, and shall bear any
associated costs of such testing.
CONFIDENTIAL - PAGE 27
<PAGE> 28
Programming Services 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
Programming Services hereby grants System Operator a non-exclusive license to
distribute the Interactive Wink Programs delivered in the VBI or MPEG of
Programming Services' video signal.
Programming Services 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 as a result of carriage or
retransmission of the Interactive Wink Programs as provided for hereunder.
Programming Services 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, but System Operator agrees
that Programming Services 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 Programming Services' Interactive
Wink Programs without modification, and that System Operator may not modify or
enhance any VBI lines described in Exhibit A of the Charter Programmer
Affiliation Agreement between Programmer and Wink and amendments to same, as
provided to System Operator. 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.
5. RESPONSE NETWORK
Programming Services agrees to utilize the Wink Response Network for two-way
Interactive Wink Programs. Programming Services also agrees to use Wink
Communication's standard scripts and guidelines to generate viewer responses to
two-way Interactive Wink Programs.
6. MARKETING MATERIALS
CONFIDENTIAL - PAGE 28
<PAGE> 29
System Operator may prepare marketing materials relating to the Interactive Wink
Programs and may use Programming Services' name, logo, and screen shots from the
Interactive Wink Programs in such marketing materials, provided that such
materials are submitted to Programming Services for review and written approval
prior to distribution. Programming Services agrees to use reasonable .efforts to
respond to such requests for approval in a timely fashion, provided that such
approval shall be in Programming Services' sole discretion.
7. SCOPE
This Agreement does not supersede or affect other Agreements between Programming
Services and System Operator, This Agreement represents all of the terms and
conditions for Programming Services providing Interactive Wink Programs. This
Agreement may be updated from time to time only by express written consent of
Programming Services.
PROGRAMMER
By:
Name:
Title:
Date:
CONFIDENTIAL - PAGE 29
<PAGE> 30
EXHIBIT D, ATTACHMENT 1: CRITERIA FOR COMPLIANT INTERACTIVE WINK PROGRAMS
o All Interactive Wink Programs must be registered and contain a unique
universal ICAP code (UIC) prior to being broadcast.
o Registered Interactive Wink Programs have complied with the Wink testing
procedures established to validate:
that the Interactive Wink Programs can be delivered through the
VBI, will arrive as appropriate, and can be decoded in the Wink
engine.
that the Interactive Wink Programs does not generate error
messages.
that the Interactive Wink Programs receives scheduled updates,
if applicable.
that the Interactive Wink Programs passes minimum acceptable
latency standards.
that the Interactive Wink Programs do not cause System Operator
technical or operational problems.
that the I nteractive Wink Programs, if two-way, generates the
appropriate routing address and usage data.
CONFIDENTIAL - PAGE 30
<PAGE> 31
EXHIBIT E: EQUIPMENT TO BE PROVIDED BY WINK (PRELIMINARY)
1. WINK HARDWARE (PRELIMINARY)
o Sun Ultra server hardware, configured to support Wink Broadcast
Server 2.x, two Ethernet LAN cards, dial-up modem for remote
diagnostic use
o Norpak TES-3 data insertion units with software module for 1 VBI
line, one each for the main East Coast and West Coast feeds and
one for in-house testing
o 2 GI CFT-2200 advanced analog cable set tops for development and
test
2. Programmer Equipment:
Programmer will provide cabling and Pentium PC running Windows 95 or Windows NT
for the Broadcast Server User Interface, Wink Studio and Wink Server Studio.
These applications may reside on one or several PCs, none of which need to be
dedicated to the Wink software. Each PC must be connected to the Broadcast
Server via an Ethernet LAN interface.
CONFIDENTIAL - PAGE 31
<PAGE> 32
EXHIBIT F: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 2
Subject to the other terms and conditions of this agreement, this pricing is
available to Programmer Owned Stations. On-going annual fees are paid one
twelfth each month, and are due the first of the month.
<TABLE>
<CAPTION>
On-going or First year Price Years 2-8
one-time costs Price/
network
<S> <C> <C> <C>
Broadcast Server On-going [*] [*]
Automation Server Module(3) On-going [*] [*]
Server Module Engine On-going [*] [*]
Tech Support On-going [*] [*]
Subtotal On-going [*] [*]
Server hardware One-time [*] [*]
Data Insert. Unit(1) One-time [*] [*]
Set-top box, misc. One-time [*] [*]
Sub-total One-time [*] [*]
Installation and integration(2) One-time [*] [*]
Studio site license (5 seats) One-time [*] [*]
Server Studio site license (5 seats) One-time [*] [*]
seats)
Studio/Server training (3x2days)(2) One-time [*] [*]
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 $1,500/VBI line.
(2) $25,000 if including Automation Server Module.
(3) Optional
The above pricing for installation and integration covers all work necessary to
enable scheduling and transmission of program and/or commercial enhancements
based on Wink Studio templates.
OPTIONAL SERVICES
<TABLE>
<S> <C>
Custom interface work (ad insertion and traffic systems, etc.) $1,000/day
Phone training and consulting beyond standard package $125/hr
Application development $2,500 min., $125/hr
</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.
CONFIDENTIAL - PAGE 32
<PAGE> 33
EXHIBIT G: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 3
Subject to the other terms and conditions of this agreement, this pricing is
available to Programmer's cable programming services. On-going annual fees are
paid one twelfth each month, and are due the first of the month.
<TABLE>
<CAPTION>
Years 2-8
On-going or First year Price/
one-time costs Price network
<S> <C> <C> <C>
Broadcast Server On-going $48,000 $48,000
Automation Server Module(3) On-going Free $24,000
Server Module Engine On-going Free $12,000
Tech Support On-going Free $6,000
Subtotal On-going $48,000 $90,000
Server hardware One-time $9,500 N/A
Data Insert. Unit(1) One-time $5,600 N/A
Set-top box, misc. One-time $700 N/A
Sub-total One-time $15,800 N/A
Installation and integration(2) One-time $15,000 N/A
Studio site license (5 seats) One-time Free N/A
Server Studio site license (5 seats) One-time Free N/A
Studio/Server training (3x2days)(2) One-time Free N/A
Subtotal One-time $15,000 N/A
TOTAL Both $78,800 $90,000
</TABLE>
(1) One required per network. More than one VBI line per network requires an
additional license from Norpak in the amount of $1,500/VBI line.
(2) $25,000 if including Automation Server Module.
(3) Optional
The above pricing for installation and integration covers all work necessary to
enable scheduling and transmission of program and/or commercial enhancements
based on Wink Studio templates.
OPTIONAL SERVICES
<TABLE>
<S> <C>
Custom interface work (ad insertion and traffic systems, etc.) $1,000/day
Phone training and consulting beyond standard package $125/hr
Application development $2,500 min., $125/hr
</TABLE>
CONFIDENTIAL - PAGE 33
<PAGE> 34
EXHIBIT H1: WINK SOFTWARE AND SERVICES PRICING, SCHEDULE 4
This pricing is subject to the terms of the Agreement, and is available
to all Other Programmer Affiliates. On-going annual fees are paid one
twelfth each month, and are due the first of the month.
<TABLE>
<CAPTION>
On-going
or one- Years 2-8
time First year Price/
costs Price network
<S> <C> <C> <C>
Broadcast Server On-going $62,000 $62,000
Server Module On-going $12,000 $12,000
Engine
Tech Support On-going $6,000 $6,000
Subtotal On-going $80,000 $80,000
Server hardware One-time $9,500 N/A
Data Insert. Unit(1) One-time $5,600 N/A
Set top, misc. One-time $700 N/A
Sub-total One-time $15, 800 N/A
Installation and One-time $20,000 N/A
Integration(2)
Studio site license (5 seats) One-time $3,000 N/A
Server Studio site One-time $5,000 N/A
license (5 seats)
Studio/Srvr training One-time $6,000 N/A
(3x2days)(2)
Subtotal One-time $39,000 N/A
TOTAL Both $134,800 $80,000
</TABLE>
(1) One required per network. More than one VBI line per network requires an
additional license from Norpak in the amount of $1,500/VBI line.
The above pricing for installation and integration covers all work necessary to
enable scheduling and transmission of program and/or commercial enhancements
based on Wink Studio templates.
OPTIONAL SERVICES
<TABLE>
<S> <C>
Automation Server Module $36,000 annual license
Custom interface work (ad insertion and traffic systems, etc.) $1,000/day
Phone training and consulting beyond standard package $125/hr
Application development $2,500 min., $125/hr
</TABLE>
CONFIDENTIAL - PAGE 34
<PAGE> 35
EXHIBIT H2: PERFORMANCE STANDARDS FOR WINK SOFTWARE AND SERVICES
The parties agree that Wink Software and Services must meet the following
standards:
1) Programmer can create Interactive Wink Programs that adhere to Exhibit
D, Attachment 1: "Criteria for Compliant Interactive Wink Programs"
using Wink Studio and Wink Server Studio.
2) Programmer can schedule Interactive Wink Programs to be inserted into
Programmer's analog video programming using the Wink Broadcast Server
and the associated PC-based user interface programs provided by Wink.
3) Programmer can insert Interactive Wink Programs into Programmer's analog
video programming using the Wink Broadcast Server, VBI data insertion
units and other software hardware and services provided by Wink. Such
insertion shall have no effect on the visible portion of the
Programmer's video signal.
4) Programmer can parse Programmer's existing standard HTML content for use
in Interactive Wink Programs using Wink Server Studio and standard LAN
connections between the Wink Broadcast Server and the Programmer's web
servers.
5) Programmer can create, schedule and insert Interactive Wink Programs
that are capable of generating Wink Revenue Responses.
Subject to availability of a live connection to either two-way cable plant or
other return path, and to System Operator's reasonable support and operational
readiness, Wink will:
6) collect Wink Revenue Responses from viewer homes,
7) prepare aggregate reports of subscriber usage of the Interactive Wink
Programs
8) forward Wink Revenue Responses to the party having registered the
Interactive Wink Program with Wink's Response Center (subject to billing
system interface or other means of capturing subscriber address and
payment information).
CONFIDENTIAL - PAGE 35
<PAGE> 36
EXHIBIT I: CURRENT WINK ADVERTISER AGREEMENT
ADVERTISER AFFILIATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the day of , 1999 (the "Effective
Date"), by and between Wink Communications, Inc., a California corporation
("Wink"), whose address is 1001 Marina Village Parkway, Alameda, CA 94501, and
____________, ____________a ____________. corporation ("Advertiser"), whose
address is
1. DEFINITIONS
1.1 "Interactive Wink Program" or "IWP" shall mean an interactive
application that is transported via the vertical blanking interval ("VBI") or an
MPEG private data stream provided concurrently with a video signal in a format
that is compliant with the Wink interactive communications application protocol.
1.2 "Broadcaster" shall mean an entity which delivers television programming
and inserts third-party advertising into such programming, and shall include but
not be limited to: broadcast networks; broadcast network affiliates or other
broadcast stations; operators (both local operators and their parent companies,
if any) of multi-channel systems, including but not limited to cable systems and
direct broadcast satellite systems; and cable networks and other programmers
providing video programming to such operators of multi-channel systems.
1.3 "Wink Tools" shall mean the Wink Studio authoring tool, and other
authoring software or materials which Wink, in it's sole discretion, may provide
in conjunction with Wink Studio.
2. TERM
The term of this Agreement (the "Term") will begin on the Effective Date and
will end on twenty four months later (the "Termination Date").
3. CREATION AND DISTRIBUTION OF WINK-ENHANCED ADS
3.1 Advertiser may contract with any then current licensee of Wink's
authoring tools ("Wink Tools", as defined below) for the creation of IWPs.
Optionally, Advertiser may:
(a) Purchase from Wink a Wink Authoring Starter Kit for $[*], which
includes:
o a five-seat non-exclusive site license to use the Wink Tools
(and all applicable upgrades of same released by Wink during the Term)
at one site of Advertiser during the Term
o a two-day training session at Wink's facilities for up to two
employees (scheduled at Wink's discretion, with reasonable notice to
Advertiser)
o eight (8) hours of IWP phone support for training, consulting or
design assistance
(b) Purchase from Wink creative and consulting services for IWP development
at a rate of $125 per hour, with a $1,000 minimum.
3.2 Before distributing any IWP to a Broadcaster, Advertiser will ensure
that the Interactive Wink Programs follow the Guidelines for Fair Treatment of
Viewers Using Wink, and meet Wink's criteria for technical compliance with the
Wink system. Advertiser agrees that each Interactive Wink Program shall be
certified as technically compliant by Wink prior to the delivery of the IWP to
Broadcasters. It is expected that Wink will complete review of a IWP within one
week of submission by Advertiser. If the IWPs fails certification, Wink shall
provide Advertiser information so as to reasonably enable Advertiser to resolve
any problems preventing certification.
4. WINK RESPONSE NETWORK & OTHER WINK PRODUCTS & SERVICES
CONFIDENTIAL - PAGE 36
- -------------
* 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> 37
4.1 Advertiser agrees to exclusively use the data center that Wink has
established (the "Wink Response Network") to collect response data from
television viewers which are able to receive and interact with IWP
("Wink-enabled Viewers"). Wink agrees to make such data available for purchase
by Advertiser. Such data shall be prepared in two categories of reports: reports
that document aggregated usage of IWPs ("Usage Reports"), and reports that
provide individual response in which Wink Revenue Responses (as defined below)
from Advertiser's IWPs ("Transaction Reports"). A "Wink Revenue Response" is a
Wink Response in which the Wink-enabled Viewer request products or services
through the IWPs, whether such products and services are provided at no charge
to the Wink-enabled Viewer or require payment by the Wink-enabled Viewer, and
where the fulfillment of that request requires the release of Wink-enabled
Viewer specific information, such as name and address. Usage Reports and
Transaction Reports are subject to the pricing in Exhibit A, are available in
standard formats, and shall be delivered via electronic mail ("Email") or FTP
formats and protocols to an address specified by Advertiser. Custom-formatted
reports and other products and services shall be made available at prices to be
quoted by Wink upon request. In addition, if Advertiser wishes Wink to transfer
data, reports, or other information in a manner other than Wink's standard Email
or FTP formats and protocols, Wink and Advertiser shall agree on the terms of
such transfer, including but not limited to details and fees regarding EDI
service.
4.2 Advertiser understands and accepts that Wink may provide reports on
aggregated viewer responses to the IWPs to each Broadcaster whose viewers
responded to or are otherwise known to have viewed Advertiser's IWPs. Such
reports shall be noted as Confidential Information under Wink's agreements with
such Broadcasters.
5. PAYMENT TERMS
Advertiser shall pay Wink for each Wink Revenue Response (net of returns,
refunds and credits) triggered by Advertiser's IWPs according to Exhibit A. All
payments shall be made within 30 days of presentation of invoice by Wink. Wink
reserves the right to change the pricing in Exhibit A upon 30 days prior written
notice. In the event of such change, Advertiser shall have the right to maintain
the Purchase Response and Request Response pricing in effect prior to the
effective date of such change for all IWPs registered with Wink prior to the
effective date of the price change. 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 Advertiser 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. INDEMNIFICATION
Wink will indemnify and hold harmless Advertiser, its parent and subsidiary
companies and their respective employees, directors, agents, and 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
Wink's material obligations stated herein. Advertiser will indemnify and hold
harmless Wink, any parent and subsidiary companies and their respective
employees, directors, agents, and 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 Advertiser's r material obligations
stated herein. 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.
7. INTELLECTUAL PROPERTY RIGHTS
CONFIDENTIAL - PAGE 37
<PAGE> 38
7.1 All rights, title and interest in and to the Wink Tools or other rights,
of whatever nature, related thereto shall remain the property of Wink.
Advertiser acknowledges and agrees that all Wink's 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 Advertiser.
7.2 For purposes of this Agreement, "Viewer Information" shall be defined as
viewer names, contact information (address, phone number, etc.), demographic or
psychographic information, and any responses provided by viewers through the
Wink system or otherwise provided to Wink. Advertiser is hereby granted a
license to use such Viewer Information, but only in a manner consistent with the
Guidelines for Fair Treatment of Viewers Using Wink. Advertiser acknowledges
that any breach of such license may cause irreparable harm and significant
injury to Wink and it's Broadcaster partners to an extent that may be extremely
difficult to ascertain. Accordingly, Advertiser agrees that Wink 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 9.2.
8. TERMINATION
8.1 Except as otherwise provided herein, neither Advertiser nor Wink may
terminate this Agreement except upon thirty (30) days prior written notice and
then only if the other has breaches any of its material obligations hereunder
and such breach (which shall be specified in such notice) is not or cannot be
cured within thirty (30) days of such notice.
8.2 Upon expiration of the term of this Agreement or upon the termination of
this Agreement or of any license granted hereunder for any reason, all rights of
Advertiser to use the Wink Tools will cease and Advertiser will immediately
purge all copies of all Wink Tools from all computer processors or storage media
on which Advertiser has installed or permitted others to install such Wink
Tools.
9. 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 Advertiser and Wink. Consent shall not be required for assignment to
a corporate affiliate, including but not limited to such that occurs
upon the merger or acquisition of either party by a third party.
b) This Agreement may be amended only by an instrument in writing, executed
by Advertiser 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 Advertiser and Wink.
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 Advertiser:
By: By:
Name: Name:
Title: Title:
CONFIDENTIAL - PAGE 38
<PAGE> 39
Date: Date:
CONFIDENTIAL - PAGE 39
<PAGE> 40
EXHIBIT A. WINK RESPONSE NETWORK PRODUCTS AND SERVICES
A Purchase Response shall be defined as any Wink Revenue Response which
constitutes an agreement to purchase a product or service, regardless of the
method of payment. An RFI Response shall be defined as any other Wink Revenue
Response. A Poll Response shall be defined as a Wink
Response generated by a Wink "vote/poll" script.
<TABLE>
<CAPTION>
Wink Transactions/mo. $[*] min./mo. per IWP
Purchase Responses Price/Wink Transaction creating Purchase Responses
<S> <C>
1-5,000 [*]
5,001- 25,000 [*]
25,001 -100,000 [*]
100,001- 250,000 [*]
250,001- 500,000 [*]
500, 001 + [*]
RFI Responses $[*] min./mo. per IWP
creating RFI Responses
1-5,000 [*]
5,001- 25,000 [*]
25,001-100,000 [*]
100,001-250,000 [*]
250,001- 500,000 [*]
500, 001 + [*]
Polls-report only $[*] min./mo. per IWP creating Poll
Responses
1-250,000 Wink Responses [*]
250, 001 + [*]
</TABLE>
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on Advertiser's monthly transaction
volume by response category. 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 RESPONSE FEES INCLUDE;
1. Daily name & address lists delivered by fax, e-mail, or electronic FTP
or mailbox.
2. UIC and application registration.
3. Standard report showing number of Wink Responses per day per IWP per
city.
4. Weekly Usage Reports in standard format POLLS The fixed charge includes
UIC and application registration, and a standard reporting that
summarizes all Poll responses by type by city. If the application asks
the Wink-enabled viewer for telephone prefix or zip code, the summary
includes those totals.
POLLS
The fixed charge includes UIC and application registration, and a standard
reporting that summarizes all Poll responses by type by city. If the application
asks the Wink-enabled viewer for telephone prefix or zip code, the summary
includes those totals.
USAGE REPORTS
$100 monthly fee if application does not allow viewers to create a Purchase or
Request Response.
CUSTOM USAGE REPORTS OR OTHER CUSTOM REPORTING
Custom reports are quoted by the Wink Response Network.
CONFIDENTIAL - PAGE 40
- -------------
* 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> 1
EXHIBIT 10.8
March 23, 1999
CBS Corporation
51 West 52nd Street
New York NY 10019
Attention: Fred Reynolds
Dear Fred:
Reference is made to the Charter Programmer Affiliation Agreement being entered
into concurrently herewith by CBS Corporation ("CBS") and Wink Communications,
Inc. ("Wink") pursuant to which Wink will license to CBS certain Wink software
for the purpose of creating and airing Wink enhanced broadcasting applications
(the "Master Agreement").
As an inducement for CBS entering into the Master Agreement, Wink is granting to
CBS that Common Stock Purchase Warrant attached hereto as Exhibit "A" between
CBS and Wink for the issuance to CBS of warrants to purchase One Hundred
Twenty-Five Thousand (125,000) shares of Wink Common Stock for a maximum price
of Twelve Dollars ($12.00) per share (the "Warrant Agreement").
CBS and Wink agree that "Programmer" (as defined in the Master Agreement) shall
have no obligations whatsoever under the Master Agreement unless and until (i)
that certain Warrant Agreement is executed and effective as between Wink and
CBS, and (ii) CBS has been made a party to, and has been granted all rights
under, that certain Third Amended and Restated Investor Rights Agreement dated
as of June 18, 1997 (as amended as of October 15, 1997, the "Rights Agreement")
and the Third Amended and Restated Founder Co-Sale Agreement made as of June 18,
1997 ("Co-Sale Agreement") by and among Wink, NBC Multimedia, Inc., and the
parties listed on Exhibit A thereto and is afforded thereby identical rights to
such parties. Wink and CBS further acknowledge and agree that, subject to the
limited right of termination set forth below, the Effective Date of the Master
Agreement shall be the later of the date of its execution or the satisfaction of
the conditions set forth hereinabove, or waiver of such by CBS.
Wink hereby represents and warrants that the Rights Agreement is in full force
and effect and has not been modified, amended or revised (except as noted above)
prior to the execution of this Agreement.
Both parties hereby acknowledge and agree that, notwithstanding the condition
precedents described above, the rights granted to CBS under the Warrant
Agreement, the Rights Agreement and the Co-Sale Agreement are irrevocably and
unconditionally granted to CBS upon execution of the Warrant Agreement, the
Rights Agreement and the Co-Sale Agreement. Wink hereby agrees that Programmer's
non-performance, termination, breach of the Master Agreement, or any
<PAGE> 2
other failure by Programmer to perform any obligations under the Master
Agreement for any reason whatsoever shall not result in any forfeiture of any
rights granted to CBS under the Warrant Agreement, the Rights Agreement and the
Co-Sale Agreement.
CBS acknowledges that the inclusion of CBS as a party to the Rights Agreement
and Co-Sale Agreement is subject to the obtaining by Wink of all necessary
consents and waivers by existing Wink shareholders and other holders of rights
with respect to Wink securities.
If the consents and waivers necessary to make CBS a party to the Rights
Agreement and the Co-Sale Agreement are not obtained within 30 days of the
execution of this letter agreement, then CBS shall have the right, at its
election, to waive the outstanding condition precedents, to extend the 30-day
period or terminate the Master Agreement. If CBS exercises its election to
terminate the Master Agreement (at the end of such 30-day period, as it may be
extended), neither party shall have any obligation or liability to the other
under the Master Agreement.
Yours very truly,
WINK COMMUNICATIONS, INC. ACCEPTED AND AGREED:
By: CBS CORPORATION
Name: By:
Title: Name:
Title:
<PAGE> 3
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 HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER OR
PLEDGE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS SOLD PURSUANT TO RULE
144 OF THE ACT.
VOID AFTER , 2004
WINK COMMUNICATIONS, INC.
WARRANT TO PURCHASE 125,000 SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, CBS Corporation (the "Holder")
is entitled to subscribe for and purchase 125,000 shares (as adjusted pursuant
to Section 3 hereof) of fully paid and nonassessable Common Stock (the "Shares")
of Wink Communications, Inc., a California corporation (the "Company"), at the
price of $12.00 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.
1. EXERCISE; PAYMENT.
(a) Time of Exercise. This Warrant may be exercised, in whole or
in part, at any time or from time to time, on any business day, before 5:00
p.m., California local time, on , 2004, for the full or any
partial number of Shares for which this Warrant is then exercisable. This
Warrant shall be immediately exercisable in full upon (i) the filing of a
registration statement for an initial public offering by the Company registered
under the Securities Act of 1933 (an "IPO") or (ii) the execution of a
definitive agreement for (A) the merger or consolidation of the Company into a
third party pursuant to which the Company's shareholders immediately prior to
such merger or consolidation own less than fifty percent (50%) of the
outstanding voting securities of the surviving entity, or (B) the sale of all or
substantially all of the assets of the Company.
EXHIBIT A
<PAGE> 4
(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
Exhibit A duly executed) at the principal office of the Company, and by the
payment to the Company, by wire transfer or by certified, cashier's or other
check acceptable to the Company, of an mount equal to the aggregate Exercise
Price of the Shares being purchased.
(ii) Net Issue Exercise. In lieu of exercising this
Warrant, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being exercised) 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 (-B)
----
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares purchasable under this Warrant (or the
portion thereof being exercised).
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 Warrant,
the "Fair Market Value" of the Company's Common Stock shall mean:
A. The average of the closing ask prices of the
Company's Common Stock quoted in the NASDAQ Over-the-Counter 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 (or such lesser number of days as the Company's
stock has been so traded) prior to the date of determination of fair market
value; provided, however, if this Warrant is exercised in connection with an
IPO, the fair market value shall be the gross price to the public per share in
such offering.
2
EXHIBIT A
<PAGE> 5
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.
(c) Stock Certificates. 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 within a reasonable tune
and, unless this Warrant has been fully exercised or has expired, a new Warrant
representing the shares with respect to which this Warrant has not have been
exercised shall be issued to the Holder.
2. Stock Fully Paid; Reservation of Shares. All of the Shares
issuable upon the exercise of 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. During the period
within which 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 this Warrant.
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
$12.00 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
then current Fair Market Value of the Common Stock 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 alter
each such issuance shall forthwith be adjusted to a price equal to (A) the
product of such Exercise Price multiplied by (B) the quotient obtained by
dividing:
3
EXHIBIT A
<PAGE> 6
(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, plus
(z) the number of shares of Common Stock
the consideration received by the Company upon such issuance would have
purchased at the then current Fair Market Value of the Common Stock, 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.
(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 principles.
4
EXHIBIT A
<PAGE> 7
(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 fights 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 of such options, rights, convertible or exchangeable securities or
options or rights relate to such
EXHIBIT A
<PAGE> 8
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 the date hereof;
(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., up to 550,000
shares of Common Stock issuable upon exercise of the warrants issued to General
Electric Capital Corporation and shares of Common Stock issuable upon exercise
of warrants issued to The Walt Disney Company or its affiliates; and
(4) up to 6,589,546 shares of Common Stock
(and/or options or warrants therefor) issued after February 1, 1995 (and net of
any repurchases) to employees, officers, directors, contractors, advisors,
consultants of the Company pursuant to incentive agreements or plans approved by
the Board of Directors 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 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
EXHIBIT A
<PAGE> 9
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 (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.
7
EXHIBIT A
<PAGE> 10
(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, mounts 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 mount 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 pursuant hereto
and the performance of the Company's obligations hereunder have been 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 and the Shares issuable upon exercise thereof
are 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"). Upon
exercise of this Warrant, the Holder shall, if appropriate under applicable
securities laws, confirm in writing, in a form satisfactory to the Company, that
the securities issuable
8
EXHIBIT A
<PAGE> 11
upon exercise of this Warrant are being acquired for investment and not with a
view toward distribution or resale.
(b) The Holder understands that the Warrant and the Shares have
not been registered under the Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the Act
pursuant to Section 4(2) thereof, that they must be held by the Holder
indefinitely, and that the Holder must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition is registered under the
Act or is exempted from such registration. 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
acquiring this Warrant and the Shares issuable upon exercise hereof and of
protecting its interests in connection herewith.
(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, AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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
THE ACT. COPIES OF THE INSTRUMENT 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 CORPORATION AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION.
9
EXHIBIT A
<PAGE> 12
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 transferee agrees in writing to
be subject to the terms hereof to the same extent as if such transferee were the
original holder 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 Exhibit c).
10. Associated Rights. The Company covenants that the initial Holder
shall be entitled to all such rights as the Company has granted to investors in
the Company generally, including all rights including but not limited to the
registration rights, information rights and rights of first refusal and co-sale,
pursuant to the Third Amended and Restated Investor Rights Agreement dated as of
June 18, 1997, as amended to date (the "Rights Agreement"), including the waiver
by each holder of the subordination rights in paragraph 2.7 contained in the
Rights Agreement, and the Third Amended and Restated Founder's Co-Sale Agreement
dated as of June 17, 1997, as amended. The Company agrees to take promptly all
appropriate steps to obtain all necessary waivers and consents from existing
investors and amend such agreements to provide the initial Holder and its
permitted assignees with such rights.
11. Rights of Shareholders. Notwithstanding Section 10 hereof, 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
10
EXHIBIT A
<PAGE> 13
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 or subscription rights or otherwise until
the Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
12. Expiration of Warrant. This Warrant shall expire and shall no longer
be exercisable upon the earlier to occur of:
(a) 5:00 p.m., California local time, on ,2004.
(b) The closing of a merger or consolidation of the Company into
a third party pursuant to which the Company's shareholders immediately prior to
such merger or consolidation own less than fifty percent (50%) of the
outstanding voting securities of the surviving entity;
(c) The closing of a sale of all or substantially all of the
assets of the Company; or
(d) The closing of an IPO.
13. 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 or sent by nationally recognized express courier, at such
address as may have been furnished to the Company in writing by the Holder.
14. 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.
Issued this 23rd day of March, 1999.
WINK COMMUNICATIONS, INC.
By:
Maggie Wilderotter
Chief Executive Officer and
President
EXHIBIT A
NOTICE OF EXERCISE
11
EXHIBIT A
<PAGE> 14
TO: WINK COMMUNICATIONS, INC.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: President
1. The undersigned hereby elects to exercise the attached Warrant as to
shares of Common Stock of WINK COMMUNICATIONS, INC. pursuant to the
terms of such 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: (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
12
EXHIBIT A
<PAGE> 15
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 Exhibit B.
(Signature)
Title:
(Date)
13
EXHIBIT A
<PAGE> 16
EXHIBIT B
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 MARCH 23, 1999
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 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.
(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
14
EXHIBIT A
<PAGE> 17
register the Securities, other than as set forth in the Third Amended and
Restated Investor Rights Agreement dated June 18, 1997 and as may be
subsequently amended. 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 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 the Securities Act.
(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 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 not
less than two years, (2) the availability of certain public information about
the Company, (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 (4) the amount
of securities being sold during any three month period not exceeding the
specified limitations stated therein.
(e) Purchaser agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by the undersigned (other than
those shares included in the registration) without the prior written consent of
the Company or the underwriters managing such initial underwritten public
offering of the Company's securities for one hundred eighty (180) days from the
effective date of such registration, and (2) Purchaser further agrees to execute
any agreement reflecting (1) above as may be requested by the underwriters at
the time of the public offering.
15
EXHIBIT A
<PAGE> 18
(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 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.
PURCHASER
By:
Title:
Date:
16
EXHIBIT A
<PAGE> 19
EXHIBIT C
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.
17
EXHIBIT A
<PAGE> 1
EXHIBIT 10.9
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
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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.
<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
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<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,
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<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
-7-
<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
-8-
<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
-9-
<PAGE> 1
EXHIBIT 10.10
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> 14
ATTACHMENT D
ADDENDUM
March 16, 1998
Affiliate will launch Wink in St. Louis, Missouri Operating Area by September
1, 1998. Wink will negotiate the procurement of Wink engine software from
General Instrument at no charge on all CFT-2200 boxes deployed in St. Louis
through September 1, 1999. Starting on September 1, 1998, Charter will pay Wink
$1,500/mo. for Wink server software in St. Louis. After one year, monthly fee
will revert to $3,000/mo. for term of the Agreement. Per the Wink-Charter
contract, installation fee of $15,000 will be payable to Wink upon successful
launch in St. Louis. Charter will provide server hardware for launch per
Attachment C of the contract. These terms specific to St. Louis supercede any
conflicting terms that may exist in the aforementioned contract.
WINK COMMUNICATIONS, INC. CHARTER COMMUNICATIONS, INC.
By: /s/ G.R. CLARK By: /s/ STEPHEN E. SILVA
------------------------------- ------------------------------------
Name: G.R. Clark Name: Stephen E. Silva
------------------------------ -----------------------------------
Title: Vice President Title: VP Corporate Development
----------------------------- ----------------------------------
& Implementation
<PAGE> 15
ATTACHMENT E
ADDENDUM
This addendum is associated with the Cable Affiliation Agreement signed by Wink
Communications and Charter Communications on October 8, 1997. This addendum
shall supercede any contradictions in Terms in the Cable Affiliation Agreement.
Whereas Vulcan Ventures, the parent company of Charter, has purchased over nine
million (9,000,000) dollars worth of Wink preferred stock, and Wink wishes to
provide certain terms for the first two Charter systems targeted to launch
Wink."
Whereas Charter has purchased, for the first time in any Charter system, over
50,000 advanced analog or digital converters compatible with the Product, and
Wink wishes to provide certain terms to accelerate the deployment of Wink in
those markets.
Now, therefore, the parties agree as follows:
a) This addendum is effective as of the dates below and will extend the term of
the existing Cable Affiliation Agreement, signed on October 8, 1998, to
December 31st, 2001.
b) Affiliate will launch Wink to a minimum of 200,000 homes by December 31,
2001.
c) Charter will deploy Wink in all homes with advanced analog or digital
converters throughout it's St. Louis, Missouri and Maryville, Illinois
systems. A minimum of 25,000 Wink enabled two-way homes will be deployed by
December 31, 1999. If not achieved, Affiliate will not receive revenue
guarantee per (d) on any deployed boxes for that year. A minimum of 50,000
Wink enabled two-way homes will be deployed by December 31, 2000. If not
achieved, Affiliate will not receive revenue guarantee per (d) on any
deployed boxes for that year.
d) Wink will guarantee [*] of request and purchase transaction revenue share
per Wink enabled two-way household in each of the first two years of this
Agreement. Wink will guarantee [*] of revenue share in year three. If
required, an annual payment to Affiliate will occur at year-end 1999, 2000,
and 2001 for the balance of the guarantee. The guarantee payment will be
based on number of Wink two-way households launched multiplied by the number
of months each box has been installed that year. This will be multiplied by
the prorated monthly guarantee for that year minus the actual revenues paid
to Affiliate throughout the year. (Years 1999 and 2000: [*]/month) (Year
2001: [*]/month). The guarantee will apply to the St. Louis/Maryville system
only.
e) Wink will extend a revenue guarantee offer to the Affiliate system in Los
Angeles, CA. When Affiliate launches Wink in Los Angeles, all two-way boxes
deployed in subsequent six months will qualify for the same revenue guarantee
structure as outlined in (d) above through term of this Agreement.
f) Wink will provide [*] in joint launch marketing funds for St. Louis and [*]
in joint marketing funds for Los Angeles, provided that each system deploys
Wink in 1999.
- -------------
* 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> 16
g) Affiliate will sell local ads that are Wink enhanced to local advertisers
in the St. Louis, Maryville, and Los Angeles launch markets. Wink will
provide tools, training, and support to Affiliate's local advertising sales
group in all launch markets.
h) Wink will provide a [*] gross revenue share, or pay Affiliate per
Attachment A, whichever is greater, on all Wink purchase and request
transactions per Wink enabled household.
i) Wink will waive the upfront $2.00 engine software license fee and fees
associated with downloading to CFT-2200 or CFT-2200i converters in all
launch markets.
j) Affiliate will pay the lower of the Wink server license fees per Attachment
D of this contract or Wink's then current rate card.
k) Affiliate will provide launch marketing support for Wink to include local
ad avails to introduce and support the Wink Service in all markets where
Wink has been deployed.
l) [*]
m) Section 2.3 of the Cable Affiliation Agreement shall be modified to read;
2.3 Wink grants to Charter Communications local terrestrial exclusive use
of the Wink Service in all markets where Charter has launched the Wink
Service. Local exclusivity shall be defined as other CATV, MMDS, LMDS,
Microwave or Cellular based operators competing in Charter markets. Local
exclusivity does not include National Satellite services or National
Broadcast Network video feeds. Wink also grants to Charter Communications
National Satellite Services exclusivity through June 30, 1999, for all
Charter markets where the Wink Service is launched.
WINK COMMUNICATIONS, INC. CHARTER COMMUNICATIONS, INC.
By: /s/ MARY AGNES WILDEROTTER By: /s/ STEPHEN E. SILVA
--------------------------- -----------------------------
Name: Mary Agnes Wilderotter Name: Stephen E. Silva
-------------------------- ----------------------------
Title: President & CEO Title: V.P. Corporate Development
------------------------ ---------------------------
Date: 3/12/99 Date: 1/6/99
--------------------------- ----------------------------
- -------------
* 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> 1
EXHIBIT 10.11
CABLE AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 10th day of December 1998, by and between WINK
COMMUNICATIONS, INC., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and COMCAST PROGRAMMING, a Division of
COMCAST CORPORATION, a Pennsylvania corporation ("Affiliate"), whose address is
1500 Market Street, Philadelphia, Pennsylvania, 19102-2148.
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 (all applicable) updates (hereinafter collectively
referred to as "Wink Software") to deliver to either advanced analog
and/or digital set top boxes the Enhanced Broadcasting within its New
Haven, CT Operating Area (Launch Market), or any portion thereof, as
determined by Affiliate.
1.2 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.
1.3 Affiliate agrees to test the Wink Software on advanced analog (CFT 2200)
cable set top boxes in New Haven, CT, or any portion thereof, as
determined by Affiliate.
2. TERM
2.1 The term of this Agreement shall commence on the date of execution of
this Agreement and terminate December 31, 2001.
3. INTEGRATION
3.1 Affiliate will make commercially reasonable efforts to test Enhanced
Broadcasting in the New Haven, CT Operating Area (Launch Market), or any
portion thereof, as determined by Affiliate. 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. It is Affiliate's intent,
subject to technical issues, to initiate such test by March 31, 1999.
3.2 Wink 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 1 of 7
<PAGE> 2
3.3 Affiliate agrees to allow Wink to install and use Wink Response Servers
located in individual Affiliate Operating Area headends in which
Affiliate determines to deploy Wink Software, to collect, aggregate, and
route responses for national Enhanced Broadcasting applications through
Wink's Alameda Data Center. Wink shall provide relative equipment and
perform all Wink-related installation work necessary to ensure proper
operation of the Wink Software and reliable delivery of Enhanced
Broadcasting and shall provide on-going technical support for the Wink
Software through the term of the Agreement for the Launch Market(s).
Wink is responsible to maintain and repair all Wink related head-end
components.
3.4 Wink agrees to provide weekly reporting to Affiliate of all response
traffic generated by its Wink enabled Affiliate subscribers.
4. RATES AND DEPLOYMENT
4.1 Affiliate shall have the right and option to include up to two (2)
additional 2-way Wink capable advanced analog and/or digital Operating
Areas under this Agreement as long as such Operating Areas launch prior
to or on December 31, 1999, and such Operating Areas shall each be
considered a Launch Market. Launch Market is defined as a Comcast market
that receives no license fee, installation, or integration fees for the
term of this Agreement. In the event that Comcast adds a 2nd or 3rd
market to this Agreement per the launch option above, Affiliate agrees
that such Launch Markets shall deploy WINK to all advanced analog and/or
digital households and shall be governed by the terms of this Agreement.
4.2 Affiliate understands that the Enhanced Broadcasting service is
delivered from National Broadcasters and National Cable Programming
Services (hereinafter collectively referred to as "Programmers") in the
VBI of the Programmers Video Signal. If Affiliate experiences problems
with the Enhanced Broadcasting delivery system, Affiliate will
reasonably cooperate with Wink to remedy such problems.
4.3 Wink agrees to revenue share with Affiliate on all transaction
processing fees associated with the Enhanced Broadcasting applications.
Wink agrees to share [ * ] percent of gross transaction processing
fees (including, but not limited to Purchase Transaction Fees and
Request Transaction Fees). See Schedule A.
5. PROMOTION AND RESEARCH
- -------------
* 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 7
<PAGE> 3
5.1 Affiliate agrees to promote the initial test of the Wink service to
applicable Subscribers within the Operating Area of New Haven, CT.
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.
5.2 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. Wink agrees to
communicate to Affiliate, 30 days in advance, of such marketing tests
and surveys. Wink shall pay for all Wink conducted research. Affiliate
agrees that Wink will have access to research regarding the deployment,
launch, and usage of Wink service by Affiliate subscribers. Wink agrees
that Affiliate will have access to research regarding the deployment,
launch, and usage of Wink service by Affiliate subscribers.
6. NOTICES
6.1 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. If to
Affiliate, Attn: SVP, Programming, at 1500 Market Street, Philadelphia,
PA 19102. 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.
7. TRADEMARKS
7.1 All right, title and interest in and to the Wink Software 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 Wink Software are the sole and exclusive properly of Wink, and
no rights or ownership are intended to be or shall be transferred to
Affiliate. Wink acknowledges and agrees that all use of the name Comcast
and the concentric "C". logo shall remain the sole and exclusive
property of Affiliate, and cannot be used by Wink without express
permission by Affiliate, and no right or ownership are intended to be or
shall be transferred to Wink.
8. REPRESENTATION AND INDEMNIFICATION
Page 3 of 7
<PAGE> 4
8.1 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.
8.2 Affiliate represents and warrants to Wink that (i) Affiliate is a
corporation duly organized and validly existing under the laws of the
State of Pennsylvania; (ii) Affiliate has the requisite power and
authority to enter in this Agreement and to fully perform its
obligations hereunder; (iii) Affiliate is under no contractual or other
legal obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
8.3 Wink shall indemnify, defend and hold harmless any Comcast company,
Affiliate, its parents, subsidiaries, and their respective affiliates,
officers, directors, employees and agents from and against any and all
losses, settlements, claims, actions, suits, proceedings, investigation,
judgments, awards, damages, liabilities, costs and expenses including,
without limitation, reasonable attorneys' fees (collectively "Losses"
and, individually, a "Loss") which arise out of or as a result of (i)
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 proprietary right of any third party or
constitutes a misappropriation of any third party's trade secrets or
(ii) arising out of or as a result of any Wink equipment.
9. CONFIDENTIALITY
9.1 Neither Affiliate nor Wink shall disclose to any third party (other than
its respective employees, in their capacity as such), any relevant
information marked "confidential" without prior written consent. The
parties agree to keep the terms of this Agreement confidential, but
acknowledge that disclosure may be made to applicable Programmers that
Enhanced Broadcasting is being broadcast with their programming and that
certain other disclosures may be required by law.
9.2 It is the intent of both parties to issue a joint press release with
respect to this Agreement within fourteen (14) days of execution of this
Agreement. Neither party shall issue any press release, with respect to
this Agreement, unless the content of such release is mutually approved.
9.3 Wink commits to Affiliate that Wink will implement high levels of
security on the network for the collection, storage, and routing of
Subscriber Data. Wink further agrees to only release individual
Subscriber Data to entities
Page 4 of 7
<PAGE> 5
that a subscriber decides should have that information. Choice is
granted by the subscriber through their deliberate interaction with a
Wink Enhanced Broadcasting application. 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 Wink Software.
10. TERMINATION
10.1 Notwithstanding any other provision herein, Wink will have the right to
terminate this Agreement or all or any licenses granted herein if
Affiliate has made a misrepresentation herein or fails to comply with
any of its material obligations under this Agreement. Should Wink elect
to exercise this right to terminate, it must be done in writing
specifically setting forth those items of misrepresentation or
nonperformance. Affiliate will then have thirty (30) days from receipt
of notification to remedy the items of nonperformance.
10.2 Notwithstanding any other provision herein, Affiliate will have the
right to cease distribution of Enhanced Broadcasting and/or terminate
this Agreement or any licenses granted herein at their sole discretion,
relative to any or all Operating Areas under this Agreement.
10.3 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
Wink Software will cease. In such instance, Wink will immediately remove
the Wink Software and any Wink equipment from Affiliate premises, and
Affiliate will allow Wink to so remove. Furthermore, Affiliate will
(i)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 Wink Software, and (ii) 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 Product remains in Affiliate's possession or under its
control.
11. 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 outside of Affiliate Operating Area
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.
Page 5 of 7
<PAGE> 6
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.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. COMCAST PROGRAMMING
By: By:
Maggie Wilderotter Thomas A. Hurley
CEO/President Senior Vice President
Programming
Page 6 of 7
<PAGE> 7
WINK/AFFILIATE REVENUE SHARE
-SCHEDULE A-
WINK RESPONSE SERVICE TRANSACTION FEE
[ * ] OF GROSS 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.
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.
Wink commits that as of this Agreement execution date, Wink's revenue share on
the transaction processing fee with any other Cable Operator (Multiple System
Operator) is not higher than [ * ].
Wink shall accord Affiliate Most Favored Nations status in any future Wink
Affiliation Agreement. This provision shall survive the expiration or
termination 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.
Page 7 of 7
<PAGE> 1
EXHIBIT 10.12
CABLE AFFILIATION AGREEMENT
THIS AGREEMENT is made as of the 15th day of January, 1999, by and between WINK
COMMUNICATIONS, INC., a California corporation ("Wink"), whose address is 1001
Marina Village Parkway, Alameda, CA 94501 and COXCOM, Inc., dba COX
COMMUNICATIONS PALOS VERDES, a Delaware corporation ("Affiliate"), whose address
is 43 Peninsula Center, Rolling Hills Estates, CA 90274.
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 any and all subsequent versions (hereinafter collectively
referred to as "Wink Software") to deliver Enhanced Broadcasting to
Affiliate cable system over Affiliate's digital and analog platforms.
During the initial eighteen (18) month term of this Agreement, any and all
versions of the Wink Software shall be licensed to Affiliate at no charge.
During the remainder of this Agreement, any and all subsequent versions of
the Wink Software that become available shall be licensed to Affiliate at
a Most Favored Nations (MFN) rate or three thousand ($3,000.00) per month,
whichever is lower. For purposes of this Agreement, the term MFN is based
upon total Wink enabled boxes committed to deploy, and includes all price
and non-price terms of the license or transaction, including but not
limited to price of Software license, support for Software and for the
Enhanced Broadcasting Service, and to the extent applicable, promotional
support and rebates, and duration of license. If MFN language to other
Multiple System Operators (MSOs) is not tied to volume of Wink enabled
boxes committed to deploy, Wink agrees to offer Affiliate such language.
1.2 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. If,
at any time during the term of this Agreement, other CoxCom, Inc. cable
systems decide to utilize the Wink Software and Enhanced Broadcasting
service, Wink agrees to provide the Software and services to such systems
at an MFN rate.
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 launch the Wink Software on all advanced analog cable
set top boxes in Operating Area. Affiliate will use commercially
reasonable efforts to enable Wink on a minimum of 10,000 (CFT 2200)
advanced analog cable set top boxes.
Proprietary and Confidential
<PAGE> 2
2 TERM
2.1 The term of this Agreement shall commence on February 1, 1999 and
terminate three (3) years thereafter -- January 31, 2002. After the
initial eighteen (18) month period, which will end on August 1, 2000,
Affiliate will have 30 days to terminate this Agreement without cause and
without incurring the first monthly license fee.
2.2 This Agreement will automatically renew for one year periods unless either
party notifies the other at least 60 days prior to the end of the term of
that party's intent not to renew.
3. INTEGRATION
3.1 For purposes of this Agreement, the term "Enhanced Broadcasting" means the
Wink software-enabled supplemental graphics and that is directly related
to and accompanies the primary video and audio stream of the National
Broadcaster (i.e., NBC, CBS, ABC, Fox, UPN, WB and PaxNet) or National
Cable Programming Service (e.g., ESPN, TNT, A&E, et al.)(collectively
referred to as "Programmers") with which it is transmitted. Additionally,
the Enhanced Broadcasting shall be limited to the above-mentioned content
to the extent that it provides additional information about the specific
television programs or commercial advertisements being transmitted by
Programmer to Affiliate pursuant to the applicable cable programming
affiliation agreement or retransmission consent agreement. Otherwise, in
no way does this Agreement expand upon or enlarge the rights of any
Programmer under existing carriage agreements with Affiliate. Enhanced
Broadcasting is originated by and for the sole direct benefit of the
Programmer whose signal is being enhanced by the Wink software.
Affiliate's carriage of any Enhanced Broadcasting is wholly subject to
Affiliate's carriage in its Operating Area of the particular Programmer
which is being enhanced by the Wink software. Carriage of any such
Programmer shall remain within the sole discretion of Affiliate.
3.2 Affiliate will distribute Enhanced Broadcasting to advanced analog and, at
its discretion, digital subscribers through its Operating Area headend as
a field trial. Subject to the limitations set forth in section 3.1 above,
the Enhancements provided by the Wink software shall enable viewers to
perform various functions, such as submitting information requests,
viewing information and going to a full screen virtual channel through the
Enhancement. Enhanced Broadcasting shall not include (a) any program guide
functionality or information that subscribers may access through the Wink
software; or (b) content that conflicts with any contractual provisions
contained in any cable affiliation or retransmission consent agreement to
which Affiliate is a party.
Proprietary and Confidential
2
<PAGE> 3
3.3 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. Any and all Wink integration to digital cable set top boxes
will be at the sole discretion of Affiliate.
3.4 Both parties will use their commercially reasonable efforts to complete
all installation and 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 Operating Area headends to collect,
aggregate, and route responses for national Enhanced Broadcasting
applications through Wink's Alameda Data Center. Wink agrees to provide
weekly reporting to Affiliate of all response traffic generated by its
Affiliate subscribers.
3.6 During the eighteen (18) month trial period, Wink will provide all
technical phone support and maintenance for all Wink hardware and Wink
Software at no charge to Affiliate. Following the trial period, the
monthly maintenance charge will be $500.
4. RATES AND DEPLOYMENT
4.1 Affiliate agrees to provide Wink Enhanced Broadcasting as part of its
advanced analog and, at its discretion, its digital offering to its
subscribers in Palos Verdes, CA on February 1, 1999 or as soon thereafter
as the Wink Software and any necessary support is available, but in any
event, no later than March 31, 1999. Any and all Wink deployment on the
digital cable set top boxes will be at the sole discretion of Affiliate.
4.2 Effective as of February 1, 1999, Wink agrees to waive the license fee
payment per Operating Area of $3,000 per month for a period of eighteen
(18) months. Following the 18 months, Affiliate shall remit a monthly
license fee payment of $3,000, through the term of this Agreement subject
to the limitations set forth in section 2.1 above.
4.3 Affiliate commits to distribute to its advanced analog subscribers and, at
Affiliate's discretion, its digital subscribers, only Enhanced
Broadcasting delivered from Programmers. Affiliate may delete any material
provided within the bandwidth of a Programmer signal that is not Enhanced
Broadcasting. Affiliate shall not be required to or held responsible for
distributing Enhanced Broadcasting in a manner that would cause it to
violate the terms of an existing Affiliation agreement or retransmission
consent agreement. Any and all Wink integration to digital cable set top
boxes will be at the sole discretion of Affiliate. 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
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restore Enhanced Broadcasting service as soon as possible. Except as may
be otherwise provided for in this Agreement, Affiliate agrees not to
charge Programmer for delivery of Enhanced Broadcasting for the term of
the Agreement. Wink warrants that it has the permission of all Programmers
for which it provides Enhanced Broadcasting to retransmit and/or enhance
their programming services.
4.4 Wink agrees to a five (5) percent Revenue Share with Affiliate on all Wink
generated advertising Purchase and Request transactions by Affiliates'
Wink Subscribers for the term of this Agreement. (See Schedule A.)
4.5 For purposes of this Agreement, the term "Wink Subscriber" shall mean each
Affiliate residential customer and commercial or business establishment
receiving and paying for cable television service with a digital or
advanced analog box in all Affiliate Operating Areas. Any and all Wink
integration to digital cable set top boxes will be at the sole discretion
of Affiliate.
4.6 Wink agrees to waive the $40,000 in installation and conversion fees for
the Affiliate market upon the execution of the Agreement. During the
period between February 1, 1999 and the later of March 31, 1999 or the
date that Enhanced Broadcasting is available to the first Affiliate Wink
Subscriber, Wink agrees to pay for any shipping or travel costs incurred
by Wink in support of on-site installation, maintenance, phone support, or
phone consulting. Beginning with the later of March 31, 1999 or the
availability of Enhanced Broadcasting to the first Affiliate Wink
Subscriber and August 1, 2000, Wink agrees to provide all travel, shipping
and other out-of-pocket expenses incurred by Wink to remedy a material
technical problem. Following August 1,2000, all travel, shipping and other
out-of-pocket costs incurred by Wink from providing support on site (as
opposed to by phone or e-mail), shall be reimbursed by Affiliate, provided
however that Affiliate's obligation to reimburse Wink for such expenses is
conditioned upon Wink (a) obtaining Affiliate's prior written consent for
such expenditures and (b) Wink provides Affiliate with an itemized and
documented invoice for such expenditures with its monthly invoice.
4.7 Wink agrees to provide Enhanced Broadcasting for local promotional
advertisements to Affiliate at no charge for a period of eighteen (18)
months from the Launch Date. Wink agrees to provide one (1) copy of Wink
Studio (authoring tool) upon Affiliate's request in order to support
Affiliate in experimentation of local application development. Wink shall
develop one (1) Virtual Channel template for Affiliate, with Affiliate
having final approval on all Wink content.
4.8 Affiliate may choose to utilize other Wink Software 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.
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5. PAYMENT TERMS
5.1 On or before the thirtieth (30th) day following Affiliate's receipt of the
monthly Wink invoice, 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. Wink agrees that an invoice must be sent to Affiliate prior to
payment by Affiliate. 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. Wink agrees to
provide a research fund of monies, not to exceed eight thousand dollars
($8000.00) for the purpose of supporting Affiliate in gathering and
aggregating data during the trial period. Affiliate agrees that there must
exist mutual agreement prior to committing such funds. Affiliate shall
provide Wink with reasonable assistance in conducting such research with
respect to Affiliate's subscribers. Both Wink and Affiliate agree that the
other party will have access to any and all research conducted by either
party regarding the deployment, launch, and usage of Wink service by
Affiliate subscribers.
6.3 It is the intent of Wink to issue a press release with respect to this
Agreement within fourteen (14) days of execution of this Agreement.
Neither party shall issue any press release, with respect to this
Agreement, unless the content of such release is mutually approved.
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
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Sales at 1001 Marina Village Parkway, Alameda, CA 94501; and, if to Cox
Communications Palos Verdes, Attn: Vipan Seth, 43 Penninsula Center,
Rolling Hills Estates, CA, 90214, with a copy to Cox Communications, Inc.,
Director New Business Development, 1400 Lake Hearn Drive, Atlanta, GA,
30309. 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. Wink
acknowledges that the name, COX, as well as any logos, trademarks, service
marks and copyrighted material owned or controlled by Affiliate, and that
all use of the name, COX, shall remain the sole and exclusive property of
Affiliate, and cannot be used by Wink without express permission by
Affiliate, and no right or ownership are intended to be or shall be
transferred to Wink.
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 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.
9.3 Wink shall indemnify, defend and hold harmless any COX company, Affiliate,
its parents, subsidiaries, and their respective affiliates, officers,
directors, employees and agents from and against any and all losses,
settlements, claims, actions, suits, proceedings, investigation,
judgments, awards, damages, liabilities, costs and expenses including,
without
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limitation, reasonable attorneys' fees (collectively "Losses" and,
individually, a "Loss") which arise out of or as a result of (i) any
claim, demand, action, suit or proceeding in which it is alleged that the
Wink Software or Enhanced Broadcasting or any part thereof violates or
infringes any patent or copyright or other proprietary right of any third
party or constitutes a misappropriation of any third party's trade secrets
or (ii) arising out of or as a result of any Wink equipment or Affiliate's
carriage of the Wink Enhanced Broadcasting.
10. CONFIDENTIALITY
10.1 In the event that Wink is required to produce any Cox confidential
information in order to comply with a court order, subpoena or other
compulsory legal process, it will promptly inform Cox of this requirement
and will give Cox the opportunity to object to such disclosure prior to
the designated date of production. 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 and only in connection with the specific transaction or
request made by the subscriber. Choice is granted by the subscriber
through his or her deliberate interaction with a Wink Enhanced
Broadcasting application. 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 Wink Software.
11 TERMINATION
11.1 Notwithstanding any other provision herein, Wink will have the right to
terminate this Agreement or all 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 fifteen (15) days
from receipt of notification to remedy the items of nonperformance. Should
Affiliate fail to correct these items of nonperformance, then Wink shall
have the right to collect all fees owed under this Agreement for the
entire term of the Agreement, and enter upon Affiliate's premises to
repossess and remove any Wink-owned or licensed Wink Software. In
addition, Wink's termination of this Agreement or such taking of
possession shall be
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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.
11.2 Notwithstanding any other provision herein, Affiliate will have the right
to terminate this Agreement or all or any licenses granted herein during
the term of this Agreement if Wink fails to comply with any of its
material obligations under this Agreement or if Wink encounters or creates
a material technical problem with its Software or its Enhanced
Broadcasting in the course of its performance of the 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. Wink will then have fifteen (15) days from receipt of
notification to remedy the items of nonperformance and sixty (60) days
from receipt of notification to remedy any technical problems. In
addition, Affiliate'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.
11.3 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 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, (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 Wink 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 Product remains in Affiliate's
possession or under its control.
11.4 Except as otherwise provided herein, neither Affiliate 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.
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.
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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
supersedes and replaces all prior oral and written proposals,
communications and agreements with regard to the subject matter hereof
between Affiliate and Wink.
e) This Agreement may be signed in counterpart.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC COX COMMUNICATIONS PALOS VERDES
Name : Name:
Title: Title:
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WINK/AFFILIATE REVENUE SHARE
-SCHEDULE A-
WINK RESPONSE SERVICE TRANSACTION FEE
5 PERCENT OF GROSS 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.
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.
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EXHIBIT 10.13
MASTER AFFILIATION AGREEMENT
DIRECTV
THIS Master Agreement is made as of the 22nd day of December, 1998 (the
"Effective Date"), by and between WINK COMMUNICATIONS, INC., a California
corporation ("Wink"), whose address is 1001 Marina Village Parkway, Alameda, CA
94501 and DIRECTV, Inc., a California corporation ("DIRECTV"), whose address is
2230 East Imperial Highway, El Segundo, CA 90245.
1. GRANT OF LICENSE
1.1 Subject to the terms of this Master Agreement, Wink hereby grants to
DIRECTV a non-exclusive license (the "License") to use the Wink
software products listed in Exhibit B (hereinafter collectively
referred to as "Wink Software") to deliver interactive program(s)
which are compliant with the Wink interactive communications
application protocol ("Interactive Wink Programs") to DIRECTV
subscribers which are located in the continental United States,
Alaska, Hawaii, and the US territories in the Caribbean (the
"Territory").
1.2. Except as specifically permitted in this Master Agreement, 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. "Updates" shall mean updates containing error corrections or minor
enhancements to the Wink Software 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 Wink Software
designated by changes in the version number to the left of the
decimal point. Wink shall provide a license to all Updates at no
charge to DIRECTV during the term of this Master Agreement and
DIRECTV, in its sole discretion, shall have the option to utilize
such Updates in providing Interactive Wink Programs to DIRECTV
subscribers. "New Release" shall mean a major release of the Wink
Software which occurs subsequent to the Measurement Date (as defined
below), which contains significant new functionality), and/or major
enhancements, and which is designated by a change in the digit or
digits to the left of the decimal point in the version number. Wink
shall offer to DIRECTV a license to all New Releases created by Wink
during the Term on terms that are as favorable or more favorable than
the terms of any agreement Wink has entered into with other United
States video distributors, including all cable operators, for the
provision of the New Releases; provided, however, that in no event
shall DIRECTV's decision not to license any New Release have any
impact whatsoever on the functionality of the current Wink Software
or DIRECTV's ability to provide Interactive Wink Programs to DIRECTV
subscribers throughout the Term, and provided that DIRECTV shall be
under no obligation to license or launch such New Releases. If a New
Release has not been made available to other parties, Wink agrees to
offer to DIRECTV a license to such New Release at a one- time fee
equal to Wink's costs (on a Time and Materials basis) in developing
and testing the New Release, which estimate shall be made by Wink in
it's sole and reasonable discretion, and documented in writing to
DIRECTV.
1.4. For purposes of this Master Agreement, a "Participating Manufacturer"
shall mean a manufacturer of equipment capable of receiving DIRECTV
signals ("DIRECTV System Receiver") which has:
(a) a valid and current Manufacturer Agreement with DIRECTV
("DIRECTV System Manufacturer") for the manufacture and
sale of DIRECTV Systems; and
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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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(b) a valid and current license agreement with Wink for Wink's
client software for digital TV reception products (the
"Wink Engine"). A DIRECTV System Receiver which has a
resident Wink Engine, and which has been enabled to
receive both DIRECTV programming and Interactive Wink
Programs transmitted over DIRECTV's network, shall be
referred to in this Master Agreement as a "Wink-enabled
DIRECTV System Receiver".
2. TERM
The "Term" of this Master Agreement shall commence on the Effective
Date and shall automatically terminate five (5) years thereafter.
DIRECTV may terminate the Master Agreement at any time after a period
of three (3) years following the first day the Interactive Wink
Programs are distributed to and received by at least 10,000
Wink-enabled DIRECTV System Subscribers (the "Measurement Date") in
accordance with the terms of this Master Agreement. Notice of
DIRECTV's intent to so terminate must be received by Wink no later
than sixty (60) days prior to the effective date of such termination.
As used herein, "Wink-enabled DIRECTV System Subscriber" shall mean
each DIRECTV subscriber that (i) receives or separately pays for
satellite television service from DIRECTV or a company acting on
behalf of DIRECTV; and (ii) has activated one or more Wink-enabled
DIRECTV System Receivers. The parties agree that DIRECTV may, in its
sole discretion, extend the Master Agreement upon the expiration of
the Term for a three year period, provided that DIRECTV shall provide
prior written notice to Wink no later than sixty (60) days prior to
the date of expiration of the Term of its intention to extend the
Term. Such extension of the Term shall be granted on the most
favorable rates, terms and conditions offered or made available to
any United States video distributor, including cable operators, but
may not reflect the terms of this Master Agreement. Wink agrees to
give written notice to DIRECTV no later than one hundred and twenty
(120) days prior to the date of expiration of the Term of the rates,
terms and conditions available to DIRECTV for such extension.
3. INTEGRATION AND DEPLOYMENT
3.1. The parties agree to the preliminary statement of work defined in
Exhibit E and the preliminary schedule defined in Exhibit F. The
parties further agree to use their best commercially reasonable
efforts to develop a final statement of work ("Final Statement of
Work") and a final schedule ("Final Schedule") within thirty (30)
days of the Effective Date of this Master Agreement. Once the Final
Statement of Work and Final Schedule have been agreed upon, neither
party shall make any modifications to the Final Statement of Work
and/or the Final Schedule without the other party's prior written
consent. Each party acknowledges and agrees that changes to the Final
Statement of Work or the Final Schedule may result in additional work
and/or expense for the other party and may require changes to the
Wink Engine for all or some Wink-enabled DIRECTV System Receivers.
The work and expense incurred by Wink shall be estimated and provided
to DIRECTV on a cost (Time and Materials) basis, and, if accepted by
both parties, shall be incorporated into a revised Final Statement of
Work and Final Schedule. The work and expense incurred by DIRECTV
shall be estimated and provided to Wink on a cost (Time and
Materials) basis, and, if accepted by both parties, shall be
incorporated into a revised Final Statement of Work and Final
Schedule. The work and expense incurred by Participating
Manufacturers, if any, shall be estimated and provided by Wink in
collaboration with Participating Manufacturers, and, if accepted by
each of DIRECTV, Wink and the applicable Participating Manufacturer,
shall be incorporated into a revised Engine Statement of Work, as
described further in Exhibit A-1 of Exhibit I. The parties agree that
DIRECTV shall pay Wink fifty percent (50%) of any non-recurring
engineering fees detailed in such Engine Statement of Work and waived
by Wink in accordance with Section 4.1 of Exhibit I, up to a maximum
of one hundred and fifty thousand dollars ($150,000); provided,
however, that Wink
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shall not charge any Participating Manufacturer for any cost or
expense related to such non-recurring engineering fees. Such payment
shall be made within thirty (30) days of such Participating
Manufacturer's acceptance of the final object code for the applicable
Wink Engine. The parties further agree that the total cumulative
incremental expense incurred by DIRECTV and Participating
Manufacturers caused by changes to the Final Schedule and Final
Statement of Work shall not exceed one hundred thousand dollars
($100,000) unless the changes requested introduce major new
functionality, result in major architectural changes to Wink Software
or result in other similar major disruption of the project not
contemplated by the preliminary statement of work in Exhibit E and
the preliminary schedule in Exhibit F; provided, however, that
neither DIRECTV nor any Participating Manufacturer shall be
responsible for any such incremental costs or expense due to changes
to either the Final Statement of Work or the Final Schedule which
have been proposed solely by Wink.
3.2. The parties agree that the active participation and support of
DIRECTV System Manufacturers is essential to the parties ability to
deploy Interactive Wink Programs to Wink-enabled DIRECTV System
Receivers. Wink agrees to license the Wink Engine to any DIRECTV
System Manufacturer on the terms defined in Exhibit I. DIRECTV agrees
to use commercially reasonable efforts to encourage both Thomson
Consumer Electronics and Hughes Network Systems to enter into such
license agreements with Wink under terms substantially similar to
those defined in Exhibit I for the product which each manufacturer
reasonably anticipates as its highest volume DIRECTV System Receiver
offered in 1999 and covering all shipments after January 1, 1999 of
such DIRECTV System Receivers to DIRECTV subscribers located in the
United States; provided, however, that [ * ]. Notwithstanding
anything herein to the contrary, either party, upon written notice to
the other party, may terminate this Master Agreement. without any
liability to the other party in the event that Thomson Consumer
Electronics has not entered into a licensing agreement with Wink, as
is contemplated above, within thirty (30) days of the Effective Date.
3.3. Wink shall, at Wink's sole cost and expense (including taxes and
freight), purchase for and on behalf of DIRECTV and deliver to
DIRECTV at such location as DIRECTV shall designate, all equipment
(including total system-redundant equipment for back-up use)
necessary to run the Wink Software and to enable DIRECTV's insertion
of Interactive Wink Programs, including Wink Virtual Channels
pursuant to Section 3.9, into DIRECTV's signals (the "Equipment"),
with the exception that any personal computers utilizing or running
Microsoft Windows 95 or Windows NT required to operate the Wink
Software will be provided by DIRECTV, at DIRECTV's sole cost and
expense, and such computers shall not be deemed Equipment hereunder.
The panics agree that Wink shall have no obligation to provide any
additional equipment that may be required to enable storage or
insertion of Interactive Wink Programs not provided by Wink or by a
Programmer (as defined below) as part of such Programmer's video
signal. All Equipment provided by Wink to DIRECTV hereunder shall
become the sole property of DIRECTV upon installation at DIRECTV's
Facilities, as defined below.
(a) Wink shall assist DIRECTV, as DIRECTV may request and at no
additional cost to DIRECTV, in connection with the installation of
the Equipment at its Facilities. For purposes of this Master
Agreement, "Facilities" shall mean DIRECTV's broadcast centers in
Castle Rock, CO, Los Angeles, CA and those locations designated by
DIRECTV as additional DIRECTV broadcast centers, if any, during the
Term. Exhibit J provides a preliminary list of Equipment to be
provided by Wink, and is
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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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subject to a final site visit by Wink's Operations department.
(b) Wink, at its sole cost and expense, shall, subject to DIRECTV's
direction and control, install and integrate the Wink Software into
DIRECTV's equipment and facilities to ensure the reliable
transmission of the Interactive Wink Programs. Alternatively, at
DIRECTV's option, Wink shall assist DIRECTV in DIRECTV's installation
and integration thereof.
(c) Wink's assistance and/or installation and integration as provided in
paragraphs (a) and (b), above (i) shall occur during normal business
hours (i.e., 9am to 5pm, Monday through Friday, excluding holidays)
and during such time periods which are scheduled in advance by the
parties and (ii) shall be subject to DIRECTV's customary safety and
security procedures employed at its Facilities.
3.4. Wink agrees to provide DIRECTV with Technical Development Fees, as
compensation for DIRECTV's technical development and support of
Interactive Wink Programs, in the amount of [ * ] due and payable on
the Measurement Date, as defined in Section 2, above.
3.5. Except as otherwise set forth herein, DIRECTV will not prevent the
distribution on the DIRECTV system of Interactive Wink Programs
inserted by Programmer, as defined below, in the VBI or MPEG of video
signals, distributed 24 hours a day, from a broadcaster or cable
programmer with whom DIRECTV, and entities wholly owned by DIRECTV
and which provide video programming to DIRECTV Subscribers, have a
valid agreement for carriage (each, a "Programmer"), and agrees to
pass Interactive Wink Programs to Wink-enabled DIRECTV System
Receivers without any charge to such Programmers during the Term of
this Master Agreement, provided that each Programmer has agreed to
provide and does provide such Interactive Wink Programs at no cost to
DIRECTV, and that such Interactive Wink Programs shall be limited to
using the equivalent of three (3) VBI lines (equal to 30 kbits/sec.)
per programming service. Notwithstanding the above, the parties agree
that DIRECTV shall not be obligated to dedicate aggregate bandwidth
in excess of [*] to all Interactive Wink Programs provided by
Programmers in conjunction with such Programmers' video signals,
unless separately agreed upon between Wink and DIRECTV. During such
time that the actual, aggregate bandwidth utilized by such Programs
is less than [*], DIRECTV agrees to transmit all such Interactive
Wink Programs: provided, however, that once the aggregate amount of
available Interactive Wink Programming meets or exceeds [*], DIRECTV,
in its sole discretion, shall select the Interactive Wink Programming
transmitted to the applicable DIRECTV System Subscribers, which
selection shall, in the aggregate, equal no less than [*].
3.6 Wink shall use commercially reasonable efforts to ensure that each
Interactive Wink Program provided by a Programmer is directly related
in content, nature and intended audience to the video programming and
advertising actually being provided by such Programmer at the same
time that such Interactive Wink Program is provided and thus has the
purpose of enhancing or providing additional detail or information
regarding such video programming or advertising, as applicable. Wink
shall ensure that the Interactive Wink Programs are provided to
DIRECTV pursuant to a then-current and valid license agreement
between the Programmer and Wink. If the conditions, including but not
limited to those set forth above, related to any Programmer's
obligations to Wink are not met, or any Programmer uses Interactive
Wink Programs to promote, either directly or indirectly, competing
multichannel video service providers, or DIRECTV is challenged and
fails to receive an acceptable indemnity from Programmer for the
content of Interactive Wink Programs, DIRECTV shall not be obligated
to pass such Interactive Wink Programs and may, at DIRECTV's option,
immediately terminate carriage of the Interactive Wink Programs with
respect to such Programmer
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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.
Proprietary and Confidential 4
<PAGE> 5
for the remainder of the Term; provided, however, DIRECTV, in its
sole discretion, may elect to reinstate the transmission of such
Programmer's Interactive Wink Programs, if any, at any point during
the Term. The parties further agree that this Master Agreement in no
way creates any obligation on behalf of DIRECTV to carry or pass any
other form of programming or data of any Programmer.
3.7 Wink shall ensure that at least ten (10) Programmers have agreements
with Wink to provide original Interactive Wink Programs for no less
than five (5) hours each week during the Term and Wink shall provide
DIRECTV with weekly Interactive Wink Program schedules for such
Programmers. Wink shall provide DIRECTV with notice at least thirty
(30) days before commencement of national transmission of Interactive
Wink Programs by new Programmers or termination of national
transmission of Interactive Wink Programs by existing Programmers.
Notwithstanding the above, and although the parties acknowledge and
agree that the elimination or addition of individual Interactive Wink
Programs does not require notice by Wink to DIRECTV, Wink shall use
commercially reasonable efforts to notify DIRECTV of such changes as
soon as possible. If the number of Programmers falls below ten (10),
Wink shall promptly notify DIRECTV in writing that the number has
fallen below ten (10), and Wink shall have sixty (60) days to acquire
additional Programmers such that there are at least ten (10)
Programmers or more providing at least the Minimum Amount (as defined
below) of Interactive Wink Programs. If after sixty (60) days
following notice to DIRECTV Wink does not have at least ten (10)
Programmers providing the Minimum Amount of Interactive Wink
Programs, DIRECTV shall have the right to (a) cease passing any
Interactive Wink Programs from Programmers and (b) declare that Wink
has materially breached this Master Agreement. DIRECTV may then
terminate this Master Agreement in accordance with the terms of
Section 13 and/or exercise its other rights and remedies hereunder.
If any Programmer fails to provide at least five (5) hours of
original Interactive Wink programming per week (the "Minimum
Amount"), Wink shall promptly notify DIRECTV in writing of this fact,
and Wink shall have thirty (30) days to increase that Programmer's
amount of such programming to at least the five (5) hour weekly
minimum. If Wink is unable to deliver the Minimum Amount of such
programming within the thirty (30) day cure period, or (ii) such
Programmer falls below the Minimum Amount of required programming
more than three times in any running six (6) month period, DIRECTV,
at its option, may immediately terminate carriage of the Interactive
Wink Programs with respect to such Programmer for the remainder of
the Term; provided, however, DIRECTV, in its sole discretion, may
elect to reinstate the transmission of such Programmer's Interactive
Wink Programs, if any, at any point during the Term.
3.8 DIRECTV, at its option, shall either (i) provide to Wink maximum
bandwidth equivalent to sixty (60) kbits/sec in one DIRECTV satellite
transponder data stream provided that Wink shall use such bandwidth
solely for the purpose of delivering various full screen Interactive
Wink Programs ("Wink Virtual Channels") required for customer-related
educational services for Wink DIRECTV System Subscribers, including
but not limited to a credit card registration program, a Wink user's
guide program and interactive tutorial, a transaction history program
featuring Wink DIRECTV System Subscribers most recent transactions,
and a Wink guide to upcoming Interactive Wink Programs related to
scheduled video programming (collectively, the "Wink Customer Service
Virtual Channel"), or (ii) incorporate the applicable content of
Wink's Virtual Channels, in the aggregate amount of no more than the
bandwidth equivalent of sixty (60) kbits/sec., into one or several
Interactive Wink Programs provided by DIRECTV to DIRECTV System
Subscribers for purposes of delivering customer service to such
subscribers at no cost or fee charged by Wink for such incorporation.
If applicable, Wink shall not use its Wink Customer Service Virtual
Channel for advertising or any purpose other than as specified herein
without DIRECTV's prior written
Proprietary and Confidential 5
<PAGE> 6
consent. DIRECTV, in its reasonable discretion, shall review the
content of the Wink Customer Service Virtual Channel prior to
DIRECTV's insertion and delivery to its DIRECTV Subscribers.
3.9. Subject to DIRECTV's prior written request and commitment to
distribute selected Interactive Wink Programs, Wink, at its sole cost
and expense, agrees to create and deliver in final electronic form,
to the Facilities, a minimum of five (5) Wink Virtual Channels as
described in Exhibit G. DIRECTV may also elect distribute other
Interactive Wink Programs, including but not limited to Wink Virtual
Channels, created by DIRECTV and/or third parties using the Wink
Software. Third party providers of additional Interactive Wink
Programs accepted for carriage by DIRECTV shall be referred to as
"Third Party Wink Program Providers." DIRECTV shall be responsible
for any additional equipment required to support and transmit Third
Party Interactive Wink Programs not created and provided by Wink or
Programmers as part of such programmer's video signal, and for
payment, if any, to third party rights holders, including but not
limited to studios, acting, on-air and other talent, news and sports
data providers, professional and college sports leagues or teams, and
all other entities necessary for the creation and distribution by
DIRECTV of Interactive Wink Programs supplied by DIRECTV or Third
Party Program Providers. Other than those revenues related to Wink
Revenue Transactions, as defined below, any and all other revenue,
access fees or other payments received by DIRECTV from such Third
Party Wink Program Providers shall, as between DIRECTV and Wink,
belong solely to DIRECTV. Wink agrees to offer any Wink Virtual
Channels created or marketed by Wink on terms that are at least as
favorable as those offered to any other distributor of video
programming (each an "Other Programming Distributor").
3.10 Wink agrees to fully fund the full time services of an experienced
Wink Consultant (including, but not limited to travel, lodging and
living expenses) working at either DIRECTV's Facilities or Wink's
offices, and under DIRECTV's direction, starting within sixty (60)
days of the Effective Date and continuing through the Term. DIRECTV
agrees that this Wink staff member will work exclusively on the
development of Interactive Wink Programs. The Wink Consultant shall
act in the capacity of an independent contractor with respect to
DIRECTV. As an independent contractor, Wink hereby agrees that Wink
Consultant shall accept, and shall direct the Wink Consultant to
follow, any reasonable directions issued by DIRECTV, through a
designated executive representative of DIRECTV, pertaining to the
goals to be attained and the results to be achieved by the Wink
Consultant, including, but not limited to the execution of a
Nondisclosure Agreement with DIRECTV, to be provided to Consultant by
DIRECTV upon the commencement of services at DIRECTV's Facilities. As
an independent contractor, Wink acknowledges and agrees that the Wink
Consultant shall not have the status of an employee of DIRECTV or its
subsidiaries. Wink acknowledges and agrees that the Wink Consultant
shall not be eligible to participate in any employee benefit, group
insurance or executive compensation plans or programs maintained by
DIRECTV. DIRECTV shall not be responsible for Social Security,
unemployment compensation, disability insurance, workers'
compensation or similar coverage, nor any other statutory benefits,
with respect to the Wink Consultant. Wink further agrees to provide
any and all necessary licenses permits, insurance policies and other
documents required for the performance of its duties hereunder at its
own expense.
3.11 Wink, at its sole cost and expense, shall perform all Wink-related
installation work necessary to ensure proper operation of the Wink
Software, the Wink Response Network (as defined in section 4.1
below) and the Wink Engine, and reliable delivery of Interactive Wink
Programs, and shall provide on-going technical support for the Wink
Software, the Wink Response Network and the Wink Engine during the
Term. DIRECTV shall permit Wink secure remote access to the Wink
Software and associated equipment solely for the specific purpose of
monitoring and troubleshooting the provisioning of Interactive Wink
Programs to Wink DIRECTV System Subscribers. Wink, at its sole
Proprietary and Confidential 6
<PAGE> 7
cost and expense. shall provide all technical support to DIRECTV
staff ("Technical Support") as DIRECTV may reasonably request in
connection with the development and distribution of Interactive Wink
Programs and any related aspect of the Wink Software. The parties
agree that technical support may be categorized as follows:
(a) support to ensure proper operation of the Wink Broadcast Server
and all other software directly associated with the transmission of
Interactive Programs ("Emergency Technical Support") and
(b) all other technical support, including but not limited to,
support for Wink Studio and Wink Server Studio ("Regular Technical
Support").
Without limiting the generality of the foregoing, all Technical
Support (i) shall include on-call (by telephone and dial-in modem)
availability of Wink personnel knowledgeable in the operation and
troubleshooting of the Wink Software and/or the Wink Response
Network, and (ii) shall be made available at all times during the
normal business hours of Wink. In addition, Emergency Technical
Support shall be made available after normal business hours during
the week and during all holidays and week-ends. If technological
problems persist, such on-call Emergency Technical Support shall be
provided by expert engineers and programmers. If technological
problems prevent transmission of Interactive Wink Programs. and
cannot be resolved through remote support, Wink shall provide on-site
visit(s) by Wink personnel, at no cost to DIRECTV, within twenty four
hours of DIRECTV's request.
3.12 Wink agrees to provide support to Wink-enabled DIRECTV System
Subscribers as follows: Wink shall provide all customer service,
without limitation, related to the Interactive Wink Programs in
accordance with those DIRECTV Customer Service Standards set forth in
Exhibit N hereto. Wink shall meet or exceed all requirements to the
level set forth under Wink Standards in Exhibit N and shall use
commercially reasonable efforts to meet or exceed all requirements to
the level set forth under Goal in Exhibit N. Wink shall make
available one or more toll-free numbers, staffed with such level of
customer service representatives as is reasonably necessary to
promptly service customer calls related to the Interactive Wink
Programs and/or any Wink Response, as defined below in Section 4.2.
The toll-free line(s) shall be operational at the commencement of
Interactive Wink Program delivery and available 24 hours per day, 7
days per week. Wink will forward all non Interactive Wink Programming
inquiries (meaning DIRECTV Services inquiries) to the DIRECTV
customer service line designated by DIRECTV. DIRECTV will forward all
non DIRECTV Services inquiries (meaning Wink inquiries) to the Wink
customer service line designated by Wink. On a quarterly basis,
DIRECTV will review the volume of calls it receives at its call
center that are solely related to Interactive Wink Programs. If,
during the quarter, the volume of such calls exceeds that number
which is equal to ten percent (10%) of the Wink-enabled DIRECTV
System Subscribers, then the parties shall meet in order to discuss
and determine the implementation of corrective training, staffing or
systems as required. If, within thirty days thereafter, the volume of
calls primarily concerning Interactive Wink Programs that are
received by DIRECTV continues to exceed 10% of the Wink enabled
DIRECTV System Subscriber level, then DIRECTV shall charge Wink on a
monthly basis for the incremental costs incurred by DIRECTV in
providing such customer service response and/or referring such calls
to Wink. Such costs shall not average, on a monthly basis, more than
three dollars ($3.00) per call from DIRECTV subscribers. Similarly,
Wink will review on a quarterly basis the volume of calls it receives
at its call center that are solely related to DIRECTV services other
than the Interactive Wink Programs provided by Wink and Wink's
national programming partners or basic operation of the Wink Engine
(i.e., not including any Third Party Interactive Wink Programs). If,
during the quarter, the volume of such calls exceeds that number
which is equal to ten percent (10%) of the Wink-enabled DIRECTV
System
Proprietary and Confidential 7
<PAGE> 8
Subscribers, then the parties shall meet in order to discuss and
determine the implementation of corrective training, staffing or
systems as required. If, within thirty days thereafter, the volume of
calls that are solely related to DIRECTV services other than the
Interactive Wink Programs provided by Wink and Wink's national
programming partners or basic operation of the Wink Engine continues
to exceed ten percent (10%) of the Wink enabled DIRECTV System
Subscriber level, then Wink shall charge DIRECTV on a monthly basis
for the incremental costs incurred by Wink in providing such customer
service response and/or referring such calls to DIRECTV. Such costs
shall not exceed three dollars ($3.00) per call from DIRECTV
subscribers.
3.13 DIRECTV agrees to provide technical specifications and other support
reasonably required to enable Wink to:
(a) receive the minimum information necessary from DIRECTV's billing
system, or other system designated by DIRECTV, to support routing of
Wink Transactions (as defined in section 4.1 below). This
information, which includes subscriber name, bill-to and service
address, phone number, unique identifier of the Wink-enabled DIRECTV
System Receiver(s), and any other information to be mutually agreed
upon between the parties, shall be deemed Confidential Information,
as defined in Section 12.
(b) interface with DIRECTV equipment in order for DIRECTV to insert
Interactive Wink Programs into a DIRECTV satellite transponder data
stream such that the Interactive Wink Programs can be either (x)
linked to particular video programming and only accessible to
Wink-enabled DIRECTV System Receivers tuned to that service (e.g.
"program-related" or "program-synchronous" Interactive Wink Programs)
or (y) accessed independently of video programming through direct
tuning or a Wink provided menu that can be accessed through direct
tuning (e.g., "virtual channels"). The specifications for this
interface are attached as Exhibit H.
(c) integrate the Wink Software with other DIRECTV equipment and
software, including but not limited to video playout and playlist
control systems, asset management systems, LANs and WANs, etc., as
reasonably necessary and determined jointly by the parties.
3.14 Wink shall keep the Wink Software, the Wink Response Network (as
defined in Section 4.1 below) and associated equipment provided by
Wink in good working order for uninterrupted reception and use of
Interactive Wink Programs by Wink -enabled DIRECTV System
Subscribers, and to ensure regular and reliable collection, reporting
and forwarding of Wink Responses (as defined in Section 4.2 below).
3.15 [*]
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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.
Proprietary and Confidential 8
<PAGE> 9
3.16 Notwithstanding anything to the contrary set forth herein. DIRECTV
has the right without prior notice to interrupt the carriage of
Interactive Wink Programs at any time for the purpose of Emergency
Broadcast and other Federal Communications Commission (FCC) mandated
broadcasts in the Territory, or if the Interactive Wink Programs or
response collection interferes in any way with transmission of the
signal of the applicable channel, interferes with the operations of
DIRECTV or causes other technical problems. DIRECTV agrees that it
shall use commercially reasonable efforts to give notice to Wink
within one (1) hour of any such interruption, and DIRECTV and Wink
will each use their commercially reasonable efforts to restore the
delivery of Interactive Wink Programs and collection of viewer
responses as soon as possible.
4. RESPONSES
4.1 The parties agree that Wink shall be responsible for operating a
network (the "Wink Response Network") capable of receiving in-bound
calls from Wink-enabled DIRECTV System Receivers, collecting Wink
Responses (as defined in Section 4.2 below), distributing such Wink
Responses to applicable Fulfillment Entities (as defined below), and
reporting on such Wink Responses to DIRECTV, Programmers and other
agreed-upon parties as necessary, for the fulfillment of Wink
Transactions (as defined below). Wink agrees to adhere to the
following performance standards for collection of Wink Responses:
(a) [*] of all calls from Wink-enabled DIRECTV System Receivers shall
connect on the 1st try.
(b) Wink shall manage the call "load balancing" by staggering the
calls during early morning hours, allowing for DIRECTV subscriber
preference settings.
(c) Wink Transactions (as defined in section 4.2 below) shall be
collected daily. Wink will use commercially reasonable efforts to
collect all Wink Transactions from the previous day by 6 am local
time for responses. Wink shall ensure that [*] of all Wink
Transactions shall be collected (and transmitted to the applicable
Fulfillment Entity, if any) by day 1, [*] by day 2, and [*] by day 3.
(d) Wink Responses (as defined in section 4.2 below) other than Wink
Transactions shall be collected daily if capacity is available. Wink
shall ensure that all Wink Responses are collected within 7 days.
4.2 For purposes of this Master Agreement, the following definitions
shall apply:
(a) A "Wink Response" is any DIRECTV System Subscriber response data
generated by an Interactive Wink Program and collected electronically
by Wink.
(b) A "Wink Transaction" is a Wink Response initiated by Wink-enabled
DIRECTV System Subscriber, and in which the Wink-enabled DIRECTV
System Subscriber uses a Wink-enabled DIRECTV System Receiver to
request products or services, whether such products and services are
either provided at no charge to the Wink-enabled DIRECTV System
Subscribers or require payment by the Wink-enabled DIRECTV System
Subscriber, and where the fulfillment of that request requires the
release of subscriber specific information by such DIRECTV System
Subscriber, such as name and address.
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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.
Proprietary and Confidential 9
<PAGE> 10
(c) "Wink Revenue Transaction" are all Wink Transactions whereby Wink
derives any revenue from any source pursuant to a DIRECTV System
Subscriber's Wink Response; provided, however, both Wink Transactions
and Wink Revenue Transactions specifically do not include (i) the
purchase of a subscription to a DIRECTV television programming
service, (ii) the purchase of a DIRECTV-supplied pay-per-view movie
or event, or (iii) the purchase of any other video programming
product similar to (i) and (ii) provided by DIRECTV.
Commencing on the Measurement Date and throughout the remainder of
the Term, Wink shall, no later than Wednesday of each week, provide
to DIRECTV standard weekly reporting, at no charge to DIRECTV, of all
Wink Responses generated during the previous week. Wink further
agrees to provide at no charge to DIRECTV daily standard reports of
Wink Transactions generated by Interactive Wink Programs inserted by
DIRECTV into DIRECTV promotional programming, including, without
limitation, programming which promotes DIRECTV subscription
programming, pay-per-view movies and events and other
DIRECTV-provided products and services ("DIRECTV Wink Programs").
DIRECTV accepts Wink's terms for all other reporting regarding Wink
Responses, as defined in Exhibit K. Wink warrants and represents that
such terms are as favorable or more favorable than the terms of any
agreement Wink has entered into with other United States video
distributors, including cable operators, for the provision of the
same or similar services. Wink further agrees to promptly notify
DIRECTV in writing, should Wink decide to enter into new agreements
or amend existing agreements with any United States video
distributors to include more favorable terms for services similar to
those defined in Exhibit K, and to immediately offer such terms to
DIRECTV. Notwithstanding the foregoing and Exhibit K, Wink
acknowledges and agrees that Wink Transactions for any DIRECTV Wink
Program will be processed at no charge to DIRECTV (For purposes of
illustration only, there would be no charge to DIRECTV in the event
that a Wink-enabled DIRECTV System Subscriber upgrades his current
DIRECTV programming package via a Wink-enabled DIRECTV Virtual
Channel or a Wink-enabled DIRECTV barker channel). DIRECTV agrees
that Wink Revenue Transactions shall be subject to Wink's rates for
request for information responses ("RFI Response") and purchase
responses ("Purchase Response"), as defined in Exhibit K. Wink agrees
to provide all reports described above in hard copy or electronic
form, per DIRECTV's instructions. In addition, Wink agrees that it
shall provide DIRECTV with any improvements or additions to the
amount and type of data that Wink generally provides to any other
video distributor with respect to Wink Responses, Wink Transactions
or Wink Revenue Transactions. All Wink Transactions and Wink Revenue
Transactions shall be undertaken by Wink or its agents in accordance
with applicable law, including, without limitation, truth in
advertising and customer privacy laws.
4.3 During the Term of this Master Agreement, Wink shall pay to DIRECTV,
on a monthly basis, a share of the fees on each Wink Revenue
Transaction that is generated by a Wink-enabled DIRECTV System
Subscriber and routed by Wink to the appropriate entity. Wink's gross
revenues (net of returns, cancellations, bad debt allowance, etc.)
from Wink Revenue Transactions generated by Wink DIRECTV System
Subscribers shall be referred to as "Gross Transaction Routing Fees."
DIRECTV's share of Gross Transaction Routing Fees shall be as set
forth in Exhibit A. These payments made by Wink to DIRECTV for
DIRECTV's share of such Gross Transaction Routing Fees" shall be
defined as "Transaction Revenue Share" for purposes of this Master
Agreement. DIRECTV specifically acknowledges and agrees that Wink is
under no obligation to provide Participating Manufacturers with any
share of Wink's Gross Transaction Routing Fees; [ * ]. Wink shall be
solely responsible for all taxes and/or other similar governmental
transactional charges, if any, with respect to all Gross
Transactional Routing Fees.
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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.
Proprietary and Confidential 10
<PAGE> 11
5. FEES AND PAYMENT TERMS
5.1. DIRECTV acknowledges and accepts Wink's licensing fees, rates for
Wink services, and payment terms for DIRECTV as set forth in Exhibits
D and K. DIRECTV may choose to utilize other products and services of
Wink from time to time under this Master Agreement. These products
and services will be offered by Wink to DIRECTV at the most favorable
rate and terms and conditions offered or made available to any United
States video distributor, including cable operators.
5.2. [*]
5.3. Wink specifically represents that the rates defined in Exhibit K are
the most favorable rates, terms and conditions offered or made
available to any United States video distributor, including cable
operators, and agrees to immediately offer DIRECTV any terms for such
services that Wink may choose to offer such parties in the future. In
addition, Wink agrees to provide such terms to the parent company of
DIRECTV and entities wholly owned by the parent company of DIRECTV.
5.4. [*]
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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.
Proprietary and Confidential 11
<PAGE> 12
5.5 In no event shall Wink enter into any similar Master Agreement and/or
licensing agreement with any other distributor of programming or
other services received by DIRECTV Subscribers via the DIRECTV System
without the prior written approval of DIRECTV, including but not
limited to United States Satellite Broadcasting ("USSB").
Notwithstanding the above, DIRECTV agrees to permit Wink to enter
into an agreement with USSB under which USSB's usage of Wink Software
is limited to pass through by USSB of Interactive Wink Programs
provided as part of video signals received by USSB from video
programmers which whom Wink has an agreement to provide such
Interactive Wink Programs. Wink agrees that DIRECTV shall have the
right to review and approve the terms of any such agreement between
Wink and USSB, which approval shall not be unreasonably withheld.
5.6 On or before the forty fifth (45th) day following each month
throughout the Term, DIRECTV shall remit to Wink all fees owed for
the License, and for maintenance, support and other services rendered
by Wink to DIRECTV in such month, as invoiced by Wink no later than
fifteen days following the applicable month. Wink shall provide
reports of and pay the Transaction Revenue Share to DIRECTV on or
before the forty fifth (45th) day following each month throughout the
Term. Past due payments by 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.
5.7 DIRECTV agrees to provide quarterly reports on all Incremental Wink
Revenues (as defined herein) generated through the use of the Wink
Software. "Incremental Wink Revenues" shall be defined as (a)
Transaction Revenue Share for Wink-enabled DIRECTV System Subscribers
(for the report of which DIRECTV may attach the Transaction Revenue
Share reports provided by Wink pursuant to Section 5.6), (b)
incremental, net advertising sales revenue received from selling
Interactive Wink Program enhancements in connection with local spot
ads or any form of third party advertising or sponsorship on
Interactive Wink Programs; provided, however that the parties
acknowledge and agree that DIRECTV shall not report, and Wink shall
not be entitled to any portion of, any fees or similar revenues
related directly to the video exhibition of spot advertising and/or
sponsorship, and (c) DIRECTV revenue shares or fees received from
Third Party Wink Program Providers .in exchange for Wink-enabled
advertising or other marketing services; provided, however that the
parties acknowledge and agree that DIRECTV shall not report, and Wink
shall not be entitled to any portion of, any fees or similar revenues
related to payments from Third Party Program Providers for access to
DIRECTV subscribers or distribution of that party's Interactive Wink
Programs to DIRECTV subscribers.
5.8. [*]
(a) A "1999 Wink Subscriber Unit" shall be a DIRECTV System
subscriber provided with an activated Wink-enabled DIRECTV System
Receiver on or before the Measurement Date or, for a subscriber whose
Wink-enabled DIRECTV System Receiver was activated prior to January
1, 2000, the number x = the number of full months that such
subscriber had an activated Wink-enabled DIRECTV System Receiver
prior to January 1, 2000, divided by the number of months elapsed
between the Measurement Date and January 1, 2000. The 1999 Revenue
Guarantee shall be the lesser of (x) one dollar ($1.00) and (y) one
dollar ($1.00) multiplied by the number of months
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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.
Proprietary and Confidential 12
<PAGE> 13
elapsed between the Measurement Date and January 1, 2000 and divided
by six (6). If. during 1999, DIRECTV's Incremental Wink Revenues have
not reached a cumulative total equal to the 1999 Revenue Guarantee
per 1999 Wink Subscriber Unit, Wink shall pay DIRECTV within forty
five (45) days, the difference between the 1999 Revenue Guarantee per
1999 Wink Subscriber Unit and the actual cumulative Incremental Wink
Revenues per 1999 Wink Subscriber Unit. If DIRECTV has reached a
minimum of one million (1,000,000) Wink-enabled DIRECTV System
Subscribers by the first anniversary of the Measurement Date, Wink
agrees to guarantee certain revenues for DIRECTV as follows:
(b) A "First Year Wink Subscriber Unit" shall be a Wink-enabled
DIRECTV System subscriber provided with an activated Wink-enabled
DIRECTV System Receiver on or before the Measurement Date or, for a
subscriber whose Wink-enabled DIRECTV System Receiver was activated
within twelve (12) months of the Measurement Date, the number x = the
number of full months elapsed prior to 12 months following the
Measurement Date that such subscriber had a Wink-enabled DIRECTV
System Receiver, divided by 12. If, within twelve (12) months of the
applicable Measurement Date, DIRECTV's Incremental Wink Revenues have
not reached a cumulative total of $2.50 per First Year Wink
Subscriber Unit, Wink shall pay DIRECTV within forty five (45) days,
the difference between $2.50 per First Year Wink Subscriber Unit and
the actual cumulative Incremental Wink Revenues per First Year Wink
Subscriber Unit, provided that any payments made by Wink under
section 5.8(a) shall be deducted first.
(c) A "Second Year Wink Subscriber Unit" shall be a Wink-enabled
DIRECTV System Subscriber provided with an activated Wink-enabled
DIRECTV System Receiver on or before the first anniversary of the
Measurement Date or, for a subscriber whose Wink-enabled DIRECTV
System Receiver was activated after such anniversary, the number x =
the number of full months elapsed after the first anniversary of the
Measurement Date and prior to twenty four 24 months following the
Measurement Date that such subscriber had a Wink-enabled DIRECTV
System Receiver, divided by 12. If DIRECTV's Incremental Wink
Revenues between the first and second anniversaries of the
Measurement Date ("Year Two") have not reached a cumulative total of
$2.50 per Second Year Wink Subscriber Unit, Wink shall pay DIRECTV
within forty five (45) days, the difference between $2.50 per Second
Year Wink Subscriber Unit and the actual cumulative Incremental Wink
Revenues captured in Year Two per Second Year Wink Subscriber Unit.
(d) A "Third Year Wink Subscriber Unit" shall be a Wink-enabled
DIRECTV System subscriber provided with an activated Wink-enabled
DIRECTV System Receiver on or before the second anniversary of the
Measurement Date or, for a subscriber whose Wink-enabled DIRECTV
System Receiver was activated after such anniversary, the number x =
the number of full months elapsed after the second anniversary of the
Measurement Date and prior to thirty six (36) months following the
Measurement Date that such subscriber had a Wink-enabled DIRECTV
System Receiver, divided by 12. If DIRECTV's Incremental Wink
Revenues between the second and third anniversaries of the
Measurement Date ("Year Three") have not reached a cumulative total
of $2.50 per Third Year Wink Subscriber Unit, Wink shall pay DIRECTV
within forty five (45) days, the difference between $2.50 per Third
Year Wink Subscriber Unit and the actual cumulative Incremental Wink
Revenues captured in Year Three per Third Year Wink Subscriber Unit.
If DIRECTV has not reached a minimum of one million (1,000,000)
Wink-enabled DIRECTV System Subscribers by the first anniversary of
the Measurement Date, but does reach a minimum of one million
(1,000,000) Wink-enabled DIRECTV System Subscribers within eighteen
(18) months
Proprietary and Confidential 13
<PAGE> 14
of the Measurement Date, and (x) Hughes Network Systems or Sony
Electronics ships over 10,000 units of a Wink-enabled DIRECTV System
Receiver to residential customers prior to March 31, 2000, and (y)
such Wink-enabled DIRECTV System Receiver model is reasonably
anticipated by such Participating Manufacturer to be its highest
volume model during the applicable model year, Wink agrees to
guarantee certain revenues for DIRECTV as follows:
(e) A "First Period Wink Subscriber Unit" shall be a Wink-enabled
DIRECTV System subscriber provided with an activated Wink-enabled
DIRECTV System Receiver on or before the Measurement Date or, for a
subscriber whose Wink-enabled DIRECTV System Receiver was activated
within eighteen (18) months of the Measurement Date, the number x =
the number of full months elapsed prior to eighteen (18) months
following the Measurement Date that such subscriber had a
Wink-enabled DIRECTV System Receiver, divided by 18. If, within
eighteen (18) months of the applicable Measurement Date, DIRECTV's
Incremental Wink Revenues have not reached a cumulative total of
$2.50 per First Period Wink Subscriber Unit, Wink shall pay DIRECTV
within forty five (45) days, the difference between $2.50 per First
Period Wink Subscriber Unit and the actual cumulative Incremental
Wink Revenues per First Period Wink Subscriber Unit, provided that
any payments made by Wink under section 5.8(a) shall be deducted
first.
(f) The Second Period shall be defined as the time between 18 months
following the Measurement Date and 30 months following the
Measurement Date. A "Second Period Wink Subscriber Unit" shall be a
Wink -enabled DIRECTV System Subscriber provided with an activated
Wink-enabled DIRECTV System Receiver within 18 months of the
Measurement Date or, for a subscriber whose Wink-enabled DIRECTV
System Receiver was activated after such date, the number x = the
number of full months elapsed during the Second Period that such
subscriber had a Wink-enabled DIRECTV System Receiver, divided by 12.
If DIRECTV's Incremental Wink Revenues during the Second Period have
not reached a cumulative total of $2.50 per Second Period Wink
Subscriber Unit, Wink shall pay DIRECTV within forty five (45) days,
the difference between $2.50 per Second Period Wink Subscriber Unit
and the actual cumulative Incremental Wink Revenues captured in the
Second Period per Second Period Wink Subscriber Unit.
(g) The Third Period shall be defined as the time between 30 months
following the Measurement Date and 42 months following the
Measurement Date. A "Third Period Wink Subscriber Unit" shall be a
Wink-enabled DIRECTV System Subscriber provided with an activated
Wink-enabled DIRECTV System Receiver within 30 months of the
Measurement Date or, for a subscriber whose Wink-enabled DIRECTV
System Receiver was activated after such date, the number x = the
number of full months elapsed during the Third Period that such
subscriber had a Wink-enabled DIRECTV System Receiver, divided by 12.
If DIRECTV's Incremental Wink Revenues during the Third Period have
not reached a cumulative total of $2.50 per Third Period Wink
Subscriber Unit, Wink shall pay DIRECTV within forty five (45) days,
the difference between $2.50 per Third Period Wink Subscriber Unit
and the actual cumulative Incremental Wink Revenues captured in the
Third Period per Third Period Wink Subscriber Unit.
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a joint and mutually agreeable press
release announcing this Master Agreement promptly after the Effective
Date, and in any event within 30 days of the Effective Date. Wink
shall provide DIRECTV with a draft of this release for review and
approval within three (3) business days of the last party's execution
of the Master Agreement. The parties agree that such press release
shall include a specific statement regarding the expected volume of
Wink-enabled
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<PAGE> 15
DIRECTV System Receivers to be shipped during the Term (e.g., a
minimum of one million units) and the expected Measurement Date
(e.g., June 1999). DIRECTV agrees to sponsor an event for the press
at the announcement of the Master Agreement, the incremental cost of
which shall be shared equally by the parties, subject to Wink's prior
approval of such incremental costs. If the event is held at the
Winter Consumer Electronics Show in January of 1999, DIRECTV agrees
to fully fund such event. Wink agrees to provide all necessary
support for the development of mutually agreed upon sample
Interactive Wink Programs for such event, including, without
limitation, adequate training of DIRECTV personnel and adequate
Wink-employee staffing for demonstrations at the Winter Consumer
Electronics Show.
6.2. Wink may, from time to time and in conformance with all applicable
federal, state or other law, undertake marketing tests and surveys,
rating polls and other research in connection with Wink-enabled
DIRECTV System Subscribers, subject to limitations on Subscriber
contacts with customers of certain sales agents of DIRECTV, as
identified by DIRECTV from time to time. Wink shall give prior
written notice to DIRECTV of the nature and scope of each such test,
survey, poll or project which applies to or involves Wink-enabled
DIRECTV System Subscribers. DIRECTV may in its sole discretion, to
the extent permissible under applicable law, provide Wink, upon
request from Wink, with reasonable assistance in conducting such
research in connection with undertaking such test, survey, poll or
project. Wink shall reimburse DIRECTV for all costs and expenses
incurred in connection with rendering such assistance upon demand.
Wink shall promptly provide DIRECTV with the results of all such
tests, surveys, polls and projects at no cost to DIRECTV. The results
of all such tests, surveys, polls and projects shall be Confidential
Information, shall be in an aggregate form only, and shall not
identify any Wink-enabled DIRECTV System Subscriber. DIRECTV agrees
that Wink shall be provided with any and all research in an aggregate
and anonymous form directly related to the deployment, launch, and
usage of the Interactive Wink Programs service by Wink-enabled
DIRECTV System Subscribers that is created or paid for by DIRECTV at
no cost to Wink. Such research shall be Confidential Information as
defined in Section 12 hereof.
6.3. DIRECTV acknowledges that Wink will be providing to Programmers and
Third Party Wink Program Providers, if any, aggregate reports on
Wink-enabled DIRECTV System Subscriber usage, vote and poll responses
to the Interactive Wink Programs that originate from such
Programmer's video programming and advertising or from such Third
Party Wink Program Provider's Interactive Wink Programs,
respectively. DIRECTV further acknowledges that Wink will be
providing to Programmers, Third Party Wink Program Providers,
advertisers, or parties designated by such entities to fulfill Wink
Transactions ("Fulfillment Entities") both (a) aggregate reports on
Wink-enabled DIRECTV System Subscriber responses and (b) provided
that such Wink-enabled DIRECTV System Subscribers have not requested
their removal from any such data collection, reports on individual
Wink Transactions that are generated as a result of a Wink-enabled
DIRECTV System Subscriber's deliberate interaction with the
Interactive Wink Program to which the report relates. Wink represents
and warrants to DIRECTV that: (i), except as set forth herein, it
shall not collect, use or provide to any third party any information
related to a Wink-enabled DIRECTV System Subscriber including, but
not limited to, name, address, phone number and credit card number,
(collectively, "Wink-enabled DIRECTV System Subscriber Data"); (ii)
Fulfillment Entities shall be expressly prohibited pursuant to
executed written agreements with Wink from (x) collecting or using
any Wink-enabled DIRECTV System Subscriber Data for purposes other
than fulfilling orders and requests from the Wink -enabled DIRECTV
System Subscriber, and (y) selling or providing any Wink-enabled
DIRECTV System Subscriber Data to third parties, except that,
notwithstanding the foregoing (x) and (y) Fulfillment Entities may be
permitted to use or provide to third parties the Wink-enabled DIRECTV
System Subscriber Data related to a particular Subscriber
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<PAGE> 16
if such Wink-enabled DIRECTV System Subscriber has purchased a
product through an Interactive Wink Program, provided that such
Wink-enabled DIRECTV System Subscriber Data shall not identify
DIRECTV Subscribers as "DIRECTV Subscribers." Notwithstanding the
foregoing, Fulfillment Entities may use any data regarding a
Wink-enabled DIRECTV System Subscriber that is collected other than
in connection with the Interactive Wink Programs and without Wink's
assistance. Wink agrees to provide Wink-enabled DIRECTV System
Subscribers with a means of securely registering their credit card or
other preferred method of payment with the Wink Response Network
through an on-screen Interactive Wink Program, and agrees to clearly
disclose and provide Wink-enabled DIRECTV System Subscribers with a
means of "opting out" of allowing Fulfillment Entities to provide
their DIRECTV System Subscriber Data to third parties (such "opt-out"
option shall apply to all Wink Transactions initiated by that
Wink-enabled DIRECTV System Subscriber). Such credit card
registration process shall be encrypted according to current
television industry encryption standards, provided that if no such
standard exists, the parties shall use reasonable efforts to reach
agreement on such an encryption standard. Wink further agrees to make
DIRECTV a third party beneficiary of Wink's agreements with
Fulfillment Entities, if permitted by such agreements, Wink
represents and warrants that it shall use its best reasonable efforts
to enforce its rights under such agreements with Fulfillment
Entities, to DIRECTV's benefit, should such Fulfillment Entities be
in breach of such agreements with respect to their unauthorized use
of any DIRECTV Subscriber data.
6.4. DIRECTV agrees to promote and market the availability of the
Interactive Wink Programs to Wink enabled DIRECTV System Subscribers
in the Territory. The parties agree that DIRECTV may brand such
interactive capabilities of the Wink-enabled DIRECTV System Receiver
in DIRECTV's sole discretion under any brand DIRECTV chooses, and
that DIRECTV's use of any Wink-owned or controlled brand may be done
in a manner so as to be clearly subordinate to DIRECTV's brand and in
conformance with DIRECTV's trademark utilization guidelines. Subject
to the preceding understanding and agreement, DIRECTV agrees to use
reasonable efforts to explore the use of Wink brands in DIRECTV's
marketing of Interactive Wink Programs and Wink-enabled DIRECTV
System Receivers. Advertising, promotional, marketing and/or sales
materials concerning the Interactive Wink Programs or the Wink
Software provided by Wink may be used at the sole discretion of
DIRECTV. Wink agrees that it shall only provide to DIRECTV those
marketing materials whereby Wink has received all necessary prior
approval from the applicable Programmers and Third Party Wink Program
Providers featured in such marketing materials such that no further
approvals shall be required from Programmers and Third Party Wink
Program Providers for minor customization of the materials, including
but not limited to, adding the name, logo and other marks of DIRECTV.
6.5 DIRECTV agrees that any marketing materials separately developed by
DIRECTV intended to promote the capabilities of the Interactive Wink
Programs must be approved in writing by Wink prior to distribution,
which approval shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, use of the names and marks of Wink and
separately Wink-developed marketing and promotional materials
regarding Wink and the Interactive Wink Programs in routine
promotional materials, such as program guides, program listings and
bill stuffers, shall be deemed approved unless Wink specifically
gives written notice to DIRECTV to the contrary. Nothing contained
herein shall limit or restrict the right of DIRECTV to use such names
and marks (i) in connection with the exercise of its rights hereunder
or (ii) as permitted under any other contract or agreement, in
connection with any advertising inserted in any television service or
programming if the sponsor of such advertisement had the right to use
such names and marks therein or otherwise than under this Master
Agreement.
Proprietary and Confidential 16
<PAGE> 17
6.6 DIRECTV agrees to provide to Wink at no charge, on a monthly basis,
DIRECTV's good faith estimate of the number of Wink-enabled DIRECTV
System Subscribers and the number of Wink-enabled DIRECTV System
Receivers installed in Wink-enabled DIRECTV System Subscriber homes.
The panics shall use good faith efforts in exploring methods to
include in the monthly report data detailing the total number of
Wink-enabled DIRECTV System Subscriber deletions, if any, and
Subscriber breakdowns by state and metropolitan DMAs. The parties
agree that Wink shall have the right to audit DIRECTV's good faith
estimates as defined in Section 14.12.
6.7 Subsequent to the sale of the one millionth (l,000,000th)
Wink-enabled DIRECTV System Receiver, Wink agrees to provide DIRECTV
with matching promotional funds from Wink in the amount of one (1)
dollar per Wink-enabled DIRECTV System Receiver ("Wink MDF Funds").
All promotional and marketing expenses deemed eligible for matching
promotional funds by DIRECTV must be submitted to Wink for approval
prior to commitment to such expenses, which approval shall not be
unreasonably withheld. Such payments shall be made monthly within 30
days of receipt of both (a) the subscriber reports defined in section
6.6 and (b) presentation of evidence of expenditure of such amounts.
Marketing and promotional expenses eligible for matching promotional
funds include events, television, print, radio or outdoor
advertising, retail marketing materials, direct mail campaigns and
other marketing communications specifically aimed at improving sales
of Wink-enabled DIKECTV System Receivers and/or awareness or usage of
Interactive Wink Programs among Wink-enabled DIRECTV System
Subscribers. The parties agree that each party may contribute
"in-kind" products and services in place of cash outlays on the
approval of the other party. "In-kind" products and services include,
but are not limited to, local advertising avails and templates for
various forms of advertising and promotion that can be tailored for
DIRECTV's use.
7. REPRESENTATIONS, WARRANTIES AND LIABILITY LIMITATION
7.1 WINK'S WARRANTIES.
7.1.1 Wink hereby represents and warrants to DIRECTV that:
(i) Wink is a corporation duly organized, validly existing and in
good standing under the laws of the State of California;
(ii) Wink has the requisite power and authority to execute and
deliver this Master Agreement and to fully perform its obligations
hereunder;
(iii) Wink has the right to furnish the Wink Software, the
Interactive Wink Programs, the Wink Virtual Channels and all content
contained therein and the services related thereto as provided in
this Master Agreement, free and clear of any restrictions by third
parties;
(iv) the execution, delivery and performance of this Master Agreement
has been duly authorized by all corporate actions necessary on the
part of Wink;
(v) Wink is not subject to any contractual or other legal obligation
which will in any way interfere with its full performance of this
Master Agreement;
(vi) the individual executing this Master Agreement on behalf of Wink
has the authority to do so;
(vii) the Wink Software and the Wink Response Network (and subsequent
revisions and upgrades to same provided by Wink to DIRECTV) will
operate and perform in accordance with all published specifications
with respect thereto;
(viii) the use or carriage by DIRECTV of the Wink Software, the Wink
Engine, the Wink Virtual Channels or any other rights granted by Wink
hereunder will not infringe upon the patent, copyright, trademark, or
other proprietary right of any third party; and
Proprietary and Confidential 17
<PAGE> 18
(ix) Wink will perform all obligations and render all services
hereunder in a professional and workmanlike manner to the best of its
abilities.
7.1.2 Wink represents and warrants to DIRECTV that the Wink Software, the
Wink Engine, the Wink Virtual Channels and the Wink Response Network
(collectively, "Wink Products") are designed and developed, to be and
will continue to be Year 2000 Compliant. "Year 2000 Compliant" shall
mean that:
(a) the Wink Products are fully functional and performs in accordance
with Wink's published specifications and the specific warranties set
forth elsewhere in this Master Agreement (together, the "Standards")
prior to, during, and after the calendar year 2000 A.D., and that the
Wink Products shall perform during each such period of time without
any error relating to date functionality and/or data;
(b) without limiting the generality of the foregoing, that the Wink
Products (i) shall not cease to perform or provide or cause any
software and/or system with which the Wink Products operates to
provide invalid or incorrect results as a result of date
functionality and/or data. or otherwise experience any degradation of
performance or functionality with respect to the Standards as a
result of such interfacing specifically arising from. relating to or
including date functionally, (ii) has been developed and designed to
be fully interoperable with year 2000-compliant software. hardware,
and data and to ensure year 2000 compatibility, including, but not
limited to, date data century recognition and calculations which
accommodate same century and multi-century and leap year formulas and
date values; (iii) shall effectively and accurately manage and
manipulate data derived from, involving or relating in any way to
dates including single century formulas and multi-century or leap
year formulas, and will not cause an abnormally ending scenario
within the Wink Products, or generate incorrect values or invalid
results involving such dates, and (iv) provides that all date-related
user interface functionalities and data fields include an indication
of century.
7.2 DIRECTV represents and warrants to Wink that:
(i) DIRECTV is a corporation duly organized and validly existing
under the laws of the State of California;
(ii) DIRECTV has the requisite power and authority to enter in this
Master Agreement and to fully perform its obligations hereunder;
(iii) the execution, delivery and performance of this Master
Agreement has been duly authorized by all corporate actions necessary
on the part of DIRECTV;
(iv) DIRECTV is not subject to any contractual or other legal
obligation which will in any way interfere with its full performance
of this Master Agreement;
(v) the individual executing this Master Agreement on behalf of
DIRECTV has the authority to do so; and
(vi) DIRECTV will perform all obligations and render all services
hereunder in a professional and workmanlike manner to the best of its
abilities.
7.3 LIMITATION OF LIABILITY
NEITHER WINK, ON THE ONE HAND, NOR DIRECTV, ON THE OTHER HAND, SHALL,
FOR ANY REASON OR UNDER ANY LEGAL THEORY, BE LIABLE TO THE OTHER OR
ANY THIRD PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFITS, REVENUES, DATA OR
SERVICES, REGARDLESS OF WHETHER SUCH DAMAGES OR LOSS WAS FORESEEABLE
AND REGARDLESS OF
Proprietary and Confidential 18
<PAGE> 19
WHETHER IT WAS INFORMED OR HAD DIRECT OR IMPUTED KNOWLEDGE OF THE
POSSIBILITY OF SUCH DAMAGES OR LOSS IN ADVANCE.
8. INDEMNIFICATION
8.1 Wink shall indemnify, defend and hold harmless DIRECTV, its parents,
subsidiaries, and their respective officers, directors, employees and
agents from and against any and all losses, settlements. claims,
actions, suits, proceedings, investigation, judgments, awards,
damages, liabilities, costs and expenses including, without
limitation, reasonable attorneys' fees (collectively "Losses" and,
individually, a "Loss") which arise out of or as a result of:
(i) any breach of this Master Agreement by Wink;
(ii) any claim, demand, action, suit or proceeding in which it
is alleged that the Wink Products or any part thereof, or
the content of the Wink Virtual Channel violates or
infringes any patent or copyright, trademark or other
proprietary right of any third party or constitutes a
misappropriation of any third party's trade secrets;
(iii) any improper disclosure by Wink of any Confidential
Information as defined herein ("Confidential Information
Disclosures");
(iv) any misuse under the terms of this Agreement by Wink or
any third party, including, without limitation any
Fulfillment Entity, of any DIRECTV Subscriber information,
including but not limited to DIRECTV Subscriber credit
card information or other personal financial data;
and shall reimburse them for any and all legal, accounting and other
fees, costs and expenses (collectively, "Expenses") reasonably
incurred by any of them in connection with investigating, mitigating
or defending any such Loss; provided, however, that Wink will not
have any obligation or liability under this Section 8.1 to the extent
that DIRECTV has an obligation or liability with respect to the same
Loss under Section 8.2. If it is, or in the opinion of Wink may be,
determined by competent authority that the Wink Products or any part
thereof 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 DIRECTV the right under such patent,
copyright, trade secret or trademark to use, reproduce and distribute
the Wink Products or such part thereof or such trademark as
authorized in this Master Agreement, at no cost to DIRECTV; (b)
subject to DIRECTV's approval which shall not be unreasonably
withheld, replace the Wink Products or such part thereof or such
trademark with other suitable software or trademark without material
degradation in performance or functionality at no cost to DIRECTV; or
(c) subject to DIRECTV's approval which shall not be unreasonably
withheld, modify the Wink Products or such part thereof or such
trademark to avoid infringement without material degradation in
performance or functionality at no cost to DIRECTV.
8.2 Wink shall indemnify, defend and hold harmless Participating
Manufacturers, their parents, subsidiaries, and their respective
officers, directors, employees and agents from and against any and
all losses, settlements, claims, actions, suits, proceedings,
investigation, judgments, awards, damages, liabilities, costs and
expenses including, without limitation, reasonable attorneys' fees
(collectively "Losses" and, individually, a "Loss") which arise out
of or as a result of any claim, demand, action, suit or proceeding in
which it is alleged that the Wink Products or any part thereof, or
any Wink Virtual Channel, violates or infringes any patent or
copyright, trademark or other
Proprietary and Confidential 19
<PAGE> 20
proprietary right of any third party or constitutes a
misappropriation of any third party's trade secrets.
8.3 DIRECTV shall indemnify Wink. its officers, directors, shareholders,
employees and agents for, and shall hold them harmless from and
against, any and all Losses which are sustained or incurred by or
asserted against any of them and which arise out of any breach of
this Master Agreement by DIRECTV and shall reimburse them for any and
all Expenses reasonably incurred by any of them in connection with
investigating, mitigating or defending any such Loss.
8.4 Promptly after receipt by a party of notice of the commencement of
any action, suit, proceeding or investigation in respect of which
such party may make a claim for indemnification hereunder, such party
will give written notice thereof to the other party; but the failure
to so notify the other party will not relieve the other party from
any liability or obligation which the other party may have to any
indemnified person (i) otherwise than under this Master Agreement or
(ii) under this Master Agreement except to the extent of any material
prejudice to the other party resulting from such failure. If any such
action, suit, proceeding or investigation is brought against an
indemnified person, the indemnifying party will be entitled to
participate therein and, if it wishes to assume the defense thereof
and gives written notice to the indemnified person of its election so
to assume the defense thereof within 15 days after notice shall have
been given to it by the indemnified person pursuant to the preceding
sentence, will be entitled to assume the further defense thereof.
Each indemnified person will be obligated to cooperate reasonably
with the indemnifying party, at the expense of the indemnifying
party, in connection with such defense and the compromise or
settlement of any such action, suit, proceeding or investigation. If
Wink is the indemnifying party, Wink shall make no compromise or
settlement of any claim without the prior written consent of DIRECTV,
which consent shall not be unreasonably withheld.
9. NOTICES
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. Such notices must be addressed as follows:
If to WINK COMMUNICATIONS:
Attn.: Chief Financial Officer
1001 Marina Village Parkway
Alameda, CA 94501
If to DIRECTV:
Attn.: Vice President, Advanced Products
2230 East Imperial Hwy,
El Segundo, CA 90245
With a copy to:
Senior Vice President and General Counsel
Business Affairs
The date of such telegraphing, personal or express delivery, or the
date of receipt of a certified notice, if applicable, shall be deemed
the date on which such notice is given and effective.
Proprietary and Confidential 20
<PAGE> 21
10. TRADEMARKS
Other than as expressly provided otherwise herein, all right, title
and interest in and to the Interactive Wink Programs or other rights,
of whatever nature, related thereto shall remain the property of
Wink. Further, the parties acknowledge and agree that with respect to
all names, logos, marks, copyright notices or designations owned and
utilized by the respective party in connection with the activities of
that party are the sole and exclusive property of that party and no
rights or ownership are intended to be or shall be transferred as a
result of this Agreement. Wink shall not use, and no right or license
is herein granted to Wink to use, any of the trade names, trademarks,
copyrights, styles, slogans, titles, logos or service marks of
DIRECTV. Notwithstanding the foregoing, DIRECTV permits Wink to
include DIRECTV's trade name and logo for Wink's industry marketing
materials, subject to (i) DIRECTV's Trademark and Style Guide.
attached hereto and incorporated herein as Exhibit M and (ii) prior
written approval by DIRECTV.
11. FORCE MAJEURE
Neither party shall have any liability to the other party for any
failure to perform hereunder, if such failure is due to: an act of
God; inevitable accident; fire; lockout; strike or other labor
dispute; riot or civil commotion; act of government or governmental
instrumentality (whether federal, state or local); act of terrorism;
failure of performance by a common carrier; failure in whole or in
part of technical facilities; sun spots or other electronic,
electro-magnetic, atmospheric or other condition affecting
transmission; loss or degradation of any DIRECTV satellite capacity
(regardless of whether the Wink Interactive Programs are currently
delivered on the affected transponder(s) at the time of such loss or
degradation); or other cause (excluding financial inability or
difficulty of any kind) beyond such party's reasonable control.
Either party may terminate this Master Agreement upon written notice
to the other party in the event of a Force Majeure which prevents
either party from substantially performing under this Master
Agreement for a period of sixty (60) continuous days.
12. CONFIDENTIALITY
As used herein, "Confidential Information" shall include: (x) the
terms and conditions, other than the existence and duration, of this
Master Agreement; (y) any information marked or orally disclosed as
"confidential;" and (z) all personally identifiable information
related to Wink-enabled DIRECTV System Subscribers or any other
subscriber of DIRECTV, excluding such information which Wink-enabled
DIRECTV System Subscribers have affirmatively provided to (i) Wink,
(ii) a Programmer, or (iii) a Third Party Wink Program Provider with
the express permission that the receiving party could provide such
information to advertisers and other third parties. Neither party
shall disclose Confidential Information to any third party (other
than as necessary to its respective employees, in their capacity as
such) except: (i) as expressly provided herein; (ii) as may be
required by any court of competent jurisdiction, governmental agency,
law or regulation, provided that the disclosing party takes
reasonable steps to obtain confidential treatment of such information
pursuant to an appropriate Protective Order (in such event the
disclosing party. shall also notify the other party a reasonable time
prior to disclosure so that the non-disclosing party may take further
steps to protect the confidentiality of such information); (iii) as
part of the normal reporting or review procedure to a party's
accountants, auditors, agents, legal counsel and employees of parent
and subsidiary companies, provided such accountants, auditors,
agents, investors and potential investment partners, legal counsel,
and employees of parent and subsidiary companies agree to be bound by
this Section; and (iv) to enforce any of a party's rights pursuant to
this Master Agreement. Any data transmission, including all reports,
between Wink, DIRECTV and approved third parties
Proprietary and Confidential 21
<PAGE> 22
containing DIRECTV Subscriber data, is hereby identified as
Confidential Information and all such Subscriber data shall be
transmitted and stored in such a manner so as to ensure, through the
use of best efforts, the security of such data from access by
unauthorized parties.
13. TERMINATION
13.1 BREACH. Notwithstanding any other provision herein, either party
shall have the right to terminate this Master Agreement and any
License granted herein by giving written notice to the other party if
such other party breaches any of its material obligations under this
Master Agreement and such breach is not cured within thirty (30) days
of receipt of written notification specifically setting forth those
items of nonperformance. The termination of this Master Agreement by
either party shall be without prejudice to any other remedies that
party may have. Each party shall be obligated to pay outstanding fees
and payments accrued as of the date of termination,
13.2 BANKRUPTCY. If a party (i) becomes bankrupt or insolvent, however
evidenced, (ii) admits in writing its inability to pay its debts when
due, (iii) makes a general assignment for the benefit of creditors,
(iv) has appointed, voluntarily or involuntarily, any trustee,
receiver, custodian or conservator with respect to it or a
substantial part of its property, (v) files, or has filed against it,
a voluntary or involuntary petition in bankruptcy or (vi) makes any
arrangement or otherwise becomes subject to any proceedings under the
bankruptcy, insolvency, reorganization or similar laws of the United
States or any state, then the other party shall have the right at any
time thereafter to terminate this Master Agreement by giving written
notice to such party.
13.3 RIGHTS UPON TERMINATION. All rights of DIRECTV to use the Wink
Software (or any License granted hereunder for any reason) will cease
upon expiration of the Term or upon the termination of this Master
Agreement, and DIRECTV will (i) immediately purge all copies of all
Wink Software from all computer processors or storage media on which
DIRECTV has installed or permitted others to install such Wink
Software (not including software, if any, within any Wink-enabled
DIKECTV System Receiver, (ii) within ninety (90) days of such
expiration or termination return all materials (other than the
Equipment) provided by Wink or allow Wink to retrieve such materials
at DIRECTV's Facilities on notice during regular business hours and
without interrupting DIKECTV operations and (iii) within ninety (90)
days of such expiration or termination, certify to Wink in writing,
signed by an officer of DIRECTV, that all copies of the Wink Software
have been returned to Wink or destroyed and that no copy of any Wink
Software remains in DIRECTV's possession or under its control. Upon
termination or expiration of the Master Agreement Wink shall
immediately discontinue all use of all DIRECTV trademarks, including
all marks associated in any way whatsoever with the Wink-enabled
DIRECTV System and all marks or names associated with any programming
or product offered by DIRECTV.
14. GENERAL
14.1 BINDING EFFECT. Assignment This Master Agreement and License shall be
binding upon the parties hereto and their respective successors and
assigns, except that it may not be assigned by transfer, by operation
of law or otherwise, without the prior written consent of the
non-transferring party, which shall not be unreasonably withheld;
provided, however, that either party may assign its rights and
obligations under this Master Agreement and License, in whole or in
part (i) to an Affiliated Company or to a successor entity to
assignor's business; (ii) to a third party as part of preparing to go
or going public; or (iii) to a third party, provided the assignor
remains primarily liable for the performance of such third party's
obligations hereunder. Except as otherwise provided herein, any
Proprietary and Confidential 22
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assignment of rights or delegation of duties under this Master
Agreement by a party without the prior written consent of the other
party, if such consent is required hereby, shall be void. Except as
otherwise provided herein, no person shall be a third party
beneficiary of this Master Agreement. For the purposes of this Master
Agreement, "Affiliated Company(ies)" shall mean, with respect to any
person or entity, any other person or entity directly or indirectly
controlling, controlled by or under common control (i.e., the power
to direct affairs by reason of ownership of voting stock, by contract
or otherwise) with such person or entity and any member, director,
officer or employee of such person or entity.
14.2 AMENDMENTS, MODIFICATIONS, CANCELLATIONS. Except as otherwise
contemplated herein, no addition to, and no cancellation, renewal,
extension, modification or amendment of, this Master Agreement shall
be binding upon a party unless such addition, cancellation, renewal,
extension, modification or amendment is set forth in a written
instrument which states that it adds to, amends, cancels, renews,
extends or modifies this Master Agreement and which is executed and
delivered on behalf of each party by an officer of each party.
14.3 WAIVERS LIMITED. No waiver of any provision of this Master Agreement
shall be binding upon a party unless such waiver is set forth in a
written instrument which is executed and delivered on behalf of such
party by an officer of such party. Such waiver shall be effective
only to the extent specifically set forth in such written instrument.
14.4 RELATIONSHIP. Neither party shall be or hold itself out as the agent
of the other party under this Master Agreement. Nothing contained
herein shall be deemed to create, and the parties do not intend to
create, any relationship of partners or joint venturers as between
DIRECTV and Wink, and neither party is authorized to or shall act
toward third parties or the public in any manner which would indicate
any such relationship. Likewise, no supplier of advertising or
programming or anything else included in connection with the
Interactive Wink Programs shall be deemed to have any privity of
contract or direct contractual or other relationship with DIRECTV by
virtue of this Master Agreement or DIRECTV's License hereunder. Wink
disclaims any present or future right, interest or estate in or to
the transmission facilities of DIRECTV.
14.5 GOVERNING LAW. The validity, interpretation, performance and
enforcement of this Master Agreement shall be governed by the law of
the State of California, without regard to its principles of
conflicts of laws. The respective obligations of the parties under
this Master Agreement are subject to all applicable federal, state
and local laws, rules and regulations.
14.6 DISPUTE RESOLUTION/ARBITRATION.
(i) DISPUTES. Any dispute or disagreement arising between
DIRECTV and Wink shall be resolved according to the following dispute
resolution procedure: First, such dispute shall be addressed to each
party's project manager for discussion and attempted resolution. If
any such dispute cannot be mutually resolved by such project managers
within 5 business days, then such dispute shall be immediately
referred to the senior management of both parties for discussion and
attempted resolution. If such dispute cannot be mutually resolved by
such management representatives within 10 business days, then such
dispute or disagreement may be referred by either party to
arbitration in Los Angeles, California before one arbitrator and
arbitrated in accordance with the Commercial Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the
"AAA"), in effect on the date that such notice is given. Once
appointed, the arbitrator shall appoint a time and place for a
pre-hearing status conference not more than 14 days from the date of
his or her appointment, and shall appoint a time and place for a
final hearing not
Proprietary and Confidential 23
<PAGE> 24
more than 45 days from the date of the status conference. The final
hearing shall. if at all possible as determined by such arbitrator,
conclude no later than 30 days after its commencement. The parties
shall also specifically have the right to seek injunctive relief as
part of any arbitration.
(ii) ARBITRATOR. The party that demands arbitration of the
unresolved dispute or disagreement shall specify in writing the
matter to be submitted to arbitration. The dispute or disagreement
shall be referred for resolution by a single arbitrator appointed in
accordance with the Arbitration Rules of the AAA.
(iii) AWARD. The arbitrator shall render a written decision
stating with reasonable detail the reasons for the decision rendered.
Any monetary award shall be payable in immediately available funds
and in United States dollars through a bank in the United States.
(iv) COSTS. Each party shall bear its own cost of preparing
for and presenting its case; and the cost of arbitration, including
the fees, and expenses of the arbitrator, will be shared equally by
DIRECTV and Wink.
(v) ENFORCEMENT. The arbitration award shall be final and
binding upon the parties and may be confirmed by the judgment of any
court having appropriate jurisdiction, including but not limited to
any court located in California.
14.7 ENTIRE AGREEMENT. This Master Agreement together with the Schedules
and Exhibits attached hereto constitutes the entire contract between
the parties with respect to the subject matter hereof and cancels and
supersedes all of the previous or contemporaneous contracts,
representations, warranties and understandings (whether oral or
written) by, between or among the parties with respect to the subject
matter hereof.
14.8 SEVERABILITY. If any provision of this Master Agreement shall
hereafter be held to be invalid, unenforceable or illegal, in whole
or in part, in any jurisdiction under any circumstances for any
reason, (i) such provision shall be reformed to the minimum extent
necessary to cause such provision to be valid, enforceable and legal
while preserving the intent of the parties as expressed in, and the
benefits to the parties provided by, this Master Agreement or (ii) if
such provision cannot be so reformed, such provision shall be severed
from this Master Agreement and an equitable adjustment shall be made
to this Master Agreement (including, without limitation, addition of
necessary further provisions to this Master Agreement) so as to give
effect to the intent so expressed and the benefits so provided. Such
holding shall not affect or impair the validity, enforceability or
legality of such provision in any other jurisdiction or under any
other circumstances. Neither such holding nor such reformation or
severance shall affect or impair the legality, validity or
enforceability of any other provision of this Master Agreement.
14.9 HEADINGS. The headings set forth in this Master Agreement have been
inserted for convenience of reference only, shall not be considered a
part of this Master Agreement and shall not limit, modify or affect
in any way the meaning or interpretation of this Master Agreement.
11.10 SURVIVAL OF REPRESENTATIONS. All representations and warranties set
forth herein shall survive the termination or expiration of this
Master Agreement and the consummation of the transactions
contemplated hereby. In addition, Sections 8, 10, 12 and 14 shall
survive any termination or expiration of this Master Agreement.
Proprietary and Confidential 24
<PAGE> 25
14.11 MOST FAVORED NATIONS. The term "Distributor" shall be defined as any
entity distributing (or controlling an entity which distributes)
video programming to subscribers. It does not include Programmers as
defined herein. If Wink has agreed to provide or at any time during
the Term agrees to provide, pursuant to a written agreement with any
Distributor ("Third Party Agreement"), on any day during the term
hereof, fees, rates, discounts, credits, commissions, rebates,
marketing support or adjustments (collectively, "Financial
Provisions") which are more favorable to such other distributor than
those set forth in this Master Agreement, Wink shall give written
notice thereof to DIRECTV and, at DIRECTV's election, this Master
Agreement shall be deemed to have been modified so that, from the
date on which such more favorable Financial Provisions are first so
provided (or, if such more favorable Financial Provisions are now
being provided, from the date hereof) and thereafter for so long as
such more favorable Financial Provision continues to be so provided,
DIRECTV shall receive such more favorable Financial Provisions.
14.12 AUDIT RIGHTS. During the term of this Master Agreement and for one
(1) year thereafter, both parties shall maintain accurate and
complete documents and information, as well as books and records in
accordance with generally accepted accounting principles and
practices which, at a minimum, shall contain sufficient information
to enable an auditor to verify compliance with this Master Agreement.
Upon not less than 30 days' prior written notice, either party shall
have the right, during the term of this Master Agreement and for one
(1) year thereafter to examine during normal business hours all of
the documents, information, books and records of the other party to
the extent necessary to verify compliance with this Master Agreement;
provided, however, that such examinations shall not be conducted more
frequently than once annually. If any such examination reveals a
discrepancy in the amount paid by or to either party and the amount
which should have been paid by or to either party, the party who has
been demonstrated to have paid too little shall immediately pay to
the other party an amount equal to the cost of such examination, plus
the amount of the discrepancy, plus interest on the amount of such
discrepancy at the rate of 1.5% per month (or, if lower, the maximum
rate permitted by law) from the date on which such amount was paid by
or should have been paid to the other party through the date on which
payment is made to the other party (such payments shall only be made
by DIRECTV if the under reporting by DIRECTV actually caused Wink to
make payments to DIRECTV).
Proprietary and Confidential 25
<PAGE> 26
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Master Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. DIRECTV, INC.
Title: Title:
By: MAGGIE WILDEROTTER By: Bradley Beale
Name: President CEO Name: Vice President
Proprietary and Confidential 26
<PAGE> 27
EXHIBIT A.: WINK/DIRECTV REVENUE SHARE
WINK RESPONSE SERVICE TRANSACTION FEES
Transaction Revenue Share is calculated as a percentage of Wink's gross revenues
on the applicable Gross Transaction Routing Fees, based on the schedule below:
<TABLE>
<CAPTION>
Responses to Interactive Wink
Number of Wink-enabled Programs carried with third Response to Interactive Wink
DIRECTV System party video programming or Programs inserted by
Subscribers (as reasonably advertising, including those DIRECTV at DIRECTV's
determined by DIRECTV, and provided by Programmers facilities, excluding all
subject to audit by Wink) ("National Responses") National Responses
<S> <C> <C>
Less than 2,006,000 [ * ] [ * ]
2,000,000 - 2,999,999 [ * ] [ * ]
3,000.000 - 3,999,999 [ * ] [ * ]
4,000.000 - 4,999,999 [ * ] [ * ]
5,000.000 - 5,999,999 [ * ] [ * ]
6,000.000 or more [ * ] [ * ]
</TABLE>
The Transaction Revenue Share for the applicable number of Wink-enabled DIRECTV
System Subscribers shall apply for all Gross Transaction Routing Fees captured
by Wink in the month in which that number of Wink-enabled DIRECTV System
Subscribers is reached and for all months thereafter during the Term, until the
next threshold for Wink-Enabled DIRECTV System Subscribers is met, at which
point that next Transaction Revenue Share shall apply for all Gross Transaction
Routing Fees thereafter, and so forth.
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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.
Proprietary and Confidential 27
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EXHIBIT B: WINK SOFTWARE
STANDARD ITEMS:
- - WINK BROADCAST SERVER VERSION 2.X
- - WINK SERVER MODULE ENGINE VERSION 1.X
- - WINK RESPONSE SERVER (MODEM RETURN PATH) VERSION 1.X
- - WINK BILLING SYSTEM INTERFACE VERSION 1.X
- - WINK A/D GATEWAY FOR CAPTURING AND REINSERTION OF INTERACTIVE WINK OGRAMS
- - PROVIDED IN ANALOG VBI AND REINSERTED IN DIRECTV DATA BROADCAST STREAMS
- - WINK STUDIO VERSION 2.X (5-SEAT LICENSE)
- - WINK SERVER STUDIO 1.X (5-SEAT LICENSE)
OPTIONAL ITEMS:
- - WINK AD INSERTION SERVER MODULE, DIFFERENT INTERFACES AVAILABLE
Proprietary and Confidential 28
<PAGE> 29
EXHIBIT C.: ATVEF TRANSLATOR ADDENDUM
[*]
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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.
Proprietary and Confidential 29
<PAGE> 30
EXHIBIT D.: PRICING AND PAYMENT TERMS
All products and services are billed Net/45.
(A) WINK SOFTWARE PROVIDED FREE OF CHARGE DURING THE TERM:
- - Site License for the Wink Broadcast Servers 2.x
- - Site License for the Wink Response Server 1.x
- - License for the Wink Billing System Interface l.x
- - Site License for Wink Server Module Engine 1.x
- - Site License for A/D Gateway
- - 5 seat license for Wink Studio 2.x
- - 5 seat license for Wink Server Studio 1.x
DIRECTV may deploy as many copies of each Wink Software program as necessary to
ensure reliable transmission from Facilities for the purpose of serving Wink
- -enabled DIRECTV System Subscribers in the Territory.
(B) WINK SERVICES PROVIDED FREE OF CHARGE:
- - Site survey and installation of all Wink Software and other products
provided by Wink
- - A two-day training session for operating and maintaining the Wink
Broadcast Server
- - A two-day training session for developing Interactive Wink Programs using
Wink Studio and Wink Server Studio
- - Up to five one day Customer Service and Sales training sessions for
DIRECTV staff
- - All training to be provided at DIRECTV facilities at a mutually agreeable
time
(C) THIRD PARTY PRODUCTS PROVIDED FREE OF CHARGE:
- - All necessary server hardware to support reception and transmission of
national Interactive Wink Programs and the Wink Virtual Channels
- - Norpak VBI readers for each incoming analog video stream carrying
Interactive Wink Programs
- - Cables, hubs, etc. necessary to connect all Wink related equipment
- - All telecom products and services to support collecting of Wink Responses
from Wink -enabled DIRECTV System Receivers, and to interface to
DIRECTV's billing system
All hardware products provided must be returned to Wink upon termination or
expiration of the Master Agreement.
(D) REQUIRED THIRD PARTY PRODUCTS TO BE LICENSED BY PARTICIPATING
MANUFACTURERS
- - Wink Engine software
(E) OPTIONAL WINK SOFTWARE AND SERVICES:
- - License for Wink Ad Insertion Server Module (delivery dependent on
vendor/interface)
<TABLE>
<S> <C>
Existing interfaces Free
New interfaces NRE based on time and materials,
not to exceed $25,000
Custom interface work $ 1,000/day
Additional 5-seat license packs for Wink Studio $ 3,000
Additional 5-seat license packs for Wink Server Studio $ 5,000
Phone training and consulting beyond bundled services $125/hr
Technical support $2,500/month
Application development $2,500 min., $125/hr
ATVEF Translator See Section 5.200
</TABLE>
Proprietary and Confidential 30
<PAGE> 31
EXHIBIT E.: PRELIMINARY STATEMENT OF WORK
See Wink/DIRECTV Statement of Work, draft dated 12/22/98
[*]
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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.
Proprietary and Confidential 31
<PAGE> 32
[ * ]
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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.
<PAGE> 33
[ * ]
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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.
<PAGE> 34
[ * ]
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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.
<PAGE> 35
[ * ]
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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.
<PAGE> 36
[ * ]
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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.
<PAGE> 37
[ * ]
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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.
<PAGE> 38
[ * ]
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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.
<PAGE> 39
[ * ]
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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.
<PAGE> 40
[ * ]
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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.
<PAGE> 41
[ * ]
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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.
<PAGE> 42
[ * ]
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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.
<PAGE> 43
STATEMENT OF WORK
code downloads to the IRD
software. This prototype
will not support broadcast
data nor a return path.
ET5.D2 Manufacturer to Wink
Manufacturer delivers
updated version of the
module software (SW2) which
adds a device control
driver, a broadcast data
driver and a functional TV
Control task.
ET5.D5 DIRECTV to Wink DIRECTV brings up
'Engineering SCID'
transmitting Wink data in
the correct format. Wink
will have telnet access to
control the behavior and
content of the data.
ET6: ET5 + 2 Weeks
ET6.D1 Wink to Manufacturer A version of the Wink Engine
(PROTO2)' which supports
apps delivered via broadcast
data stream. and user input
from the IRD control task.
ET6.D2 Manufacturer to Wink QA Test Environments
ET6.D2 Manufacturer to Wink An updated version module
software (SW3) which adds
support for the modem, and a
??TCP/IP/PPP?? stack.
ET7: ET6 + 3 Weeks QA Begins at Wink
ET7.D 1 Wink to Manufacturer Wink delivers a 3rd version
of the Wink Engine (PROTO3)
which supports a' return
path over the modem. Wink
Engine is 'code complete'
with all features and
functions having passed
engineering test.
ET8: ET7 + 6 Weeks
ET8.D1 Wink to Manufacturer Wink Software on HW1 modules
ready for Certification at
Manufacturer (PROTO4).
ET8.D2 Manufacturer to Wink Final Manufacturer Hardware
(HW2) and updated software
(SW4).
ET9: ET8 + 4 weeks IRD with Wink Engine pass
Certification at
Manufacturer.
ET9.D1 Manufact. to DIRECTV IRD with Wink Engine begin
SI&T at DIRECTV
ET10: ET9 + 0 weeks (2 week prelim. integration
at DIRECTV begins 2 weeks
before ETS.)
ET10.D1 All IRD with Wink Engine begin
SI&T at DIRECTV
THE FOLLOWING MILESTONES ARE REALLY SYSTEM RELATED - THUS NAMED STN. THIS BEGINS
AFTER ALL COMPONENTS ARE DELIVERED TO DTV AFTER HAVING COMPLETED COMPONENT
TESTING.
ST1: ET10/BT7/RT6 + 4 weeks 4 weeks for f'inal
integration after last
component arrives
ST1.D1 All Pass SI&T at DIRECTV. Begin
Acceptance Test.
ST2: ST1 + 7 weeks Field Test
ST2.D1 All Pass Acceptance Test at
DIRECTV.
TOTAL: 35 WEEKS
CONFIDENTIAL
10:42 AM 12/23/98 STATEMENT OF WORK Page 12 / 23
<PAGE> 44
[ * ]
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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.
<PAGE> 45
[ * ]
- -------------
* 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> 46
[ * ]
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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.
<PAGE> 47
[ * ]
- -------------
* 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> 48
[ * ]
- -------------
* 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> 49
[ * ]
- -------------
* 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> 50
[ * ]
- -------------
* 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> 51
[ * ]
- -------------
* 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> 52
[ * ]
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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.
<PAGE> 53
[ * ]
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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.
<PAGE> 54
[ * ]
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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.
<PAGE> 55
EXHIBIT F: PRELIMINARY SCHEDULE
See Wink/DIRECTV Statement of Work, draft dated 12/22/98.
Proprietary and Confidential 32
<PAGE> 56
[ILLUSTRATION]
<PAGE> 57
[ILLUSTRATION]
<PAGE> 58
EXHIBIT G.: WINK PROVIDED VIRTUAL CHANNELS
<TABLE>
<CAPTION>
BRANDING
NAME DESCRIPTION BANDWIDTH MINIMUM TERMS
<S> <C> <C> <C> <C>
WEATHER Current weather and [ * ] TBD [ * ]
forecasts on demand- [ * ]
localization based on [ * ]
user location and/or
preferences
SPORTS Current pro and [ * ] TBD [ * ]
college scores on [ * ] [ * ]
demand - football, [ * ]
basketball, baseball,
hockey, golf, tennis
and auto racing -
localization based on
user location and/or
preferences
GENERAL Current news [ * ] TBD [ * ]
NEWS headlines, articles on [ * ]
Demand [ * ]
BUSINESS Financial news and [ * ] TBD [ * ]
NEWS market data - may [ * ] [ * ]
include limited [ * ] [ * ]
personalization for
tracking of
stocks/portfolio in a
later release
SHOPPING Virtual stores for [ * ] TBD [ * ]
select merchandise - [ * ] [ * ]
books, music, videos, [ * ]
clothes, travel,
flowers, etc.
</TABLE>
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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.
Proprietary and Confidential 33
<PAGE> 59
[ * ]
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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.
Proprietary and Confidential 34
<PAGE> 60
[*]
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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.
Proprietary and Confidential
Execution Copy
<PAGE> 61
[*]
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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.
Proprietary and Confidential
Execution Copy
<PAGE> 62
[*]
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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.
Proprietary and Confidential
Execution Copy
<PAGE> 63
[*]
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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.
Proprietary and Confidential
Execution Copy
<PAGE> 64
EXHIBIT I.: STANDARD WINK ENGINE LICENSE TERMS FOR PARTICIPATING MANUFACTURERS
See Sample December 22, 1998 - Development and License Agreement between Wink
and a Manufacturer of DIRECTV System Receivers
Proprietary and Confidential 35
<PAGE> 65
SAMPLE - DECEMBER 22, 1998
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is made as of _____
___199_ (the "Effective Date"), between Wink Communications, Inc., a California
corporation with offices at 1001 Marina Village Parkway, Alameda, CA 94501
('"Wink") and __________ , _________ , __________ , ___________ , a __________
corporation, with offices at ______________________ ("Manufacturer").
BACKGROUND
A. Wink is a software developer that has developed an end-to-end system
for delivering interactive applications synchronized with or independent of
television programs and advertisements. Among other software, Wink develops,
customizes, supports and licenses its software engine (the "Wink Engine") that
decodes Wink's protocol and displays the interactive applications overlaid on a
television screen.
B. DIRECTV, a California corporation ("DIRECTV"), whose address is 2230
East Imperial Highway, El Segundo, CA 90245 and Wink have entered into a license
agreement (the "Master Agreement") under which DIRECTV has licensed certain
software from Wink and has agreed to transmit certain interactive programs that
can be decoded and displayed by a Wink Engine resident in a DIRECTV System
Receiver (as defined below).
C. Manufacturer is a manufacturer of television set top boxes and video
products, and has a valid and current license with DIRECTV to produce and
distribute devices incorporating DIRECTV technologies and capable of receiving
and decoding DIRECTV signals ("DIRECTV System Receivers").
D. Wink and Manufacturer desire that Wink grant to Manufacturer the
right to embed a customized version of the Wink Engine on DIRECTV System
Receivers to be distributed in continental United States.
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 Wink-enabled DIRECTV System Receiver.
<PAGE> 66
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-l, 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 Manufacturer product for
which the Wink Engine is customized and 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 2.0 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 "Manufacturer Device" means the DIRECTV System Receiver as
identified in each Statement of Work,
1.10 "Wink-enabled DIRECTV System Receiver" means a DIRECTV System
Receiver containing the Licensed Engine (or a DIRECTV System
Receiver that contains a memory component into which the
Licensed Engine may be loaded or transmitted) and which is able
to receive both DIRECTV programming and Wink interactive
programs transmitted by DIRECTV.
<PAGE> 67
1.11 "Subdistributors" means entities authorized by Manufacturer to
distribute the Wink-enabled DIRECTV System Receiver(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. The parties agree to use their reasonable
commercial efforts to customize the Wink Engine for the
Manufacturer 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. Each party's obligations under this 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. Manufacturer 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. Manufacturer
shall provide to Wink free of charge (including all taxes and
freight) all hardware, software, and equipment reasonably
necessary for Wink to complete development and duplicate the
Manufacturer 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. Manufacturer
shall retain title to all such Equipment provided to Wink, and
Wink shall return all such Equipment to Manufacturer upon
written request and at Manufacturer's sole cost and expense.
Wink shall 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 Manufacturer's needs and objectives for the
Licensed Engine, and subject to DIRECTV's written permission.
Any such changes will be documented in writing and provided to
Manufacturer. Any other changes to a Statement of Work may only
be made by mutual agreement of the parties and all provisions
affected by such changes shall be appropriately adjusted.
<PAGE> 68
2.5 Delays. In the event Manufacturer 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
Manufacturer 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 Manufacturer-specific implementation features. Within thirty
(30) days after receipt, Manufacturer 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 setting forth those
material errors to be corrected ("Statement of Errors").
Manufacturer shall not withhold acceptance of any Deliverable
unless such Deliverable materially deviates from the
Specifications. Wink and Manufacturer recognize that the
Deliverables will not be error-free. If Manufacturer 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 Manufacturer for review and reevaluation. The
foregoing procedure shall be repeated until acceptance by
Manufacturer of the Deliverables or the parties mutually agree
to cease development and terminate this Agreement or the
applicable Statement of Work. Manufacturer's failure to accept
or provide a Statement of Errors within such thirty day period
shall be deemed an acceptance of such Deliverables. The parties
agree that additional testing performed in conjunction with
DIRECTV or their designated party may be required, and agree to
include an estimate of the time and effort involved in such
testing in the Statement of Work.
2.7 Transfer of Software. Upon Manufacturer's acceptance of the
completed' Licensed Engine ("Final Acceptance"), Wink shall
deliver to Manufacturer a master diskette or other digital
storage media for use by Manufacturer 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.
<PAGE> 69
3. GRANT OF RIGHTS
3.1 Licensed Engine. Subject to the terms and conditions of this
Agreement, effective upon Final Acceptance, Wink grants to
Manufacturer a, 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
Manufacturer Device and as necessary in the course of
distribution and support of the Wink-enabled DIRECTV System
Receiver as permitted hereunder; (b) distribute copies of the
Licensed Engine solely for incorporation into a Wink-enabled
DIRECTV System Receiver which was previously acquired (directly
or indirectly) from Manufacturer for use only with such
previously acquired unit, and not otherwise on a stand-alone
basis; and (c) distribute the Wink-enabled DIRECTV System
Receiver in the United States of America. Manufacturer's right
to distribute copies of the Licensed Engine pursuant to Section
3.1 (b), above, is subject to the condition that Manufacturer
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 Manufacturer and Wink prior to any such
distribution.
3.2 Submanufacturers. Manufacturer 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
Wink-enabled DIRECTV System Receivers only for Manufacturer's
account, (ii) not to sell or distribute Licensed Engines and
Wink-enabled DIRECTV System Receivers except to Manufacturer,
(iii) to keep the 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. Manufacturer's
provision of the Licensed Engine to such Submanufacturer shall
in all instances be subject to (a) Manufacturer's assurance that
it will use the same level of care in choosing Submanufacturers
for Manufacturer 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) Manufacturer's prompt notification to Wink
if Manufacturer knows or believes that a Submanufacturer has
breached the provisions of subsection (i) - (iii) above. In the
event that Manufacturer desires to provide the Licensed Engine
to a Submanufacturer without also
<PAGE> 70
providing such Submanufacturer with software owned by
Manufacturer, Manufacturer'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.
Manufacturer 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. Manufacturer 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 Manufacturer,
to be bound by all applicable restrictions on Manufacturer 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. Manufacturer
shall promptly notify Wink if Manufacturer has reason to believe
that any of Manufacturer's Subdistributors may not be abiding by
such restrictions. Manufacturer 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 Manufacturer 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, Manufacturer shall mark the Manufacturer
Device with such patent notices as may be permitted or required
under Title 35, United States Code. Manufacturer 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, Manufacturer 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,
4. FEES
4.1 Wink agrees that there shall be no per copy license fees or
other license fees due Wink in connection with Manufacturer's
license of the Licensed Engine. Manufacturer agrees to pay the
support fees defined in Exhibit C, section 6 within thirty days
of receipt of an invoice from Wink. Manufacturer further agrees
to pay the non-recurring engineering charges ("NRE") set forth
in each Statement of Work upon acceptance of the final version
of the object
<PAGE> 71
code for the applicable Licensed Engine ("Gold Master"). In no
event shall such NRE exceed $300,000 per Licensed Engine. Wink
agrees that such NRE shall be waived if the following conditions
are met:
(a) Manufacturer and Wink meet the deadline for delivery and
acceptance of the Gold Master, as stated in the Development
Plan, and as amended by mutual agreement between the parties. If
the parties fail to meet the deadline for delivery of the Gold
Master in the Development Plan, the parties shall evaluate the
causes of such delay. If Wink has, in Wink's sole and reasonable
opinion, contributed to such delay, the deadline shall be
extended to reflect such delay by Wink.
(b) For each full month that the acceptance of the Gold Master,
as stated in the Development Plan, is delayed through no fault
of Wink, the waiver of non-recurring engineering charges shall
be reduced by one third. After three months of a delay, the full
amount shall be due and payable on the date of acceptance of the
Gold Master by Manufacturer.
4.22 Currency; Taxes. All payments hereunder shall be in United
States dollars. All payments, if any, by Manufacturer 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 Wink, including foreign withholding tax. Any
such taxes which are otherwise imposed on payments to Wink shall
be the sole responsibility of Manufacturer.
5. WARRANTY
5.1 Product Warranty. Wink warrants to Manufacturer that under
ordinary use the Licensed Engine shall function substantially in
conformance with the Specifications for a period of no less than
ninety (90) days after Manufacturer's Final Acceptance.
5.2 Defects not Covered by Warranty. Wink's warranty shall not extend
to problems in the Licensed Engine that result from: (i)
Manufacturer'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
Manufacturer 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
<PAGE> 72
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 Manufacturer'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 MANUFACTURER 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
Manufacturer agrees that as between Manufacturer 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 Manufacturer 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 Manufacturer or any
Subdistributor advertises, promotes or markets the
functionality of the Licensed Engine, Manufacturer may,
and may 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 and
of which Wink has notified Manufacturer. Manufacturer
and its Subdistributors may use trade names, marks or
trademarks in addition to the Wink Trademarks in
connection with the Wink-enabled DIRECTV System
Receiver.
<PAGE> 73
7.1.2 Approval of Representations. All representations of
Wink's Trademarks that Manufacturer 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
Manufacturer's first commercial shipment of the
Wink-enabled DIRECTV System Receiver bearing one or more
Wink Trademarks, Manufacturer shall supply to Wink one
such Wink-enabled DIRECTV System Receiver for inspection
and testing by Wink to ensure that such Wink-enabled
DIRECTV System Receiver conforms to Wink's standards of
quality for products sold under the Wink Trademarks. In
no event shall Manufacturer commence commercial shipment
of any such Wink-enabled DIRECTV System Receiver (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. Manufacturer shall promote the
functionality of the Licensed Engine in its presentations to
customers and in its marketing materials as a prominent feature
of the Wink-enabled DIRECTV System Receiver.
7.3 Wink Markings and User Interface Elements.
7.3.1 Remote Button. All remote controls that Manufacturer
markets for use with Wink-enabled DIRECTV System
Receivers 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.
<PAGE> 74
7.3.2 Manuals. Manufacturer 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 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 Manufacturer artwork for a logo that may be
placed on all Wink- enabled DIRECTV System Receivers.
Manufacturer may silk screen or similarly affix this
logo on each Wink-enabled DIRECTV System Receiver.
Manufacturer shall ensure that: (i) if a Wink-enabled
DIRECTV System Receiver 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
Wink-enabled DIRECTV System Receiver 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.
<PAGE> 75
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; provided,
however, that the parties agree that DIRECTV, Inc. shall be
provided with an executed copy of this Agreement, and all
schedules, attachments and exhibits attached hereto, within
thirty (30) days of the Effective Date. Notwithstanding this
paragraph, each party shall have the right to say the following
in meetings with customers, prospective customers, or prospective
investors:
- Manufacturer and Wink are working together,
- Manufacturer is licensing Wink's technology.
- Wink is porting the Wink Engine to Manufacturer set-tops.
8. TRAINING, SUPPORT AND MAINTENANCE
8.1 Maintenance. Wink agrees to make available to Manufacturer, at no
charge to Manufacturer, all Updates released by Wink and permit
Manufacturer to distribute Updates to its Subdistributors and
Submanufacturers for their use consistent with this Agreement,
Manufacturer shall promptly notify its Submanufacturers and
Subdistributors of the availability of each Update and
Manufacturer 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. Manufacturer shall be responsible
for making such Updates available to its customers,
8.2 Technical Support. Wink shall make available to Manufacturer
technical support, as set forth in Exhibit C. Wink may
subcontract its technical support obligations and shall notify
Manufacturer as to the appropriate contact to obtain support.
8.3 Equipment. In order to facilitate Wink's performance of the
support activities contemplated herein, Manufacturer shall, at
its own expense, continue to provide Wink with Equipment (as
defined in Section 2.3). In the event that Manufacturer 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.
<PAGE> 76
8.4 Training. Wink shall make available, at Wink's facilities,
training for Manufacturer 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.
9. TERM AND TERMINATION
9.1 Term. This Agreement shall commence on the Effective Date and
shall continue in full force and effect until the earlier of (a)
five (5) years from the first commercial shipment of Wink-enabled
DIRECTV System Receiver by Manufacturer, and (b) the term of the
Master Agreement. The term of this Agreement may be extended by
mutual agreement of the parties. Notwithstanding the foregoing,
if the Master Agreement is extended, this Agreement shall be
automatically extended until the Master Agreement lapses or is
terminated. Wink agrees to provide written notice to Manufacturer
in the event of any such extension of the Master Agreement.
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 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
Manufacturer 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 Manufacturer under this Agreement
shall automatically terminate, and Manufacturer and its
Subdistributors shall immediately
<PAGE> 77
cease distribution of Licensed Engines and use of the Wink
Trademarks, provided, however, that if the Agreement is
terminated by Manufacturer due to Wink's material breach or
insolvency, Manufacturer 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
Wink-enabled DIRECTV System Receiver shall continue in effect;
9.4.3 Within ten (10) days after such expiration or termination,
except as provided in Section 9.6, or the case where
Manufacturer elects to continue the license pursuant to Section
9.4.1 above, Manufacturer 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 Manufacturer the return of, all Manufacturer Confidential
Information in its possession at the time of expiration or
termination. Notwithstanding the foregoing, Manufacturer 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,
solely to provide support to its permitted Subdistributors and
end users.
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 Manufacturer. Manufacturer 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 of the provisions of section 5,
which material breach has not been cured within (90) days after
Manufacturer's written notice to Wink thereof. The foregoing is
subject, however, to the condition that Manufacturer 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. Manufacturer 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
Manufacturer, (i) Manufacturer shall have a non-exclusive, non-
<PAGE> 78
[*]
- -------------
* 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> 79
9.4.4 Manufacturer shall pay all outstanding amounts owed to
Wink within thirty (30) days. In the event Wink is
performing development tasks for Manufacturer at the
time of any termination, Manufacturer 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 Manufacturer, Manufacturer may,
dispose of its inventory of Wink-enabled DIRECTV System
Receivers 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, Manufacturer
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, Manufacturer 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:
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;
<PAGE> 80
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 F 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 Manufacturer, 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
Manufacturer, subject to the limitations set forth hereafter.
Wink shall be relieved of its obligations hereunder unless
Manufacturer 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
thereof, or the sale, distribution or use thereof as permitted
hereunder infringes any patent, copyright, trade secret or
<PAGE> 81
trademark of a third party or is enjoined, then Wink at its sole
option and expense may: (a) procure for Manufacturer 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
Licensed 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 MANUFACTURER WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY
PATENT, COPYRIGHT, TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL
PROPERTY RIGHT.
12.0 INDEMNITY BY MANUFACTURER
Except with respect to any claim, suit, action or proceeding for which
Wink is obligated to indemnify under Section 11, Manufacturer 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 Manufacturer'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. Manufacturer shall be
relieved of its obligations hereunder unless Wink gives 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.
13.0 GENERAL
<PAGE> 82
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. Manufacturer 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. Manufacturer warrants that
it will comply in all respects with all applicable export and
re-export restrictions. Manufacturer 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.
<PAGE> 83
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. 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.
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 MANUFACTURER 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 MANUFACTURER HEREUNDER. IN NO EVENT SHALL WINK BE LIABLE TO
MANUFACTURER, 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
<PAGE> 84
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.
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 Manufacturer acknowledge and agree
that Wink's entering into this Agreement and the amount of
Manufacturer'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. MANUFACTURER
By: By:
Name: Name:
Title: Title:
<PAGE> 85
EXHIBIT A-1
[SAMPLE] STATEMENT OF WORK
1. Device
Wink and Manufacturer agree that Wink shall port the Wink Engine to
the Manufacturer DIRECTV System Receiver.
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 Agreement Manufacturer no
Delivery of development equipment as required to a Manufacturer no
location specified by Wink
Delivery by Wink of Project Plan for development of Wink no
Wink Engine Version 2.0 as customized for
Manufacturer
First Delivery of Equipment to Wink Manufacturer no
On-site support at Wink to set up Equipment Manufacturer no
Delivery by Wink of Alpha version of object code of Wink no
Wink Engine Version 2.0 as customized for __
Final Delivery of Equipment to Wink Manufacturer no
Delivery by Wink of Beta version of object code of Wink Wink no
Engine Version 2.0 as customized for
Acceptance of final version of object code of Wink Manufacturer no
Engine Version 2.0 as customized for
4. Materials and Equipment
First Delivery of Equipment
To be defined
Final Delivery of Equipment
To be defined
5. Payment Schedule: All amounts in US Dollars.
</TABLE>
<PAGE> 86
<TABLE>
<CAPTION>
EVENT NRE PAYMENT ROYALTY PAYMENT
<S> <C> <C>
Signing of Agreement [ $0] [ $0 ]
Delivery by Wink of Project Plan for development [ $0 ] [ $0 ]
of Wink Engine Version 2.0 as customized for
Manufacturer____
Delivery by Wink of Alpha version of object code [ $0 ] [ $0 ]
of Wink Engine Version 2.0 as customized for
Acceptance of final version of object code of Wink [ $0 ] [ $0 ]
Engine Version 2.0 as customized for
Totals: [ $0 ] [ $0 ]
</TABLE>
WINK COMMUNICATIONS INC MANUFACTURER
By: By:
Name: Name:
Title: Title:
<PAGE> 87
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> 88
EXHIBIT C
SUPPORT
The following provisions govern the support to be provided by Wink to
Manufacturer for the Licensed Engine.
1. Contact People. Manufacturer 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 Manufacturer's support
inquiries shall be initiated through the Contact People.
2. Support Obligations. Manufacturer 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. Manufacturer can escalate a problem to Third Level
Support, once Manufacturer exhausts the items enumerated above
in First and Second Level Support. When escalating, Manufacturer
shall provide enough information to allow Wink to duplicate the
problem.
<PAGE> 89
(b) Assignment of Severity Level. When a Third Level support call
comes into Wink from Manufacturer, the parties will mutually
assign a Severity Level as specified below that describes the
nature of the call and how critical it is to Manufacturer'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>
Severity First Response Frequency of
Level Definition Time Status Update
<S> <C> <C> <C>
Critical Bug causes a crash and/or data 4 business hours Each business day
loss to 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 1 business day Weekly
of a feature (i.e., feature fails in
specific cases)
Low Bug is characterized by a "glitch" 1 business day Weekly
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
</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 Manufacturer via
email.
5. Exclusions. Wink's support obligations shall not extend to problems that
result from: (i) Manufacturer's failure to implement any Updates to the
Licensed Engine which are provided by Wink; (ii) changes to the
operating system or environment or Manufacturer 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
<PAGE> 90
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, Manufacturer 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 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.
<PAGE> 91
EXHIBIT J.: EQUIPMENT PROVIDED BY WINK
- - Sun Spare Servers (primary + back-up) as necessary to operate the Wink
Broadcast Server and Server Module Engine for the Interactive Wink
Programs supplied by Programmers and the Wink virtual Channels.
- - Norpak VBI readers for all incoming national video signals which contain
Interactive Wink Programs and which DIRECTV has agreed to pass through
to Wink-enabled DIRECTV System Receivers (including 2 spare units that
can be "swapped" for defective ones by DIRECTV staff)
- - All modems, servers and other equipment associated with the Wink
Response Network
Proprietary and Confidential
36
<PAGE> 92
EXHIBIT K.: WINK RESPONSE ROUTING PRICING
All products and services are billed Net/45. A Purchase Response shall be
defined as any Wink Transaction which constitutes an agreement to purchase a
product or service, regardless of the method of payment. An RFI Response shall
be defined as any other Wink Transaction. A Poll Response shall be defined as a
Wink Response generated by a Wink "vote/poll" script. The purpose of Poll
Responses is to measure responses to specific questions, and may serve to
aggregate both multiple choice and free form responses.
<TABLE>
<CAPTION>
WINK TRANSACTIONS/MO. PRICE/WINK TRANSACTION
<S> <C>
PURCHASE RESPONSES $[*] min./mo. per Interactive Wink Program
creating Purchase Responses
1-5,000 [*]
5,001 - 25,000 [*]
25,001 - 100,000 [*]
100,001 - 250.000 [*]
250,001 - 500,000 [*]
500, 001 + [*]
RFI RESPONSES $250 min./mo. per Interactive Wink Program
creating RFI Responses
1-5,000 [*]
5,001 - 25,000 [*]
25,001 - 100,000 [*]
100,001 - 250,000 [*]
250,001 - 500,000 [*]
500, 001 + [*]
</TABLE>
<TABLE>
<S> <C>
Polls - report only $[*] min./mo. per Interactive Wink Program creating Poll
Responses
1-250,000 Wink Responses [*]
250, 001 + [*]
</TABLE>
1. Minimum monthly charges per application include UIC (Universal ICAP
code) registration.
2. All volume price breaks are based on DIRECTV's monthly transaction
volume by response category. 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 Response Fees Include;
1. Daily name & address lists delivered by fax, e-mail, or electronic FTP
or mailbox.
2. UIC and application registration.
3. Standard report showing number of Wink Responses per day per Interactive
Wink Program per city.
Polls
The fixed charge includes UIC and application registration, and a
standard reporting that summarizes all Poll responses by type by city.
If the application asks the viewer for telephone prefix or zip code, the
summary includes those totals.
Custom Usage Reports or other Custom Reporting
Custom reports are quoted by the Wink Response Center.
Proprietary and Confidential 37
- -------------
* 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> 93
EXHIBIT M.: DIRECTV TRADEMARK AND STYLE GUIDELINES
DIRECTV Trademark and Style Guide, dated December 1998 (and as amended by
DIRECTV in the future in it's sole discretion.
Proprietary and Confidential 38
<PAGE> 94
[ * ]
- -------------
* 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> 95
EXHIBIT N
DIRECTV CUSTOMER SERVICE STANDARDS
<TABLE>
<CAPTION>
Metrics: Wink Standard Goal
<S> <C> <C>
[*] [*]
Service Level (percentage of calls
answered within 30 seconds)
Attendance [*] [*]
Call Abandon Rate [*] [*]
Call Busy Rate [*] [*]
% Calls Handled [*] [*]
Average Speed of Answer [*] [*]
Average Call Handle Time [*] [*]
Average Call Hold Time [*] [*]
Longest Call Waiting [*] [*]
% Calls Transferred [*] [*]
QUALITY:
EC calls are rated at a Meets or Ex [*] [*]
% of calls where EC is polite and r [*] [*]
% of calls that have one call resol [*] [*]
LEGAL COMPLIANCE [*] [*]
Call Monitoring per EC per month [*] [*]
SYSTEMS:
Telemarketing - available [*] [*]
Telecom - available [*] [*]
Networks - available [*] [*]
</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.
Proprietary and Confidential 39
<PAGE> 96
FIRST AMENDMENT TO THE MASTER AFFILIATION AGREEMENT
BY AND BETWEEN
WINK COMMUNICATIONS, INC. AND DIRECTV, INC.
This First Amendment (the "First Amendment") to that certain MASTER
AFFILIATION AGREEMENT dated as of December 22, 1998 (the "Agreement") by and
between Wink Communications, Inc., a California corporation ("Wink") with
offices at 1001 Village Parkway, Alameda, CA 94501, and DIRECTV, Inc., a
California corporation with offices at 2230 East Imperial Highway, El Segundo,
CA 90245 ("DIRECTV"), is hereby made and entered into this 8th day of March,
1999, as follows:
1. Amendment. For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto amend the
Agreement, pursuant to Section 14.2 thereof, as hereby follows;
A. Section 5.8. The Paragraph immediately following Paragraph
(d) of Section 5.8 is hereby amended to read as follows:
If DIRECTV HAS NOT REACHED A MINIMUM OF ONE MILLION (1,000,000)
WINK-ENABLED DIRECTV SYSTEM SUBSCRIBERS BY THE FIRST ANNIVERSARY OF THE
MEASUREMENT DATE, BUT DOES REACH A MINIMUM OF ONE MILLION (1,000,000)
WINK-ENABLED DIRECTV SYSTEM SUBSCRIBERS WITHIN EIGHTEEN (18) MONTHS OF
THE MEASUREMENT DATE, AND (x) HUGHES NETWORK SYSTEMS, PHILIPS CONSUMER
ELECTRONICS OR SONY ELECTRONICS SHIPS OVER 10,000 UNITS OF A
WINK-ENABLED DIRECTV SYSTEM RECEIVER TO RESIDENTIAL CUSTOMERS PRIOR TO
MARCH 31, 2000, AND (y) SUCH WINK-ENABLED DIRECTV SYSTEM RECEIVER MODEL
IS REASONABLY ANTICIPATED BY SUCH PARTICIPATING MANUFACTURER TO BE ITS
HIGHEST VOLUME MODEL DURING THE APPLICABLE MODEL YEAR, WINK AGREES TO
GUARANTEE CERTAIN REVENUES FOR DIRECTV AS FOLLOWS:
2. Counterparts. This First Amendment may be executed in counterparts,
each of which shall be deemed an original, and all such counterparts together
shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this First Amendment
through their duly authorized representatives as of the date first set forth
above.
ACCEPTED AND AGREED TO:
Wink Communications, Inc. DIRECTV, Inc.
By: /s/ ALLEN THYGESN By: /s/ BRADLEY BEALE
--------------------------------- -------------------------------------
Name: Allen Thygesn Name: Bradley Beale
------------------------------- -----------------------------------
Title: SVP Title: Vice President
------------------------------ ----------------------------------
1
<PAGE> 1
EXHIBIT 10.14
MASTER CABLE AFFILIATION AGREEMENT
TIME WARNER CABLE
THIS Master Agreement is made as of the 23rd day of September,
1998 (the "Effective Date"), by and between WINK
COMMUNICATIONS, INC., a California corporation ("Wink"), whose
address is 1001 Marina Village Parkway, Alameda, CA 94501 and
TIME WARNER CABLE, a division of Time Warner Entertainment
Company, L.P., a Delaware limited partnership ("Affiliate"),
with offices at 290 Harbor Drive, Stamford, Connecticut 06902.
1. GRANT OF LICENSE
1.1 Subject to the terms of this Master Agreement, Wink
hereby grants to Affiliate a non-exclusive license
(the "License") to use the Wink software products
listed in Exhibit B (hereinafter collectively
referred to as "Wink Software") to deliver
interactive program(s) which utilize the vertical
blanking interval ("VBI") and are compliant with the
Wink interactive communications application protocol
("Interactive Wink Programs") to: (A) the subscribers
of all cable systems: (i) managed by a Time Warner
Company (as defined herein) or (ii) of which a Time
Warner Company (as defined herein) directly or
indirectly owns, or has the right to become owner, of
at least 25% of the equity and which are located in
the continental United States, Alaska, Hawaii, and
the US territories in Caribbean and Canada
("Affiliate System"); and (B) satellite master
antenna television systems, multi-point distribution
services, multi-channel multi-point distribution
services, equipment owned or operated by the owners
or residents of individual dwelling units for private
viewing capable of receiving audio/visual signals
and/or programming directly via satellite (including,
without limitation, C-Band and Ku-Band signals), as
modified, manipulated, compressed or replaced now or
in the future and all other methods of distributing
or receiving audio/visual signals and/or programming,
excluding traditional broadcast television, in an
Operating Area (as defined in Section 1.2), in any
area of a county in which an Operating Area is
located and in any county adjacent to such a county.
As used herein, a "Time Warner Company" shall mean
Affiliate, Time Warner Inc. ("TWI"), Time Warner
Entertainment Company, L.P. ("TWE"), Time Warner
Entertainment-Advance/Newhouse, L.P. ("TWE-NN"), TWI
Cable Inc. ("TWIC"), or Paragon Communications or any
other corporation, partnership, joint venture, trust,
joint stock company, association, unincorporated
organization (including a group acting in concert) or
other entity of which Affiliate, TWI, TWE, TWEAN,
TWIC or Paragon Communications, directly or
indirectly own at least 25% of the equity.
Proprietary and Confidential
Execution Copy
1
<PAGE> 2
1.2 For purposes of this Master Agreement, the "Operating
Area" of any Affiliate System shall mean that area
where such Affiliate System is authorized by the
appropriate governmental agency, authority or
instrumentality (if required) to operate an audio or
video distribution facility and is operating or is
obligated to operate or become operational.
1.3 Except as permitted in this Master Agreement, this
License is not transferable outside of each Affiliate
System's Operating Area, nor may any rights hereunder
be transferred, assigned or sub-licensed in whole or
in part without Wink's prior written consent.
1.4 For purposes of this Master Agreement, a
"Participating System" shall mean an Affiliate System
that has: (A) executed Exhibit C (the "System
Addendum"), which provides Wink, Affiliate and the
Participating System with specific information
regarding exceptions or modifications, if any, to the
terms defined in this Master Agreement, equipment
inventory and requirements, test and launch dates,
and other information specific to Participating
System, and which, when executed, shall be deemed a
part of this Master Agreement (all references
hereinafter to "this Master Agreement" shall be
deemed to include each executed System Addendum); and
(B) licensed the Wink-developed client software for
Affiliate's advanced analog and digital cable set top
boxes (the "Wink Engine", a cable set top box for
which the Wink Engine is commercially available shall
be referred to as a "Wink-capable STB"), separately
from the manufacturer of such set top boxes in order
to enable reception of Interactive Wink Programs.
Wink has arranged for special preferential terms for
the license of the Wink Engine for Participating
Systems meeting certain criteria, as defined in
Exhibit D. The parties agree that a System Addendum
shall not be effective and binding upon a
Participating System unless and until executed by
Affiliate's Senior Vice President of Programming (or
another person designated in writing by him or her),
Participating System and Wink.
2. TERM
2.1 The "Term" of this Master Agreement shall commence on
the Effective Date and terminate five (5) years
thereafter.
2.2 The term of each System Addendum shall commence on
the date of execution of the System Addendum and
shall terminate on expiration or termination of the
Master Agreement, unless terminated earlier as
provided herein. Participating System and Affiliate
shall have the right, but not the obligation, in
their sole discretion, to terminate an individual
System Addendum at any time after a period of three
(3) years following the first day the Interactive
Wink Programs are distributed to and received by such
Participating System's subscribers (the "Launch
Date") in accordance with
Proprietary and Confidential
Execution Copy
2
<PAGE> 3
the terms of this Master Agreement. Notice of
Affiliate's or Participating System's intent to so
terminate must be received by Wink no later than
sixty (60) days prior to the effective date of such
termination.
2.3 Each Participating System that has provided
Interactive Wink Programs to its subscribers on or
before December 31, 1999 shall have the option, in
its and Affiliate's sole discretion, to terminate its
System Addendum at any time after a period of
eighteen (18) months following the Launch Date for
that Participating System by providing Wink with
thirty (30) days prior written notice.
2.4 At any time during the Term, each Participating
System shall have the right to terminate the carriage
or provision of the Interactive Wink Programs of any
Programmer (as defined in Section 3.1), if one or
several of such Interactive Wink Programs do not
meet, in Participating System's sole discretion
(which shall be reasonable) the requirements of
Section 3.2. Affiliate and Wink acknowledge that a
Participating Programmer (as defined herein) may
offer more than one programming service and may
provide Interactive Wink Programs in connection with
more than one of its programming services. Affiliate
and Participating Systems agree that any termination
of carriage or provision of the Interactive Wink
Programs pursuant to this Section 2.4 shall be of
only the non-complying Interactive Wink Programs
offered in connection with a particular programming
service(s), and not of all Interactive Wink Programs
offered in connection with all programming services
provided by the Participating Programmer.
3. INTEGRATION
3.1 Except as otherwise set forth herein, Affiliate and
Participating Systems will not prevent the
distribution of Interactive Wink Programs carried in
the VBI of video signals from a broadcaster or cable
programmer with whom Affiliate or a Participating
System has a valid agreement for carriage or
re-transmission of video programming, or whose signal
Participating System is otherwise obligated by
applicable law to distribute to its subscribers
(each, a "Programmer"), and agree to pass Interactive
Wink Programs to Wink STB Subscribers (as defined
herein) without any charge to Programmers (except as
set forth in Section 3.3) during the Term of this
Master Agreement, provided that (i) each Programmer
has agreed to provide and does provide such
Interactive Wink Programs at no cost to Affiliate,
Affiliate Systems or any Wink STB Subscriber; (ii)
the content of such Interactive Wink Programs
complies with Section 3.2; and (iii) Affiliate or
Participating System is receiving its appropriate
revenue share (if applicable) as set forth in Section
3.3. Upon receipt of written notice from Affiliate or
any Participating System that a Programmer does not
have a valid and current agreement for carriage or
retransmission of video programming with Affiliate or
any Participating
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System, Wink shall assist Participating Systems in
ensuring that such Programmer's Interactive Wink
Programs for the applicable programming service(s)
offered by the Programmer are not passed to Wink STB
Subscribers.
As used herein, "Wink STB Subscriber" shall mean each
Participating System customer that (i) receives or
separately pays for cable television service; (ii)
has a Wink-capable STB; and (iii) has not requested
not to receive the Interactive Wink Programs.
3.2 Wink shall use commercially reasonable efforts to
ensure that each Interactive Wink Program provided by
a Programmer (including the content thereof) is
directly related in content, nature and intended
audience to the video programming and advertising
actually being provided by such Programmer at the
same time that such Interactive Wink Program is
provided and thus has the purpose of enhancing or
providing additional detail or information regarding
such video programming or advertising, as applicable.
Wink shall also ensure that the Interactive Wink
Programs are provided to Affiliate or a Participating
System pursuant to a then current and valid license
agreement between the Programmer and Wink. If these
conditions are not met, Affiliate and Participating
Systems are not obligated to pass such Interactive
Wink Programs, and may immediately terminate carriage
of the Interactive Wink Programs of such Programmer.
The parties further agree that this Master Agreement
in no way creates any obligation on behalf of
Affiliate or Participating Systems to carry or pass
any other form of programming or data of any
Programmer. Affiliate and Participating System agree
to notify Wink in writing as soon as is reasonably
practicable when Affiliate or Participating System
believes that an Interactive Wink Program does not
meet the conditions provided herein or if a
Programmer is not complying with Section 3.3.
Affiliate and Participating System further agree to
resume carriage of Programmer's Interactive Wink
Programs, once the Interactive Wink Programs have
been brought into compliance with this section 3.2 or
a Programmer agrees to comply with Section 3.3 (if
applicable), as determined in Affiliate's or
Participating System's sole discretion, which shall
be reasonable.
3.3 [*]
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[*]
3.4 Each Participating System shall use commercially
reasonable efforts to assist Wink in enabling the
reception of nationally or locally inserted
Interactive Wink Programs in cable set top boxes in
which Participating System has agreed to deploy the
Wink Engine, provided that it is understood and
agreed that a Participating System has no obligation
to permit or assist Wink in enabling, or to enable,
the set-top box of any subscriber who elects not to
receive the Interactive Wink Programs. The parties
agree that each Participating System's System
Addendum will provide a mutually agreeable list of
operational obligations for Wink and Participating
System specific to Participating System's enabling of
the Wink Software and the Wink Engine.
3.5 Each Participating System shall provide to Wink up to
a total of 3 VBI lines on one (1) channel provided
that the use by Wink of such VBI lines does not, in
Participating Systems' sole discretion, cause the
degradation of or otherwise interfere with the signal
of such channel and provided that Wink shall use such
VBI lines solely for the purpose of delivering
various full screen Interactive Wink Programs
required for customer-related educational services,
including but not limited to a customer registration
program, a Wink user's guide program, and a Wink
guide to upcoming Interactive Wink Programs related
to scheduled video programming (a "Wink Virtual
Channel"). Wink shall not use the Wink Virtual
Channel for advertising or any purpose other than as
specified herein. A Participating System may elect to
insert Interactive Wink Programs created by such
Participating System and/or third parties using the
Wink Software, subject to the restrictions defined in
Exhibit C, if any. Third party providers of such
additional Interactive Wink Programs accepted for
carriage by individual Participating System shall be
referred to as "Third Party Wink Program Providers".
3.6 Wink shall perform all Wink-related installation work
necessary to ensure proper operation of the Wink
Software and the Wink Engine, and reliable delivery
of Interactive Wink Programs, and shall provide
on-going technical support for the Wink Software and
the Wink Engine during the effective term of each
Participating System's System Addendum.
3.7 Wink and each Participating System will use their
commercially reasonable efforts to complete all
integration work in order to meet the project
deadlines specified in Attachment 1 of the
Participating System's System Addendum. Affiliate and
Participating Systems agree to provide technical
specifications and other reasonable support to enable
Wink to extract the minimum
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information necessary from the applicable billing
system to enable transaction routing. This
information, which includes subscriber name, bill-to
and service address, phone number, set top box
serial number, and any other information to be
mutually agreed upon between the parties, shall be
deemed Confidential Information, as defined in
Section 12.1.
3.8 Wink shall keep the Wink Software in good working
order for uninterrupted reception of Interactive Wink
Programs by Wink STB Subscribers. Participating
Systems shall perform daily polls to collect viewer
responses to Interactive Wink Programs and other
routine maintenance of the Wink Software to ensure
regular and reliable Wink response collection, and
shall permit Wink secure remote access to the Wink
Software and associated equipment solely for the
specific purpose of providing the Interactive Wink
Programs and collecting transaction routing and
response information from same. Wink shall specify in
writing the identity of the individuals employed by
Wink who shall be permitted such access, and these
individuals shall be advised of and bound by the
confidentiality obligations set forth in Section 12
herein. Wink further represents and warrants that
such access by Wink will not adversely impact
Participating System's operations.
3.9 Notwithstanding anything to the contrary set forth
herein, Participating System has the right without
prior notice to interrupt the carriage of Interactive
Wink Programs at any time for the purpose of
Emergency Broadcast and other Federal Communications
Commission (FCC) mandated broadcasts in, the
Operating Area, or if the Interactive Wink Programs
or response collection interferes in any way with
transmission of the signal of the applicable channel,
interferes with the operations of Affiliate or any
Participating Systems or causes other technical
problems. Participating System agrees to give notice
to Wink within twenty-four (24) hours of any such
interruption, and Participating System and Wink will
each use their commercially reasonable efforts to
restore the delivery of Interactive Wink Programs and
collection of viewer responses as soon as possible.
Failure by Participating System to give such notice
shall not constitute a breach under this Master
Agreement.
3.10 Affiliate and Participating Systems shall have no
obligation to distribute Interactive Wink Programs
provided with video programming delivered from the
Participating System's head-end(s) to its subscribers
in a digital format.
4. DEPLOYMENT
4.1 Unless otherwise set forth in the respective System
Addendum, each Participating System shall have the
benefit of the terms and conditions of this Master
Agreement and the pricing in Exhibit D if it:
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(a) collects each day the Wink STB Subscriber responses
generated by Interactive Wink Programs;
(b) has agreed to license from the applicable
manufacturer at least 75,000 Wink Engines, and has
agreed to deploy at least 75,000 two-way enabled Wink
Engines in subscriber premises on the Launch Date;
and
(c) agrees to perform any other actions as may reasonably
be required at no additional cost to enable
Participating System's subscribers with Wink-capable
STBs who have not advised Participating Systems that
they do not wish to receive the Interactive Wink
Programs to become Wink STB Subscribers.
Notwithstanding the above, Wink agrees that Affiliate's New
York City system is eligible for the terms and conditions of
this Master Agreement and the pricing in Exhibit D, regardless
of whether it satisfies (a), (b) and (c) in the preceding
sentence.
4.2 Affiliate agrees to use commercially reasonable efforts to
notify all of its systems in North America of the terms and
conditions of this Master Agreement within thirty (30) days of
the execution of the Master Agreement. The failure of
Affiliate to so notify within such thirty (30) day period
shall not constitute a breach of this Master Agreement.
4.3. Wink shall ensure that at least ten (10) national Programmers
have agreements with Wink to provide Interactive Wink Programs
during the term of the Master Agreement (each, a
"Participating Programmer"). Each such Participating
Programmer shall be limited to using only three (3) specified
VBI lines for delivery of its Interactive Wink Programs. A
complete list of the Participating Programmers together with
the specific three (3) VBI lines that each such Participating
Programmer shall use and the number of hours of programming
per week for which each such Participating Programmer has
committed in its written agreement with Wink to provide
Interactive Wink Programs shall be set forth on Exhibit F.
Exhibit F shall be amended by Wink from time to time by
providing prompt written notice to Affiliate and Participating
Systems of Participating Programmers that are added or dropped
by Wink and the corresponding three (3) VBI lines utilized by
such Participating Programmer that are added or dropped.
Each Participating Programmer shall deliver its Interactive
Wink Programs within the three (3) VBI lines specified on
Exhibit F, as amended, however Affiliate and each
Participating System may provide such Interactive Wink
Programs to Wink STB Subscribers on any VBI lines it chooses,
in its sole discretion and without notice to the Participating
Programmer. In the case of new Participating Programmers, Wink
shall provide Affiliate and Participating
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Systems such notice at least forty five (45) days before
commencement of national transmission of Interactive Wink
Programs by such Participating Programmers. If the number of
Participating Programmers with whom Wink has written
agreements falls below ten (10), Wink shall promptly notify
Affiliate and Participating Systems in writing that the number
has fallen below ten (10), and Wink shall have sixty (60) days
to get the number of Participating Programmers back to ten
(10) or more. If after sixty (60) days Wink does not have
written agreements with at least ten (10) Participating
Programmers pursuant to which the Participating Programmers
are to provide Interactive Wink Programs, Affiliate shall have
the right to declare that Wink has materially breached this
Master Agreement and Affiliate may then terminate in
accordance with the terms of Section 13.3 and/or exercise its
other rights and remedies hereunder.
4.4 During the Term of this Master Agreement, Wink shall pay to
Participating System a share of the fees on each purchase and
request response that is generated by a Wink STB Subscriber,
(including each response in connection with which a Wink STB
Subscriber provides personal information, such as name and
.address, to a third party) and routed by Wink to the
appropriate Participating Programmer or Fulfillment Entity (as
defined in Section 6.3) (each, a "Wink Transaction"). Wink's
gross revenues from Wink Transactions shall be referred to as
"Gross Transaction Routing Fees". Participating System's share
of Gross Transaction Routing Fees shall be as set forth in
Exhibit A. These payments made by Wink to Participating
Systems shall be defined as "System Transaction Revenue Share"
for purposes of this Master Agreement.
4.5 The parties agree that Participating Systems may charge an
additional fee to a subscriber who wishes to receive the
Interactive Wink Programs but who has not already been
provided with a Wink-capable STB and would not otherwise be
eligible for a Wink-capable STB through subscription to a
premium service or other tier of service under which such
Wink-capable STB would normally be provided to the subscriber.
The parties agree that to the extent Affiliate and
Participating Systems charge such fees, Wink will be paid
fifty percent (50%) of the difference between the gross fees
received from the subscriber attributable solely to the
receipt of the Interactive Wink Programs and the normal rental
fee for a Wink-capable STB, if applicable.
4.6. Affiliate and Participating Systems may choose to utilize
other products and services of Wink from time to time under
this Master Agreement. These products and services will be
offered by Wink to Affiliate and Participating Systems at the
most favorable rate and terms and conditions offered or
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made available to any third party distributor of audio/visual
signals and/or programming.
4.7. Each Participating System agrees to allow Wink to use the Wink
Software installed in the head-end(s) of Participating System
to collect, aggregate, and route responses for Interactive
Wink Programs from the head-end(s) through Wink's National
Data Center in accordance with the terms and conditions of
this Agreement at no charge to Wink and at no charge to
Participating System. Wink agrees to provide weekly reporting
to Participating System of all response traffic generated by
Wink STB Subscribers. Wink represents and warrants to
Affiliate and Participating Systems that all such information
collected from the Wink Response Servers shall be aggregated
such that any reports Wink generates shall be aggregate and
anonymous and shall not personally identify subscribers.
5. FEES AND PAYMENT TERMS
5.1 Affiliate and the Participating Systems acknowledge and accept
Wink's licensing fees, rates for Wink services, and payment
terms for Participating Systems as set forth in Exhibit D. On
or before the forty fifth (45th) day following each month
throughout the term of its applicable System Addendum, each
Participating System shall remit to Wink all fees owed for the
License or for services rendered in such month.
5.2 Past due payments 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.
5.3 Wink shall provide reports of and pay the System Transaction
Revenue Share to Participating Systems on or before the forty
fifth (45th) day following each month throughout the Term.
Wink shall also prepare for Affiliate a consolidated
semi-annual report of aggregate System Transaction Revenue
Shares across all Participating Systems.
5.4 Affiliate and each Participating System acknowledge that each
Participating System must provide quarterly reports on all
Incremental Wink Revenues (as defined herein) generated
through the use of the Wink Software. "Incremental Wink
Revenues" shall be defined as System Transaction Revenue Share
for Participating System Wink STB Subscribers (for the report
of which Participating System may attach the System
Transaction Revenue Share reports provided by Wink pursuant to
Section 5.3), ad sales revenue received from selling
Interactive Wink Program enhancements to local spot ads or any
form of advertising or sponsorship on locally inserted full
screen Interactive Wink Programs, and Participating System
revenue shares or fees received from Third Party Wink Program
Providers. A "Wink
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Subscriber Unit" shall be a subscriber provided with an
activated Wink-capable STB on or before the Launch Date or,
for a subscriber whose Wink-capable STB was activated within
eighteen (18) months of the Launch Date, the number x
determined by the formula below:
x = the number of full months elapsed prior to 18
months following the Launch Date that such subscriber had an
activated Wink capable STB, divided by 18.
If, within eighteen (18) months of the applicable Launch Date,
a Participating System's Incremental Wink Revenues have not
reached a cumulative total of [*] per Wink Subscriber Unit,
Wink shall pay the Participating System(s) within forty five
(45) days, the difference between [*] per Wink Subscriber
Unit and the actual cumulative Incremental Wink Revenues per
Wink Subscriber Unit.
6. PROMOTION AND RESEARCH
6.1 The parties agree to issue a joint press release announcing
this Master Agreement within fourteen (14) days of execution
of this Master Agreement. Wink shall provide Affiliate with a
draft of this release for review and approval within three (3)
business days after the execution of this Master Agreement by
both parties.
6.2 Wink may, from time to time, undertake marketing tests and
surveys, rating polls and other research in connection with
Affiliate or Participating Systems. Wink shall give prior
written notice to Affiliate of the nature and scope of each
such test, survey, poll or project which applies to or
involves Affiliate or a Participating System. Affiliate and a
Participating System may, to the extent permissible under
applicable law, provide Wink, upon reasonable request from
Wink, with reasonable assistance in conducting such research
in connection with undertaking such test, survey, poll or
project. Wink shall reimburse Affiliate and Participating
System for all costs and expenses incurred in connection with
rendering such assistance upon demand. Wink shall promptly
provide Affiliate with the results of all such tests, surveys,
polls and projects. The results of all such tests, surveys,
polls and projects shall be Confidential Information, shall be
in an aggregate form only, and shall not identify any
subscriber, cable television system or cable television
operator. Affiliate and Participating Systems agree that Wink
will have access to any and all research in an aggregate and
anonymous form regarding the deployment, launch, and usage of
the Interactive Wink Programs service by Wink STB Subscribers
that is created or paid for by Affiliate or Participating
Systems. Such research shall be Confidential Information as
defined in Section 12 hereof.
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with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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6.3 Affiliate acknowledges that Wink will be providing to
Participating Programmers and Third Party Wink Program
Providers aggregate reports on Participating System Wink STB
Subscriber usage, vote and poll responses to the Interactive
Wink Programs that originate from such Participating
Programmer's video programming and advertising or from such
Third Party Wink Program Provider's Interactive Wink Programs,
respectively. Affiliate acknowledges that Wink will be
providing to Participating Programmers, Third Party Wink
Program Providers, advertisers, or parties designated by such
entities to fulfill Wink Transactions ("Fulfillment Entities")
both (a) aggregate reports on Participating System Wink STB
Subscriber responses and (b) reports on individual Wink
Transactions that are generated as a result of a Wink STB
Subscriber's deliberate interaction with the Interactive Wink
Program to which the report relates. Wink represents and
warrants to Affiliate and Participating Systems that: (i),
except as set forth herein, it shall not collect, use or
provide to any third party any information related to a Wink
STB Subscriber including, but not limited to, name, address,
phone number and credit card number, (collectively, "Wink STB
Subscriber Data"); (ii) each Participating Programmer, Third
Party Wink Program Provider, advertiser providing Interactive
Wink Programs and Fulfillment Entity shall be expressly
prohibited pursuant to executed written agreements with Wink
from (x) collecting or using any Wink STB Subscriber Data for
purposes other than fulfilling orders and requests from the
Wink STB Subscriber, and (y) selling or providing any Wink STB
Subscriber Data to third parties, except that, notwithstanding
the foregoing (x) and (y), advertisers may be permitted to use
or provide to third parties the Wink STB Subscriber Data
related to a particular Wink STB Subscriber if such Wink STB
Subscriber has purchased a product through an Interactive Wink
Program and has expressly consented, during the registration
and education process on the Wink Virtual Channel, to the use
of or provision of such data by an advertiser; and (iii) each
Affiliate and Participating System subscriber who wishes to
receive the Interactive Wink Programs and become a Wink STB
Subscriber shall be required, during the registration and
education process on the Wink Virtual Channel, to: (x)
expressly acknowledge and agree that he or she may, in
connection with receipt and use of the Interactive Wink
Programs, provide personally identifiable information
(including name, address, phone number, e-mail address and
credit card number) to Wink, Participating Programmers,
advertisers, Third Party Wink Program Providers and
Fulfillment Entities; (y) expressly consent to the providing
of such personally identifiable information and the use of
such information by advertisers for additional promotion of
products; and (z) choose whether to consent to the sale of
such personally identifiable information to third parties by
advertisers from whom such subscriber purchases products or
whether to "opt-out" of permitting the sale of such personally
identifiable information. Notwithstanding the foregoing,
Participating Programmers, Third Party Wink Program Providers
advertisers and Fulfillment Entities may use any data
regarding a Wink STB Subscriber
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that is collected other than in connection with the
Interactive Wink Programs and without Wink's assistance.
6.4 Participating System agrees to promote and market the
availability of the Interactive Wink Programs to Wink STB
Subscribers within the Operating Area. Advertising,
promotional, marketing and/or sales materials concerning the
Interactive Wink Programs or the Wink Software provided by
Wink may be used at the discretion of Participating System.
Wink agrees to use commercially reasonable efforts to obtain
prior approvals from all Participating Programmers and Third
Party Wink Program Providers featured in marketing materials
provided by Wink such that no further approvals from
Participating Programmers and Third Party Wink Program
Providers for minor customization of the materials, including
the name and logo of Participating System.
6.5 Participating System agrees that any marketing materials
separately developed by Participating System intended to
promote Wink or the Interactive Wink Programs must be approved
in writing by Wink prior to distribution, which approval shall
not be unreasonably withheld. Notwithstanding the foregoing,
use of the names and marks of Wink and separately
Wink-developed marketing and promotional materials regarding
Wink and the Interactive Wink Programs in routine promotional
materials, such as program guides, program listings and bill
stuffers, shall be deemed approved unless Wink specifically
gives written notice to Affiliate and Participating Systems to
the contrary. Nothing contained herein shall limit or restrict
the right of Affiliate or Participating Systems to use such
names and marks (i) in connection with the exercise of its or
their rights hereunder or (ii) as permitted under any other
contract or agreement, in connection with any local
advertising inserted in any cable television service or
programming if the sponsor of such advertisement had the right
to use such names and marks therein or otherwise than under
this Master Agreement.
6.6 Each Participating System is eligible for matching promotional
funds from Wink of [*]. All promotional and marketing expenses
deemed eligible for matching promotional funds by
Participating System must be submitted to Wink for approval
prior to commitment to such expenses, which approval shall not
be unreasonably withheld, and payment will be made by Wink
within thirty (30) days of presentation of evidence of
expenditure of such amounts Marketing and promotional expenses
eligible for matching promotional funds include events, print
or outdoor advertising, public relations expenditures, direct
mail campaigns and other marketing communications specifically
aimed at improving subscriber awareness or usage of
Interactive Wink Programs. The parties agree that each party
may contribute "in-kind" products and services in place of
cash outlays on the
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with the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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approval of the other party. "In-kind" products and services
include, but are not limited to, local cable advertising
avails and templates for various forms of advertising and
promotion that can be tailored to the Participating System.
6.7 [*]
7. REPRESENTATIONS, WARRANTIES AND LIABILITY LIMITATION
7.1 WINK'S WARRANTIES.
7.1.1 General Warranties. Wink hereby represents and warrants
to Affiliate and Participating Systems that: (i) Wink is a
corporation duly organized, validly existing and in good
standing under the laws of the State of California; (ii) Wink
has the requisite power and authority to execute and deliver
this Master Agreement and to fully perform its obligations
hereunder; (iii) Wink has the right to furnish the Wink
Software, the Interactive Wink Programs, the Wink Virtual
Channels and all content contained therein and the services
related thereto as provided in this Master Agreement and any
System Addendum; (iv) the execution, delivery and performance
of this Master Agreement and any System Addendum has been duly
authorized by all corporate actions necessary on the part of
Wink; (v) Wink is not subject to any contractual or other
legal obligation which will in any way interfere with its full
performance of this Master Agreement and any System Addendum;
(vi) the individual executing this Master Agreement on behalf
of Wink has the authority to do so; (vii) the Wink Software
(and subsequent revisions and upgrades to same provided by
Wink to Affiliate and the Participating Systems) will operate
and perform in accordance with all published specifications
with respect thereto as set forth in Exhibit E; (viii) the use
or carriage by Affiliate and the Participating Systems of the
Wink Software, the Wink Engine, the Wink Virtual Channels or
any other rights granted by Wink hereunder will not infringe
upon the patent, copyright, trademark, or other proprietary
right of any third party and (ix) Wink will perform all
obligations and render all services hereunder in a
professional and workmanlike manner to the best of its
abilities.
7.1.2 Year 2000 Warranty. Wink represents and warrants to
Affiliate and Participating Systems that the Wink Software is
designed and developed, to be and will continue to be Year
2000 Compliant. "Year 2000 Compliant" shall mean that (a) the
Wink Software is fully functional and performs in accordance
with Wink's published specifications and the specific
warranties set forth elsewhere in this Master Agreement
(together, the "Standards") prior to, during, and after the
calendar year 2000 A.D., and that the Wink Software shall
perform during each such period of time without any error
relating to date functionality and/or data, which, by way of
illustration
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and not limitation, represents or references different
centuries or more than one century or leap years; (b) without
limiting the generality of the foregoing, that the Wink
Software (i) shall not cease to perform or provide or cause
any software and/or system with which the Wink Software
operates] to provide invalid or incorrect results as a result
of date functionality and/or data, or otherwise experience any
degradation of performance or functionality with respect to
the Standards as a result of such interfacing specifically
arising from, relating to or including date functionality
and/or data which represents or references different centuries
or more than one century or leap years, (ii) shall be tested
by Wink with any software and/or system with which the Wink
Software interfaces to ensure that the Wink Software does not
provide invalid or incorrect results as a result of date
functionality and/or data, or otherwise experience any
degradation of performance or functionality with respect to
the Standards specifically arising from, relating to or
including date functionality and/or data which represents or
references different centuries or more than one century or
leap years, (iii) has been developed and designed to be fully
interoperable with year 2000 compliant software, hardware, and
data and to ensure year 2000 compatibility, including, but not
limited to, date data century recognition and calculations
which accommodate same century and multi-century and leap year
formulas and date values; (iv) shall effectively and
accurately manage and manipulate data derived from, involving
or relating in any way to dates including single century
formulas and multi-century or leap year formulas, and will not
cause an abnormally ending scenario within the Wink Software
or in any software and/or system with which the Wink Software
operates or interfaces, or generate incorrect values or
invalid results involving such dates, and (v) provides that
all date-related user interface functionalities and data
fields include an indication of century.
7.2 AFFILIATE'S WARRANTIES. Affiliate represents and warrants to
Wink that (i) Affiliate is a division of a limited partnership
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 Master Agreement and to fully
perform its obligations hereunder; (iii) as to each
Participating System, a valid franchise will then be held by
the appropriate franchisee or the appropriate franchisee will
have held a valid franchise and will then be continuing to
operate under a claim of right or will otherwise be lawfully
continuing to operate while diligently pursuing, in good
faith, its available judicial remedies or negotiating, in good
faith, for franchise renewal; and (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.
7.3 LIMITATION OF LIABILITY. NEITHER WINK, ON THE ONE HAND, NOR
AFFILIATE, ANY TIME WARNER COMPANY, ANY AFFILIATE SYSTEM, OR
ANY PARTICIPATING SYSTEM, ON THE OTHER HAND, SHALL, FOR ANY
REASON OR UNDER ANY LEGAL THEORY, BE LIABLE TO THE OTHER OR
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ANY THIRD PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFITS, REVENUES, DATA
OR SERVICES, REGARDLESS OF WHETHER SUCH DAMAGES OR LOSS WAS
FORESEEABLE AND REGARDLESS OF WHETHER IT WAS INFORMED OR HAD
DIRECT OR IMPUTED KNOWLEDGE OF THE POSSIBILITY OF SUCH DAMAGES
OR LOSS IN ADVANCE.
8. INDEMNIFICATION
8.1. Wink shall indemnify, defend and hold harmless any Time Warner
Company, Affiliate, its parents, subsidiaries, Affiliate
Systems, Participating Systems and their respective
affiliates, officers, directors, employees and agents from and
against any and all losses, settlements, claims, actions,
suits, proceedings, investigation, judgments, awards, damages,
liabilities, costs and expenses including, without limitation,
reasonable attorneys' fees (collectively "Losses" and,
individually, a "Loss") which arise out of or as a result of:
(i) any breach of this Master Agreement by Wink;
(ii) any, claim, demand, action, suit or proceeding in
which it is alleged that the Wink Software, the Wink
Engine, the Wink Virtual Channels or any other
content or software provided by Wink or any part
thereof violates or infringes any patent or copyright
or other proprietary right of any third party or
constitutes a misappropriation of any third party's
trade secrets;
(iii) any improper disclosure by Wink, a Programmer, a
Third Party Wink Program Provider or an advertiser of
any Confidential Information as defined herein
("Confidential Information Disclosures"); and
(iv) any claim, demand, action, suit or proceeding in
which it is alleged that an Interactive Wink Program
(provided by any entity other than a Third Party Wink
Program Provider) violates the rights of any third
party including but not limited to any claim of
libel, slander, defamation, indecency, obscenity,
invasion of right of privacy or infringement or
violation of copyrights, music synchronization or
performance rights, dramatic or non-dramatic music
rights, trademark rights, patent rights or any other
proprietary right of any third party (collectively,
"Proprietary Rights Claims")
and shall reimburse them for any and all legal, accounting and
other fees, costs and expenses (collectively, "Expenses")
reasonably incurred by any of them in connection with
investigating, mitigating or defending any such Loss;
provided, however, that Wink will not have any obligation or
liability under this Section 8.1 to the extent that Affiliate
has an obligation or liability with
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respect to the same Loss under Section 8.2. In addition, the
parties agree that Wink's total cumulative liability for
indemnification under this Master Agreement and any System
Addendum for claims arising from Confidential Information
Disclosures and Proprietary Rights Claims shall not exceed
[*].
8.2. Affiliate shall indemnify Wink and its affiliates (including
controlling persons and related companies), officers,
directors, shareholders, employees and agents for, and shall
hold them harmless from and against, any and all Losses which
are sustained or incurred by or asserted against any of them
and which arise out of any breach of this Master Agreement by
Affiliate and shall reimburse them for any and all Expenses
reasonably incurred by any of them in connection with
investigating, mitigating or defending any such Loss.
8.3 Promptly after receipt by a party of notice of the
commencement of any action, suit, proceeding or investigation
in respect of which such party may make a claim for
indemnification hereunder, such party will give written notice
thereof to the other party; but the failure to so notify the
other party will not relieve the other party from any
liability or obligation which the other party may have to any
indemnified person (i) otherwise than under this Master
Agreement or (ii) under this Master Agreement except to the
extent of any material prejudice to the other party resulting
from such failure. If any such action, suit, proceeding or
investigation is brought against an indemnified person, the
indemnifying party will be entitled to participate therein
and, if it wishes to assume the defense thereof and gives
written notice to the indemnified person of its election so to
assume the defense thereof within 15 days after notice shall
have been given to it by the indemnified person pursuant to
the preceding sentence, will be entitled to assume the defense
thereof. Each indemnified person will be obligated to
cooperate reasonably with the indemnifying party, at the
expense of the indemnifying party, in connection with such
defense and the compromise or settlement of any such action,
suit, proceeding or investigation. If Wink is the indemnifying
party, Wink shall make no compromise or settlement of any
claim that involves the imposition of liability on Affiliate
or payment of money by Affiliate without the prior written
consent of Affiliate.
8.4. The parties agree that Programmers are responsible for the
Interactive Wink Programs provided with their respective video
signals. Wink shall consistently support this position in any
claims, demands, actions, suits or proceedings brought against
any Time Warner Company, Affiliate, its parents, subsidiaries,
Participating Systems and affiliates and their respective
officers, directors, employees and agents in which it is
alleged
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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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that the Interactive Wink Programs or any part thereof violate
the proprietary rights of a third party or otherwise create a
liability for Affiliate.
9. NOTICES
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. Such notices must be
addressed as follows:
If to WINK COMMUNICATIONS:
Attn.: Vice President - Affiliate Sales
1001 Marina Village Parkway
Alameda, CA 94501
If to AFFILIATE:
Attn.: Senior Vice President, Programming
Time Warner Cable
290 Harbor Drive
Stamford, CT 06902
With a copy to:
Time Warner Cable
290 Harbor Drive
Stamford, Connecticut 06902
Attn: Senior Vice President and General Counsel
The date of such telegraphing, personal or express delivery, or the
date of receipt of a certified notice, if applicable, shall be deemed
the date on which such notice is given and effective. Notices,
statements, and other communications regarding individual System
Addenda shall also provided to the applicable Participating System at
the same time such notices are provided to Affiliate and Wink.
10. TRADEMARKS
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 or its Participating Systems. Wink shall not use, and no
right or license is herein granted to Wink to use, any of the trade
names, trademarks, copyrights, styles, slogans, titles, logos or
service marks
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of any Time Warner Company, Affiliate or any Participating System,
Notwithstanding the foregoing, Affiliate permits Wink to include
Affiliate's trade name and logo for Wink's industry marketing
materials, subject to prior written approval by Affiliate.
11. FORCE MAJEURE
Neither party shall have any liability to the other party for any
failure to perform hereunder, if such failure is due to: an act of God;
inevitable accident; fire; lockout; strike or other labor dispute; riot
or civil commotion; act of government or governmental instrumentality
(whether federal, state or local); act of terrorism; failure of
performance by a common carrier; failure in whole or in part of
technical facilities; or other cause (excluding financial inability or
difficulty of any kind) beyond such party's reasonable control.
12. CONFIDENTIALITY
As used herein, "Confidential Information" shall include: (x) the terms
and conditions, other than the existence and duration, of this Master
Agreement; (y) any information marked "confidential;" and (z) all
personally identifiable information related to Wink STB Subscribers or
any other subscriber of Affiliate or an Affiliate System, excluding
such information which Wink STB Subscribers have actively provided to
Wink, a Participating Programmer or a Third Party Wink Program Provider
with the express permission that Wink could provide such information to
advertisers and other third parties. Neither party shall disclose
Confidential Information to any third party (other than as necessary to
its respective employees, in their capacity as such) except: (i) as
expressly provided herein; (ii) as may be required by any court of
competent jurisdiction, governmental agency, law or regulation (in such
event the disclosing party shall notify the other party a reasonable
time prior to disclosure so that the non-disclosing party may take
steps to protect the confidentiality of such information); (iii) as
part of the normal reporting or review procedure to a party's
accountants, auditors, agents, legal counsel and employees of parent
and subsidiary companies, provided such accountants, auditors, agents,
investors and potential investment partners, legal counsel, and
employees of parent and subsidiary companies agree to be bound by this
Section; and (iv) to enforce any of a party's rights pursuant to this
Master Agreement.
13. TERMINATION
13.1 Breach. Notwithstanding any other provision herein, either party shall
have the right to terminate this Master Agreement or any System
Addendum and
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any licenses granted herein or therein by giving written notice to the
other party if the other breaches any of its material obligations under
this Master Agreement and such breach is not cured within thirty (30)
days of receipt of written notification specifically setting forth
those items of nonperformance. The termination of this Master Agreement
by either party shall be without prejudice to any other remedies that
party may have. In the event of such uncured misrepresentation or
breach, the terminating party may chose to terminate the entire Master
Agreement, affecting all Participating Systems, or to terminate the
Licenses granted to one or several individual Participating Systems.
13.2 Bankruptcy. If a party (i) becomes bankrupt or insolvent, however
evidenced, (ii) admits in writing its inability to pay its debts when
due, (iii) makes a general assignment for the benefit of creditors,
(iv) has appointed, voluntarily or involuntarily, any trustee,
receiver, custodian or conservator with respect to it or a substantial
part of its property, (v) files, or has filed against it, a voluntary
or involuntary petition in bankruptcy or (vi) makes any arrangement or
otherwise becomes subject to any proceedings under the bankruptcy,
insolvency, reorganization or similar laws of the United States or any
state, then the other party shall have the right at any time thereafter
to terminate this Master Agreement and any System Addendum by giving
written notice to such party.
13.3 Rights Upon Termination. Upon expiration of the Term (including any
extensions thereof) or upon the termination of this Master Agreement or
any System Addendum 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) 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 Wink Software, (ii)
within ninety (90) days of such expiration or termination return all
equipment provided by Wink or allow Wink to retrieve the equipment at
Affiliate's and Participating System's premises on notice during
regular business hours and without interrupting Affiliate or
Participating System's operations and (iii) within ninety (90) days of
such expiration or termination, 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.
14. GENERAL
14.1 Binding Effect; Assignment Neither party shall assign any of its rights
or delegate any of its duties under this Master Agreement (by operation
of law or otherwise) without the prior written consent of the other
party; provided, however, that no such consent shall be required in
connection with any such
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assignment or delegation by Affiliate to any Time Warner Company or any
person which controls, is controlled by or is under common control with
Affiliate or any Time Warner Company or any partner of Paragon
Communications. Any assignment of rights or delegation of duties under
this Master Agreement by a party without the prior written consent of
the other party, if such consent is required hereby, shall be void.
Except as otherwise provided herein, no person shall be a third party
beneficiary of this Master Agreement.
14.2 Amendments, Modifications, Cancellations. Except as otherwise
contemplated herein, no addition to, and no cancellation, renewal,
extension, modification or amendment of, this Master Agreement shall be
binding upon a party unless such addition, cancellation, renewal,
extension, modification or amendment is set forth in a written
instrument which states that it adds to, amends, cancels, renews,
extends or modifies this Master Agreement and which is executed and
delivered on behalf of each party by, in the case of Wink, an officer
of Wink and, in the case of Affiliate, by its Senior Vice President of
Programming or, if no person holds such title, another officer of
Affiliate performing substantially similar functions; provided however,
that Affiliate's Senior Vice President of Programming (or, if
applicable, another officer of Affiliate performing substantially
similar functions) may, by written authorization, designate another
person to execute and deliver such an instrument. Without in any way
limiting Affiliate's right to withhold any such consent or waiver or to
reject any such modification or amendment, Wink agrees that Affiliate
shall have the right to condition its grant of any requested consent
hereunder, its grant of any requested waiver of any provision hereof or
its acceptance of any requested modification hereof or amendment hereto
on receipt of such commissions, compensation or other financial
accommodation or consideration as it may, in its sole discretion,
determine.
14.3 Waivers Limited. No waiver of any provision of this Master Agreement
shall be binding upon a party unless such waiver is set forth in a
written instrument which is executed and delivered on behalf of such
party by an officer of such party. Such waiver shall be effective only
to the extent specifically set forth in such written instrument.
Neither the exercise (from time to time and at any time) by a party of,
nor the delay or failure (at any time or for any period of time) to
exercise, any right, power or remedy shall constitute a waiver of the
right to exercise, or impair, limit or restrict the exercise of, such
right, power or remedy or any other right, power or remedy at any time
and from time to time thereafter. No waiver of any right, power or
remedy of a party shall be deemed to be a waiver of any other right,
power or remedy of such party or shall, except to the extent so waived,
impair, limit or restrict the exercise of such right, power or remedy.
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14.4 Relationship. Neither party shall be or hold itself out as the agent of
the other party under this Master Agreement. Nothing contained herein
shall be deemed to create, and the parties do not intend to create, any
relationship of partners or joint venturers as between Affiliate and
Wink, and neither party is authorized to or shall act toward third
parties or the public in any manner which would indicate any such
relationship. Likewise, no supplier of advertising or programming or
anything else included in connection with the Interactive Wink Programs
shall be deemed to have any privity of contract or direct contractual
or other relationship with Affiliate by virtue of this Master Agreement
or Affiliate's License hereunder. Wink disclaims any present or future
right, interest or estate in or to the transmission facilities of
Affiliate and any affiliate of Affiliate and the parents, subsidiaries,
partnerships or joint venturers controlling the Participating Systems,
such disclaimer being to acknowledge that neither Affiliate nor the
transmission facilities of the Participating Systems (nor the owners
thereof) are common carriers.
14.5 Governing Law. The validity, interpretation, performance and
enforcement of this Master Agreement shall be governed by the law of
the State of New York, without regard to its principles of conflicts of
laws. The respective obligations of the parties under this Master
Agreement are subject to all applicable federal, state and local laws,
rules and regulations (including, without limitation, the
Communications Act of 1934, as amended, the Cable Communications Policy
Act of 1984, as amended, and the rules and regulations of the Federal
Communications Commission thereunder).
14.6 Forum; Jury Trial. Each party agrees that any proceeding arising out of
or relating to this Master Agreement or the breach or threatened breach
of this Master Agreement shall be commenced and prosecuted in the
appropriate federal or state court in the State of New York. Each party
consents and submits to the non-exclusive personal jurisdiction of any
court in the State of New York in respect of any such proceeding. Each
party waives any objection that it may now or hereafter have to the
laying of venue of any such proceeding in any court in the State of New
York and any claim that it may now or hereafter have that any such
proceeding in any court in the State of New York has been brought in an
inconvenient forum.
14.7 Entire Agreement. This Master Agreement together with the Schedules and
Exhibits attached hereto constitutes the entire contract between the
parties with respect to the subject matter hereof and cancels and
supersedes all of the previous or contemporaneous contracts,
representations, warranties and understandings (whether oral or
written) by, between or among the parties with respect to the subject
matter hereof.
14.8 Severability. If any provision of this Master Agreement shall hereafter
be held to be invalid, unenforceable or illegal, in whole or in part,
in any
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jurisdiction under any circumstances for any reason, (i) such provision
shall be reformed to the minimum extent necessary to cause such
provision to be valid, enforceable and legal while preserving the
intent of the parties as expressed in, and the benefits to the parties
provided by, this Master Agreement or (ii) if such provision cannot be
so reformed, such provision shall be severed from this Master Agreement
and an equitable adjustment shall be made to this Master Agreement
(including, without limitation, addition of necessary further
provisions to this Master Agreement) so as to give effect to the intent
so expressed and the benefits so provided. Such holding shall not
affect or impair the validity, enforceability or legality of such
provision in any other jurisdiction or under any other circumstances.
Neither such holding nor such reformation or severance shall affect or
impair the legality, validity or enforceability of any other provision
of this Master Agreement.
14.9 Headings. The headings set forth in this Master Agreement have been
inserted for convenience of reference only, shall not be considered a
part of this Master Agreement and shall not limit, modify or affect in
any way the meaning or interpretation of this Master Agreement.
14.10 Survival of Representations. All representations and warranties set
forth herein shall survive the termination or expiration of this Master
Agreement and the consummation of the transactions contemplated hereby.
In addition, Sections 8, 10, 12 and 14 shall survive any termination or
expiration of this Master Agreement.
14.11 No Inference Against Author. Each party acknowledges that this Master
Agreement was fully negotiated by the parties and agrees, therefore,
that no provision of this Master Agreement shall be interpreted against
any party because such party or its counsel drafted such provision.
14.12 Counterparts. This Master Agreement may be signed in any number of
counterparts, each of which (when executed and delivered) shall
constitute an original instrument, but all of which together shall
constitute one and the same instrument. This Master Agreement shall
become effective and be deemed to have been executed and delivered by
both of the parties at such time as counterparts shall have been
executed and delivered by each of the parties, regardless of whether
each of the parties has executed the same counterpart. It shall not be
necessary when making proof of this Master Agreement to account for any
counterparts other than a sufficient number of counterparts which, when
taken together, contain signatures of both of the parties.
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14.13 Most Favored Nations; Audit Rights
14.13.1 Most Favored Nations. If Wink has agreed to provide,
at any time agrees to provide or at any time provides a license to
deliver Interactive Wink Programs to any third party, directly or
indirectly, pursuant to any agreement, understanding or arrangement
(whether oral or written, whether formal or informal, whether now or
hereafter effective, whether on a long term, short term basis) (a
"Third Party Agreement") to any distributor, on any day during the term
hereof under terms, provisions, conditions, covenants, commitments,
concessions, commissions, rebates, allowances, fees or rates
(collectively, "Provisions") which are more favorable to such other
distributor than those set forth in this Agreement, Wink shall give
written notice thereof to Affiliate and, at Affiliate's election, this
Agreement shall be deemed to have been modified so that, from the date
on which such more favorable Provision is first so provided (or, if
such more favorable Provision is now being provided, from the date
hereof) and thereafter for so long as such more favorable Provision
continues to be so provided, Affiliate (and Participating Systems, as
applicable) shall receive such more favorable Provision, subject only
to the following: If such more favorable Provision is a Financial
Provision (as hereinafter defined), Wink shall offer to Affiliate in
writing such more favorable Financial Provision together with all other
Financial Provision(s) contained in such Third Party Agreement, it
being agreed that in order to receive the more favorable Financial
Provision, Affiliate (or any participating System, as applicable) must
also accept the other Financial Provisions contained in such Third
Party Agreement. For purposes hereof, "Financial Provision" shall mean
the software licensing fees and rates for Wink services as set forth in
Sections A and B of Exhibit D and the System Transaction Revenue Share
described in Section 4.4 of this Agreement. The determination of
whether a Provision in a Third Party Agreement is more favorable shall
focus on such Provision individually for each moment of time during
which such Provision is effective rather than on the Third Party
Agreement as a whole or the effect of such Provision thereon.
14.13.2 Audit Right; Damages. During the term of this
Agreement and for one (1) year thereafter, Wink shall maintain accurate
and complete documents and information, as well as books and records in
accordance with generally accepted accounting principles and practices
which, at a minimum, shall contain sufficient information to enable an
auditor to verify compliance with this Agreement. Upon not less than 30
days' prior written notice, Affiliate shall have the right, during the
term of this Agreement and for one (1) year thereafter to examine
during normal business hours all of the documents, information, books
and records of Wink to the extent necessary to verify compliance with
this Agreement; provided, however, that such examinations shall not be
conducted more frequently than once annually.
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If any such examination reveals a discrepancy in the amount paid by or
to Affiliate (or Participating System) and the amount which should have
been paid by or to Affiliate (or Participating System), Wink shall
immediately pay to Affiliate (or Participating System) an amount equal
to the cost of such examination, plus twice the amount of such
discrepancy, plus interest on the amount of such discrepancy at the
rate of 1.5% per month (or, if lower, the maximum rate permitted by
law) from the date on which such amount was paid by or should have'
been paid to Affiliate (or Participating System) through the date on
which payment is made to Affiliate (or Participating System).
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this Master Agreement as of the Effective
WINK COMMUNICATIONS, INC. TIME WARNER CABLE
By: By:
Name: Name:
Title: Title:
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EXHIBIT A.:WINK/AFFILIATE REVENUE SHARE
WINK RESPONSE SERVICE TRANSACTION FEES
All System Transaction Revenue Shares are calculated as a percentage of
Wink's gross revenues on the applicable Gross Transaction Routing Fees,
based on the schedule below. The volume breaks are based on the number
of transactions originating from Wink Engines deployed in North America
and routed monthly for the applicable entity contracting with Wink's
Data Center for routing of Wink transactions:
<TABLE>
<CAPTION>
Transaction Revenue Shares Participating System
(% of Wink gross revenues) Revenue Share
(Name, address, optional credit card) National Program or Ad Local
Program or 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>
(*) A local program or ad response is defined as a response generated
from an Interactive Wink Program inserted by Participating System,
Affiliate or an entity which Affiliate or Participating System has
contracted for the insertion of advertisements during Participating
System's "local avails" on cable or broadcast networks, or from a Third
Party Wink Program Provider. All other responses shall be deemed
National Programs or Ads.
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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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EXHIBIT B.:WINK SOFTWARE
STANDARD ITEMS:
WINK BROADCAST SERVER VERSION 2.X WITH ALL VBI INSERTER INTERFACES
WINK SERVER MODULE ENGINE VERSION 1.X WINK RESPONSE SERVER (STORE AND FORWARD
RETURN PATH) VERSION 1.X
WINK BILLING SYSTEM INTERFACE VERSION 1.X
OPTIONAL ITEMS:
WINK STUDIO VERSION 2.X (5-SEAT LICENSE)
WINK SERVER STUDIO 1.X (5-SEAT LICENSE)
WINK AD INSERTION SERVER MODULE, DIFFERENT INTERFACES AVAILABLE
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EXHIBIT C.: ADDENDUM TO BE EXECUTED BY AFFILIATE'S PARTICIPATING SYSTEMS SYSTEM
ADDENDUM
This System Addendum is made as of the day of (the "Effective Date"), by and
between WINK COMMUNICATIONS, INC., a California corporation ("Wink"), whose
address is 1001 Marina Village Parkway, Alameda, CA 94501 and
, a corporation ("Participating System"),
whose address is
1. RECITALS
Whereas, on , 1998, Wink and Time Warner Cable, a
division of Time Warner Entertainment Co., L.P. (Affiliate) executed a
Master Cable Affiliation Agreement (the "Master Agreement") Whereas,
pursuant to the Master Agreement, Participating System is duly
authorized to execute this System Addendum; Whereas, the parties wish
to incorporate fully herein the terms and conditions of the Master
Agreement; The parties now agree to be bound by the following
additional or amended terms and conditions;
2. GENERAL
2.1 The parties agree that all terms defined in the Master Agreement shall
have the same meaning and definition in this System Addendum as set
forth in the Master Agreement;
2.2 Participating System accepts a License and agrees to assume all the
rights and obligations of a Participating System in connection
therewith as defined in the Master Agreement (except for amendments in
section 3 of this Addendum, if any), and Wink agrees to assume all the
rights and obligations of Wink as defined in the Master Agreement
(excepts for amendments in section 4 of this Addendum, if any).
2.3 The parties agree that all terms and conditions set forth in the Master
Agreement, including, but not limited to, representations and
warranties and indemnification obligations that obligate Wink and
Affiliate shall apply in this
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System Addendum to obligate Wink and Participating System as if set
forth fully herein.
2.4 The parties agree that this System Addendum shall not be effective
unless and until executed by Affiliate's Senior Vice President of
Programming (or another person designated in writing by him or her),
Participating System and Wink.
3. ADDITIONAL TERMS AND CONDITIONS
3.1 Participating System agrees to deploy the Wink Engine in the set top
box equipment described in Attachment 1, and to perform any other
actions necessary to enable such set top equipment to receive
Interactive Wink Programs in the time frame required by Attachment 1.
The parties agree that Participating System may choose to deploy the
Wink Engine in additional Wink-capable STBs at any time.
3.2 Wink shall provide the following services at or before the Launch Date
in addition to those specified in the Master Agreement: (to be
determined between Affiliate, Participating System and Wink)
3.3 Wink shall provide the following services on an on-going basis
following the Launch Date in addition to those specified in the Master
Agreement: (to be determined between Affiliate, Participating System
and Wink) Participating System shall provide operational support for
the deployment of the Wink Engine and the Wink Software as follows in
addition to the support specified in the Master Agreement: (to be
determined between Affiliate, Participating System and Wink)
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4. AMENDED TERMS AND CONDITIONS
[IF ANY]
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
entered into this System Addendum as of the Effective Date.
WINK AFFILIATE
By: By:
Name: Name:
Title: Title:
PARTICIPATING SYSTEM
By:
Name:
Title:
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EXHIBIT C, ATTACHMENT 1: DEPLOYMENT REQUIREMENTS
In order to ensure eligibility for the pricing and other terms defined in the
Master Agreement (as amended in the System Addendum), Participating System
agrees to the following deployments and schedule
STB Quantity Deadline for Wink download
Example:
GI CFT 2200 xx, xxx
To Be Completed by the Parties prior to Execution
GI CFT 2200
SA 8600X
PIONEER BAV-2000
GI DCT 1000
SA EXPLORER
Pioneer DIGITAL STB
Proprietary and Confidential
Execution Copy
30
<PAGE> 31
EXHIBIT D.:PRICING AND PAYMENT TERMS FOR PARTICIPATING SYSTEMS
(A) Wink Software provided free of charge for 18 months following the
Launch Date:
- - License for one Wink Broadcast Server 2.x with all VBI Inserter
Interfaces
- - License for one Wink Response Server 1.x
- - License for one Wink Billing System Interface 1.x
- - License for one Wink Server Module Engine 1.x
If a Participating System has multiple headends, Wink shall provide, at no
additional charge, any additional licenses of the Wink Software that may be
necessary to enable all Wink STB Subscribers to receive Interactive Wink
Programs. After 18 months following the Launch Date, the monthly license fee for
all the Wink Software listed in this section A is $3,000 per month.
(B) Wink services provided free of charge:
- - Site survey, installation and configuration of all Wink Software and
other products provided by Wink
- - A two-day training session for operating and maintaining the Wink
Broadcast Server Technical Support for the Wink Software during the
term of the Master Agreement
(C) Third party products provided free of charge:
- - CFT-2200 Wink Engines for Wink STB Subscribers enabled to receive
Interactive Wink Programs on or before the Launch Date (available
through December 31, 1998, through General instrument Corp.)
- - Sun Ultra server hardware, configured to support Wink Broadcast Server
and Wink Response Server
- - 1 Norpak TES-3 data insertion units with software modules for 3 VBI
lines (or equivalent inserter for SA-8600x systems)
- - 1 Windows NT or Windows 95 Pentium PC for Wink Studio, Broadcast Server
GUI
- - Cables, hubs, etc. necessary to connect all Wink related equipment
All hardware products provided must be returned to Wink upon termination or
expiration of the Master Agreement, or upon termination or expiration of
Participating System's System Addendum.
(D) Required third party products to be licensed by Participating System or
Affiliate
- - Wink Engine software for all Wink-capable STBs on which Participating
System wishes to provide Interactive Wink Programs.
(E) Optional Wink Software and services:
- - License for Wink Ad Insertion Server Module (delivery dependent on
vendor/interface) Existing interfaces $750/mo + $0.01/Wink STB
Subscriber/mo.
<TABLE>
<CAPTION>
New interfaces Quoted
<S> <C>
- - 5-seat license for Wink Studio 2.x $3,000
- - 5 seat license for Wink Server Studio 2.x $5,000
- - Custom interface work $1,000/day
- - Phone training and consulting beyond bundled services $125/hr
- - Application development $2,500 min., $125/hr
</TABLE>
All products and services are billed Net/45.
Proprietary and Confidential
Execution Copy
31
<PAGE> 32
EXHIBIT E.:WINK SPECIFICATIONS
ICAP 1.0 specification - is Confidential Information under this Master Agreement
Manuals for Wink Software
Developer Guidelines for Interactive Wink Programs
Proprietary and Confidential
Execution Copy
32
<PAGE> 33
EXHIBIT F.:PARTICIPATING PROGRAMMERS
<TABLE>
<CAPTION>
Weekly hours of programming
Programmer with Interactive Wink Programs Designated VBI lines
<S> <C> <C>
NBC 6 13, 15
CNN 20
CNN/HN all except local avails
ESPN 1 4 (6 together with ESPN2)
ESPN 2 see ESPN1
TNT 5
TBS 5
TNN 10
TWC all except local avails
VH-1 10 19
Nick/Nick-at-N 5 19
Showtime event and promotion specific
CourtTV all except local avails locally inserted
CNBC all NYSE market hours + 10
EI 10
</TABLE>
Wink VBI lines usage will be completed within 14 days of execution of this
Master Agreement.
Proprietary and Confidential
Execution Copy
33
<PAGE> 1
EXHIBIT 10.15
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.
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<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.
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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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<PAGE> 5
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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<PAGE> 6
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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<PAGE> 7
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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<PAGE> 10
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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<PAGE> 11
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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<PAGE> 12
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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<PAGE> 13
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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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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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.
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<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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EXHIBIT D
SAMPLE WINK TRADEMARK
[see attached page]
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<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.
-28-
<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
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<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:__________________________________
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<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
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<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
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<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
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<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>
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<PAGE> 1
EXHIBIT 10.16
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
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<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
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<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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<PAGE> 5
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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<PAGE> 6
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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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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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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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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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.
-19-
<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.
-20-
<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.
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<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.
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<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.
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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
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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
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EXHIBIT 10.17
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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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> 38
AMENDMENT No. 2 TO
WINK APPLICATION SERVER LICENSE AGREEMENT
THIS AMENDMENT (the "Amendment") hereby amends the terms and conditions of
the "Wink Application Server 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 the 31st day of December 1998 ("Execution Date").
Unless specifically amended in this Amendment, all terms of the Agreement
remain in force.
AMENDMENT
1. Toshiba-requested update
Pursuant to Exhibit H (entitled "Support") Section B (entitled
"Comprehensive Support") of the Agreement, Toshiba has requested that Wink
creates a Toshiba-Requested Update (WAS V.1.2) in accordance with the
development plan attached hereto as an Exhibit. Wink agrees to develop the
Toshiba-Requested Update, at a charge of US $36,000.00, to be paid by Toshiba
within 30 days of acceptance by Toshiba of the object code of such
Toshiba-Requested Update.
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/ MARY AGNES WILDEROTTER By: /s/ HIDETAKA YAMAMOTO
---------------------------- -----------------------------
Name: Mary AGNES WILDEROTTER Name: HIDETAKA YAMAMOTO
-------------------------- ---------------------------
Title: President/CEO Title: General Manager ADI Group
-------------------------- ---------------------------
<PAGE> 39
EXHIBIT
DEVELOPMENT PLAN FOR TOSHIBA-REQUESTED UPDATE
(WAS Version 1.2)
1. Specifications
The following functionality shall be developed and included into the WAS
as WAS version 1.2:
Odd/even UIC
Immediate update and Time-specified update
Don't show "Change Update Time"
Filter events by times or by UIC numbers
Printing item lists to a file
Entering Kanji to "Event Name"
Re-enabling of a periodic event
Modification to WAS log file
2. Development Milestones & Schedule: Deliverables, Deliverer, and
Completion Dates
All developments have been concluded as of the Execution Date.
<PAGE> 1
EXHIBIT 10.18
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
-12-
<PAGE> 13
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> 29
AMENDMENT No. 2 TO
WINK ENGINE LICENSE AGREEMENT
THIS AMENDMENT (the "Amendment") hereby amends the terms and conditions of
the "Wink Engine License Agreement" executed as of the 30th day of September
1997 (the "Agreement") and "Addendum to Wink Engine License Agreement" executed
as of January 15, 1998 (the "Addendum"), 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 31st day of December 1998 ("Execution
Date").
Unless specifically amended in this Amendment, all terms of the Agreement
and the Addendum remain in force.
AMENDMENT
1. Toshiba-requested update
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 1.2"), to be developed in a time frame to
meet Toshiba's desired shipment schedule of televisions and set-top boxes and
in accordance with the Development Plan attached hereto as an Exhibit. Wink
agrees to develop the Version 1.2 Toshiba-Requested Update, at US$7,000, to be
paid within 30 days of acceptance by Toshiba of the object code to such Version
1.2 Toshiba-Requested Update.
<PAGE> 30
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: Mary Agnes Wilderotter By: Hidetaka Yamamoto
-------------------------- ---------------------------
Name: Mary Agnes Wilderotter Name: Hidetaka Yamamoto
------------------------ -------------------------
General Manager
Title: President/CEO Title: ADI Group
----------------------- ------------------------
<PAGE> 31
EXHIBIT
DEVELOPMENT PLAN OF TOSHIBA-REQUESTED UPDATE
(Wink 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 modification:
Resident ROM App: Enable Toshiba to link resident ROM applications. Separate
resident APP.o from dataAPI.o so that Toshiba can change ROM applications.
2. Development Milestones & Schedule: Deliverables, Deliverer, and Completion
Dates
All developments have been concluded as of the Execution Date.
<PAGE> 1
EXHIBIT 10.19
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.
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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. 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 10.20
ATVEF ADOPTER LICENSE AGREEMENT
This is a patent and copyright license agreement among parties wishing to adopt
the Advanced Television Enhancement Forum Specification.
As used in this Agreement:
1. DEFINITIONS
1.1 The "Founders" are Cable Television Laboratories, Inc; Intel
Corporation; Microsoft Corporation; Network Computer, Inc.;
CNN; The Walt Disney Company; PBS; Tribune Company; Warner
Bros.; and other companies that sign the ATVEF Founders
Agreement as agreed upon by the Founders.
1.2 "Adopter" is the entity named at the end of this Agreement
which has executed this Adopter Agreement, delivered it to the
Secretary and is current in its payment of the Adopter Fee, as
defined in Section 3.6, below.
1.3 "Adopters" are all other entities which have executed an
identical counterpart of this Agreement, have delivered it to
the Secretary and are current in their payment of the Adopter
Fee.
1.4 "Specification" is the specification entitled "Advanced
Television Enhancement Forum Specification" authored and
published by the Founders.
1.5 "Licensed Implementations" means the implementations expressly
designated in the Specification and shall include, but not be
limited to, the following (1) the URL definition format and
capability for displaying a TV image with a web page using
HTML; (2) the trigger definition and syntax to be used by
attributes for content distribution; (3) the file and packet
header formats for the specified file transfer protocol; and
(4) the JavaScript for executing responsively to specified
events and for dynamically altering content.
1.6 "License Statements" means statements on file with the
Secretary that specify the terms under which Founders license
their Necessary Claims that read on the Licensed
Implementations.
1.7 "Necessary Claims," means claims of a patent or patent
application with an effective filing date on or before June 1,
2000 that read on an implementation required by the
Specification as embodied in a product or service compliant
with the Specification.
1.8 "Secretary" shall initially be Intel Corporation or other
party designated by the Founders and shall be responsible for
carrying out the administrative duties set forth in this
Agreement and the ATVEF Specification Founders' Agreement.
2. GRANTS OF LICENSES
Upon the later of Adopter's execution of this Agreement or
public release of the Specification by the Founders:
2.1 Pursuant to the terms of the Specification Founders'
Agreement, Founders grant to Adopter, a perpetual,
irrevocable, nonexclusive, nontransferable, nonsublicenseable,
worldwide license under their Necessary Claims under the terms
and conditions, if any, set forth in License Statement(s) on
file with the Secretary, to make, have made, use, import,
offer to sell and sell Licensed Implementations that comply
With the Specification, and agree not to assert any Necessary
Claim against Adopter or any vendor, distributor, purchaser or
other person in the chain of distribution for the manufacture,
use, distribution, offer to sell, sale, import, or other
transfer of a Licensed Implementation compliant with the
Specification and produced by or on behalf of Adopter;
provided that such license and agreement not to assert
Necessary Claims
<PAGE> 2
ATVEF ADOPTER LICENSE AGREEMENT
shall not extend to features of a product or service which are
not required to comply with the Specification; provided,
further, that such license or agreement not to assert
Necessary Claims shall not, and further does not extend to any
party that is asserting Necessary Claims against the grantor
of the license with respect to such products or services.
2.2 Adopter hereby grants to the Founders and Adopters, and
Adopter accepts from the Adopters, a perpetual, irrevocable,
nonexclusive, royalty-free, nontransferable,
nonsublicenseable, worldwide license under its Necessary
Claims to make, have made, use, import, offer to sell and sell
Licensed Implementations that comply with the Specification
and does not extend to any party that is asserting Necessary
Claims against the grantor of the license on such products;
provided that such license and agreement not to assert
Necessary Claims shall not extend to features of a product or
service which are not required to comply with the
Specification and further agrees not to assert any Necessary
Claim against a Founder, Adopter or vendor, distributor,
purchaser or other person in the chain of distribution for the
manufacture, use, distribution, offer to sell, sale, import,
or other transfer of a Licensed Implementation compliant with
the Specification and produced by or on behalf of a Founder or
Adopter.
2.3 Pursuant to the terms of the ATVEF Specification Founders'
Agreement, the Founders grant to Adopter a nonexclusive,
perpetual, irrevocable, nonexclusive, nontransferable,
nonsublicenseable, royalty-free worldwide license under the
copyrights in the Specification to use and reproduce the
Specification as reasonably necessary to practice the license
set forth in this Agreement.
2.4 The rights granted to Adopter herein are subject to Adopter's
full compliance with the terms and conditions set forth in
this Agreement.
3. GENERAL
3.1 Trademarks. Adopter hereby agrees not to object to the use of
any mark approved by the Founders in conjunction with the
promotion, manufacture or distribution of product or service
that is compliant with the Specification by a Founder, an
Affiliate of one of the Founders, an Adopter or person
involved in the manufacture or distribution of a product or
service compliant with the Specification. Adopters may not
identify any product or service which does not fully comply
with the Specification under any mark or brand adopted by the
Founders, or any marks confusingly similar to such marks, to
identify the Specification. Adopter is hereby granted a
license to use the marks and/or logos adopted by the Founders
(the "Marks") solely to indicate that products or services
bearing or promoted under the Marks comply with the
Specification, and are only to be used with products and/or
services which are fully compliant with requirements of the
Specification.
3.2 Governing Law. This Agreement shall be construed and
controlled by the laws of New York, without reference to
conflict of laws principles.
3.3 Jurisdiction. The parties agree that all disputes arising in
any way out of this Agreement shall be heard exclusively in,
and all parties irrevocably consent to jurisdiction and venue
in, the state and Federal courts of New York.
3.4 No Other Licenses. Except for the rights expressly provided
by this Agreement, Adopter neither grants nor receives, by
implication, or estoppel, or otherwise, any rights under any
patents or other intellectual property rights.
3.5 No Warranty. Adopter acknowledges that the Specification is
provided "AS IS" WITH NO WARRANTIES WHATSOEVER, WHETHER
EXPRESS, IMPLIED OR STATUTORY,
<PAGE> 3
ATVEF ADOPTER LICENSE AGREEMENT
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY, NONINFRINGEMENT, FITNESS FOR ANY PARTICULAR
PURPOSE, OR ANY WARRANTY OTHERWISE ARISING OUT OF ANY
PROPOSAL, SPECIFICATION, OR SAMPLE.
3.6 Fees. The annual fee for Adopters shall be $2500 per year
("Adopter Fee") through December 31, 1999.
3.7 Not Partners. Adopter understands that the Founders are
independent companies and are not partners or joint venturers
with each other. While the Founders may select an entity to
handle certain administrative tasks for them, no party is
authorized to make any commitment on behalf of all or any of
them.
3.8 Limitation of Liability. IN NO EVENT WILL FOUNDERS BE LIABLE
TO EACH OTHER, OR TO ANY ADOPTER FOR COST OF PROCUREMENT OF
SUBSTITUTE GOODS OR SERVICES, LOST PROFITS, LOSS OF USE, LOSS
OF DATA OR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, OR SPECIAL
DAMAGES, WHETHER UNDER CONTRACT, TORT, WARRANTY OR OTHERWISE,
ARISING IN ANY WAY OUT OF THIS OR ANY OTHER RELATED AGREEMENT,
WHETHER OR NOT SUCH PARTY HAD ADVANCE NOTICE OF THE
POSSIBILITY OF SUCH DAMAGES.
3.9 Complete Agreement. This Agreement sets forth the entire
understanding of the agreement between the Adopters and the
Founders and supersedes all prior agreements and
understandings relating hereto. No modifications or additions
to or deletions from this Agreement shall be binding unless
accepted in writing by an authorized representative of all
parties.
3.10 Notices. All notices to be provided pursuant to this Agreement
shall be given in writing and shall be effective when either
served by personal delivery or upon receipt via certified
mail, return receipt requested, postage prepaid, overnight
courier service or sent by facsimile transmission with hard
copy confirmation sent by certified mail, in each case to the
party at the addresses listed below:
<TABLE>
<S> <C> <C>
Secretary: ATVEF Adopter: Wink Communications
Intel Corporation 1001 Marina Village Parkway
Attn.: General Counsel Alameda, CA 94501
2200 Mission College Blvd. USA
Santa Clara, CA 95052 Attn: Senior Vice President,
USA Programming
</TABLE>
Either party may give written notice of a change of address
and, after notice of such change has been received, any notice
or request shall thereafter be given to such party at such
changed address.
<PAGE> 4
ATVEF ADOPTER LICENSE AGREEMENT
3.11 Effective. This Agreement is not effective until fully executed
and received by the Secretary.
Founder [or Secretary]:
Company: Address:
By:
Name: Telephone:
Title: Fax:
Date: e-mail:
Adopter:
Company: Wink Communications Address: 1001 Marina Village Parkway
By: Alameda, CA 94501
Name: Allan C. Thygesen Telephone: 510-337-6945
Title: Senior Vice President Fax: 510-337-2960
Date: July 22, 1998 e-mail: [email protected]
<PAGE> 5
ATVEF ADOPTER LICENSE AGREEMENT
3.11 Effective. This Agreement is not effective until fully executed and
received by the Secretary.
Founder [or Secretary]:
Company: Intel Corporation Address: 2111 NE 25th Avenue
By: Hillsboro, OR 97124
Name: CJ Fredricksen Telephone: (503) 264-6414
Title: ATVEF Director Fax: (503) 264-6067
Date: 11/09/98 e-mail: [email protected]
Adopter:
Company : Wink Communications Address: 1001 Marina Village Parkway
By: Alameda, CA 94501
Name: Allan C. Thygesen Telephone: 510-337-6945
Title: Senior Vice President Fax: 510-337-2960
Date: July 22, 1998 e-mail: [email protected]
<PAGE> 1
EXHIBIT 10.21
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is made as of
May 17, 1999 (the "Effective Date"), between Wink Communications, Inc., a
California corporation with offices at 1001 Marina Village Parkway, Alameda, CA
94501 ("Wink") and Thomson Consumer Electronics, Inc., a Delaware corporation,
with offices at 10330 N. Meridian Street, Indianapolis, IN 26290
("Manufacturer").
BACKGROUND
A. Wink is a software developer that has developed an end-to-end system
for delivering interactive applications synchronized with or independent of
television programs and advertisements. Among other software, Wink develops,
customizes, supports and licenses its software engine (the "Wink Engine") that
decodes Wink's interactive applications written to Wink's protocol ("Interactive
Wink Programs") and displays the interactive applications overlaid on a
television screen.
B. DIRECTV, a California corporation ("DIRECTV"), whose address is 2230
East Imperial Highway, El Segundo, CA 90245 and Wink have entered into a license
agreement (the "Master Agreement") under which DIRECTV has licensed certain
software from Wink and has agreed to transmit Interactive Wink Programs that can
be decoded and displayed by a Wink Engine resident in a DIRECTV System Receiver
(as defined below).
C. Manufacturer is a manufacturer of television set top boxes and video
products, and has a valid and current license with DIRECTV to produce and
distribute devices incorporating DIRECTV technologies and capable of receiving
and decoding DIRECTV signals ("DIRECTV System Receivers").
D. Wink and Manufacturer desire that Wink grant to Manufacturer the
right to embed a customized version of the Wink Engine on DIRECTV System
Receivers to be distributed in North America.
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 Wink Programs which are
decoded and executed by the Wink Engine in the Combined Product.
1.2 "Wink Engine" means Wink's proprietary platform- and user
interface-independent software engine that implements Wink's Interactive
Communicating Applications Protocol for the interpretation of Interactive Wink
Programs.
<PAGE> 2
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 Manufacturer
product for which the Wink Engine is customized and 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
the 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 a Statement of Work.
1.6 "Deliverable" means each item identified as a deliverable
in a Statement of Work.
1.7 "Licensed Engine" means version 2.0 of the Wink Engine as
customized under a Statement of Work in object code format and any Updates, and
any related documentation which Wink may create.
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 a significant new feature or functionality, in each case as
determined with Manufacturer's agreement. 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. Both parties intend to minimize the number of Updates released
in a given year by exercising reasonable efforts to group enhancements into a
single Update.
1.9 "Combined Product" means a DIRECTV system receiver
containing the Licensed Engine or by agreement between the parties a DIRECTV
system receiver designed to receive the Licensed Engine via download and which
is able to receive both DIRECTV programming and Interactive Wink Programs
transmitted by DIRECTV.
1.10 "Subdistributors" means entities authorized by
Manufacturer to distribute the Combined Product(s) including subsidiaries,
affiliates, distributors, resellers, value-added resellers, dealers or sales
representatives.
1.11 "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-
<PAGE> 3
2. DEVELOPMENT, DELIVERY AND ACCEPTANCE
2.1 Development. Wink agrees to use reasonable commercial
efforts to customize the Wink Engine for the Combined Product identified in the
Statement of Work or to complete any additional development of a Licensed Engine
after Final Acceptance as defined and set forth in a respective Statement of
Work. The terms of this Agreement shall apply to all such development efforts
except to the extent expressly set forth in a Statement of Work.
2.2 Cooperation and Assistance. Manufacturer shall (i) assist
Wink in producing the Specifications and (ii) provide other reasonably necessary
materials and information, as specifically agreed upon by the parties in the
Development Plan.
2.3 Provision of Software, Hardware and Equipment.
Manufacturer shall provide to Wink free of charge (including all taxes and
freight) all DIRECTV System hardware and software reasonably necessary for Wink
to complete development ("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. Manufacturer shall retain title to all such Equipment provided
to Wink, and Wink shall return all such Equipment to Manufacturer upon
expiration or termination of this Agreement. Manufacturer shall bear all freight
and other costs associated with such return of Equipment by Wink. Wink shall
exercise the same degree of care with the Equipment as Wink does for its own
equipment. Wink shall provide to Manufacturer free of charge (including all
taxes and freight) all Wink-related hardware and software necessary for
Manufacturer to complete development and testing of the Wink Engine, excluding
"Bit Stream Generator" hardware and software from Doctor Design Inc. ("DDI") and
companies affiliated with DDI, and specifically including a Wink server to be
indefinitely located at Manufacturer's premises ("Wink Equipment"). A
preliminary list of Wink Equipment shall be included in each Statement of Work
and may be updated from time to time by mutual agreement. Wink shall retain
title to all such Wink Equipment, and Manufacturer shall return all such Wink
Equipment to Wink upon expiration or termination of this Agreement. Wink shall
bear all freight and other costs associated with such return of Wink Equipment
by Manufacturer. Manufacturer shall exercise the same degree of care with the
Wink Equipment as Manufacturer 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 Manufacturer's needs and objectives for the Licensed Engine and
subject to DIRECTV's and Manufacturer's written permission. Any such changes
will be documented in writing and provided to Manufacturer. Any changes to a
Statement of Work may only be made by mutual agreement of the parties, and all
provisions and/or Deliverables affected by such changes shall be appropriately
adjusted.
2.5 Delays. In the event either party is late in the
performance of its obligations in accordance with the Development Plan
(including the DIRECTV network development) and such delay affects the other
party's obligations hereunder, the other party's performance of such affected
obligations shall be delayed by the time period necessary to account for such
delay.
-3-
<PAGE> 4
2.6 Delivery and Acceptance. Upon completion, Wink shall
deliver to Manufacturer 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 compatibility's and for
Manufacturer-specific implementation features. Within thirty (30) days after
receipt, Manufacturer shall review and evaluate each Deliverable according to
Wink's and Manufacturer's agreed upon test criteria if applicable and shall
provide Wink with a written acceptance of the Deliverables or a written
statement setting forth those material errors to be corrected ("Statement of
Errors"). Manufacturer shall not withhold acceptance of any Deliverable unless
such Deliverable deviates from the Specifications, and can reasonably be
classified as a level 2 or higher error. Errors will be classified as follows:
LEVEL 1: Errors that may deviate from the specification slightly, but do not
result in noticeable degradation in performance of the Wink Engine, or in the
Wink Engine's ability to process Interactive Wink Programs. Noticeable shall be
defined as degradation that would be likely to be noticed by a residential
customer. LEVEL 2: Errors that result in noticeably reduced performance of the
Wink Engine LEVEL 3: Errors that result in lost features or inoperability of the
Wink Engine.
Wink and Manufacturer recognize that the Deliverables will not
be error-free. If Manufacturer provides a Statement of Errors, Wink shall use
reasonable commercial efforts to correct such errors as are validated by Wink,
as soon as practicable, and to return a copy of the updated Deliverables to
Manufacturer for review and reevaluation. In the case that Wink is unable to
validate an error identified by the Manufacturer, the parties agree to work in
good faith to jointly validate the error and identify a course of action to
resolve the issue. The foregoing procedure shall be repeated until acceptance by
Manufacturer of the Deliverables or the parties mutually agree to cease
development and terminate this Agreement or the applicable Statement of Work.
Manufacturer's failure to accept or provide a Statement of Errors within such
thirty day period shall be deemed an acceptance of such Deliverables. The
parties agree that additional testing performed in conjunction with DIRECTV or
its designated party may be required, and agree to include an estimate of the
time and effort involved in such testing in the Statement of Work.
2.7 Transfer of Software. Upon Manufacturer's acceptance of
the completed Licensed Engine ("Final Acceptance"), Wink shall deliver to
Manufacturer a master diskette or other digital storage media as requested by
Manufacturer for use by Manufacturer 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.
-4-
<PAGE> 5
3. GRANT OF RIGHTS
3.1 Licensed Engine. Subject to the terms and conditions of
this Agreement, effective upon Final Acceptance, Wink grants to Manufacturer a
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 Combined Product and as
necessary in the course of distribution and support of the Combined Product as
permitted hereunder and (b) distribute and sell the Combined Product in the
United States of America.
3.2 Submanufacturers. Manufacturer 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
Manufacturer's account, (ii) not to sell or distribute Licensed Engines and
Combined Products except to Manufacturer, (iii) to keep the 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. Manufacturer's provision of the Licensed Engine to such
Submanufacturer shall in all instances be subject to (a) Manufacturer's
assurance that it will use the same level of care in choosing Submanufacturers
for Combined Products 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) Manufacturer's prompt notification to
Wink if Manufacturer knows or believes that a Submanufacturer has breached the
provisions of subsection (i) - (iii) above. In the event that Manufacturer
desires to provide the Licensed Engine to a Submanufacturer without also
providing such Submanufacturer with software owned by Manufacturer,
Manufacturer'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. Manufacturer 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. Manufacturer may exercise its
distribution rights hereunder through the use of Subdistributors. However,
Manufacturer may not, without written approval from Wink, sub-license or provide
for the distribution of the Combined Product by any OEM that is in the business
of branding and distributing consumer electronics products.
3.4 Proprietary Notices. All copies of the Licensed Engine
reproduced or distributed by Manufacturer 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 reasonable request, Manufacturer shall mark the Combined Product with
such patent notices as may be permitted or required under Title 35, United
States Code. Manufacturer shall use reasonable efforts to promptly incorporate
such notices after Wink provides the form of notice.
-5-
<PAGE> 6
3.5 Limitations. Manufacturer shall not modify, prepare
derivative works of, reverse engineer, disassemble, de-compile, or otherwise
attempt to obtain access to the source code of the Licensed Engine.
4. FEES
4.1 License Fees. Wink agrees that there shall be no per copy
license fee or other license fee due Wink in connection with Manufacturer's
license of the Licensed Engine.
Manufacturer agrees to ship at least 250,000 units of the
Combined Product to Subdistributors in calendar year 1999. Manufacturer also
agrees to use reasonable efforts to meet its portion of the Statement of Work
for timely delivery of the Wink Engine download. Manufacturer is not responsible
for delays outside of the scope of their responsibilities as identified in the
Statement of Work. However, Manufacturer will use reasonable efforts to avoid
delays associated with new features or functionality, other than the Wink
Engine, which DIRECTV chooses to include in the download.
5. WARRANTY
5.1 Product Warranty. Wink warrants to Manufacturer that under
ordinary use the Licensed Engine shall function in Manufacturer's Combined
Products in conformance with the Specifications, excluding jointly accepted
LEVEL 1 deviations as defined in Section 2.6.
5.2 Defects not Covered by Warranty. Wink's warranty shall not
extend to problems in the Licensed Engine that result from:
(i) Manufacturer's failure to implement any Updates
to the Licensed Engine which are provided by Wink and accepted by DIRECTV;
(ii) changes to the operating system after the Final
Test which adversely affect the Licensed Engine;
(iii) any alterations of or additions to the
Licensed Engine performed by parties other than Wink or without Wink's prior
written authorization;
(iv) use of the Licensed Engine in a manner
inconsistent with the Specifications, 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.
-6-
<PAGE> 7
5.3 Wink represents and warrants to Manufacturer that the
Licensed Engine is designed and developed to be and will continue to be Year
2000 Compliant. "Year 2000 Compliant" shall mean that:
(a) the Licensed Engine is fully functional and performs
in accordance with Wink's Specifications and the specific warranties set forth
elsewhere in this Agreement (together, the "Standards") prior to, during, and
after the calendar year 2000 A.D., and that the Licensed Engine shall perform
during each such period of time without any error relating to date functionality
and/or data;
(b) without limiting the generality of the foregoing, that
the Licensed Engine: (i) shall not cease to perform or provide or cause any
software and/or system with which the Licensed Engine operates to provide
invalid or incorrect results as a result of date functionality and/or data, or
otherwise experience any degradation of performance or functionality with
respect to the Standards as a result of such interfacing specifically arising
from, relating to or including date functionality, (ii) has been developed and
designed to be fully interoperable with year 2000-compliant software, hardware,
and data and to ensure year 2000 compatibility, including, but not limited to,
date data century recognition and calculations which accommodate same century
and multi-century and leap year formulas and date values; (iii) shall
effectively and accurately manage and manipulate data derived from, involving or
relating in any way to dates including single century formulas and multi-century
or leap year formulas, and will not cause an abnormally ending scenario within
the Licensed Engine, or generate incorrect values or invalid results involving
such dates, and (iv) provides that all date-related user interface
functionalities and data fields include an indication of century.
5.4 Exclusive Remedy. Wink's sole obligation and
Manufacturer's exclusive remedy under the above warranties shall be for Wink to
use commercially reasonable efforts at Wink's or Manufacturer's facilities to
correct reproducible errors in the Licensed Engine necessary to bring it into
conformity with Wink's Specifications. In the case that Wink is unable to
validate an error identified by the Manufacturer, the parties agree to work in
good faith to jointly validate the error and identify a course of action to
resolve the issue.
5.5 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS WARRANTIES AND AS
PROVIDED IN SECTION 11, WINK MAKES AND MANUFACTURER RECEIVES NO WARRANTIES WITH
RESPECT TO THE LICENSED ENGINE, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND
WINK SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE. Wink does not warrant that operation of the
Licensed Engine will be error free.
6. PROPERTY RIGHTS
Manufacturer agrees that as between Manufacturer 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
Manufacturer any right, title or interest in the Licensed Engine, whether by
implication, estoppel or
-7-
<PAGE> 8
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 Manufacturer or any Subdistributor advertises,
promotes or markets the functionality of the Licensed Engine, Manufacturer may,
and may 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 and of which Wink has notified Manufacturer. Manufacturer 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 Trademarks that Manufacturer 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
Manufacturer's first commercial shipment of the Combined Product bearing one or
more Wink Trademarks, Manufacturer shall supply to Wink one such Combined
Product for inspection by Wink to ensure that such Combined Product conforms to
Wink Trademarks guidelines. In no event shall Manufacturer commence commercial
shipment of any such Combined Product (except as set forth above) under the Wink
Trademarks without Wink's prior written approval. Unless Manufacturer receives
written notice from Wink within ten (10) business days after delivery of such
inspection unit to Wink that Manufacturer's use of the Wink Trademarks is not
consistent with Wink's Trademark guidelines, Wink's approval of Manufacturer's
use of the Wink Trademarks shall be deemed to have been granted.
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. Manufacturer 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.
-8-
<PAGE> 9
7.3 Wink Markings and User Interface Elements.
7.3.1 Remote Button. All remote controls that the
Manufacturer markets for use with Combined Products shall contain a button
dedicated for enabling the functionality of the Licensed Engine ("Wink Button")
when Wink applications are present on-screen. This button may have other
functions when Wink applications are not present. This button will include a
marking chosen by Wink for placement on 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 other features such as
"menu", "info", "guide", "OK".
7.3.2 Manuals. Manufacturer shall ensure that printed
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 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 Manufacturer artwork for a logo that may be placed on all Combined
Products. Manufacturer may silk screen or similarly affix this logo on each
Combined Product. Manufacturer shall ensure that: (i) if a Combined Product has
a menu system, 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 in the
Statement of Work; 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.
7.4 Press Releases. The parties intend to cooperate and participate
in public relations programs to promote the Combined Products. 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. 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;
provided, however, that the parties agree that DIRECTV, Inc. shall be provided
with an executed copy of the Specifications, and all schedules, attachments and
exhibits attached hereto, within thirty (30) days of the Effective Date.
Notwithstanding this paragraph, each party shall have the right to say the
following in meetings with customers, prospective customers, or prospective
investors:
-9-
<PAGE> 10
- Manufacturer and Wink are working together.
- Manufacturer is licensing Wink's technology.
- Wink is porting the Wink Engine to Manufacturer set-tops.
8. TRAINING, SUPPORT AND MAINTENANCE
8.1 Maintenance. Wink agrees to make available to
Manufacturer, at no charge to Manufacturer, all Updates released by Wink and
permit Manufacturer to distribute Updates to its Subdistributors and
Submanufacturers for their use consistent with this Agreement. Manufacturer
shall promptly notify its Submanufacturers and Subdistributors of the
availability of each Update and Manufacturer 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. Manufacturer shall be responsible for making such Updates
available to its customers.
8.2 Technical Support. Wink shall make available to
Manufacturer, at no charge to Manufacturer, technical support, as set forth in
Exhibit C. Wink may subcontract its technical support obligations and shall
notify Manufacturer as to the appropriate contact to obtain support.
8.3 Technical Training. Wink shall make available, at Wink's
facilities and at Wink's expense, technical training for Manufacturer's
employees as requested by Manufacturer, but not to exceed three (3) employees
per calendar year. Wink will train additional employees at rates and costs
agreed upon, but not to exceed $1,000 per person per day.
8.4 Sales Training. Wink shall provide training as requested
by Manufacturer at Manufacturer's national sales meeting or another training
session to be identified by Manufacturer. Any additional sales training will be
subject to mutual agreement of the parties.
8.5 Travel Requirements. Each party shall be responsible for
its own travel expenses. The parties agree to use reasonable efforts to
alternate meetings between each party's facilities.
9. TERM AND TERMINATION
9.1 Term. This Agreement shall commence on the Effective Date
and shall continue in full force and effect until the earlier of (a) five (5)
years from the first commercial shipment of Combined Product by Manufacturer, or
(b) the expiration of the Master Agreement (the "Term"). The Term may be
extended by mutual agreement of the parties. Notwithstanding the foregoing, if
the Master Agreement is extended, this Agreement shall be automatically extended
until the Master Agreement lapses or is terminated. Wink agrees to provide
written notice to Manufacturer in the event of any such extension of the Master
Agreement.
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
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<PAGE> 11
immediately terminated. 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 sixty (60) days of the date such Deliverable is due.
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 Manufacturer under this Agreement shall
automatically terminate, and Manufacturer shall immediately cease distribution
of Licensed Engines and use of the Wink Trademarks, provided, however, that if
the Agreement is terminated by Manufacturer due to Wink's material breach or
insolvency, Manufacturer may, at its option, continue to use, reproduce, and
distribute the Licensed Engine under the right and license granted hereunder;
9.4.2 Rights of end users to use the Licensed Engine as
part of a Combined Product shall continue in effect;
9.4.3 Within ten (10) days after such expiration or
termination, except as provided in Section 9.6, or the case where Manufacturer
elects to continue the license pursuant to Section 9.4.1 above, Manufacturer
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 Manufacturer the return or
destruction of, all Manufacturer Confidential Information in its possession at
the time of expiration or termination. Notwithstanding the foregoing,
Manufacturer 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, solely to provide support to
its permitted Subdistributors and end users.
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
Manufacturer. Manufacturer 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 section
5, which material breach has not been cured within thirty (30) days after
Manufacturer's written notice to Wink thereof. The foregoing is subject,
however, to the condition that Manufacturer is not at that time in material
breach of any of its obligations under this Agreement, and such breach has not
been cured within sixty (60) days after written notice thereof by Wink.
Manufacturer shall assume all start-up fees, annual renewal fees, deposit fees
and any and all other fees due to such escrow agent.
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<PAGE> 12
Upon any release of the Wink Engine source code to
Manufacturer, (i) Manufacturer 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 Manufacturer'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 Manufacturer as Confidential Information of
Wink under the provisions of Section 10 hereof. As soon as the release condition
ceases to exist, Manufacturer shall immediately return the source code and all
modifications thereto made by Manufacturer, as well as the current source code
version provided by Wink, to the escrow agent for re-deposit and Manufacturer
shall delete any and all copies of the source code from Manufacturer computers
or electronic storage media and destroy all paper copies of source code.
Manufacturer will use the source code at its facilities,
to be designated by Manufacturer 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 Manufacturer 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. Manufacturer 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, Manufacturer agrees to inform all employees who are given access to
the source code that such source code is the confidential material of Wink
licensed to Manufacturer as such. Access to the source code will be limited to
those Manufacturer employees needing such access to effect the purposes of this
Agreement. Manufacturer will be fully responsible for the conduct of its
employees, agents, and representatives who in any way breach this Agreement.
Manufacturer will enter into a confidentiality agreement with each Manufacturer
employee who is given access to the source code, which agreement will
incorporate the protections and restrictions set forth herein. Manufacturer 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 Manufacturer 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,
Manufacturer will provide Wink with the names of all persons who have access to
the source code.
9.4.4 The provisions of Sections 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 Manufacturer, Manufacturer and its Subdistributors
may dispose of its inventory of Combined Products on hand, for a reasonably
commercial period not to exceed one hundred eighty (180) days after the
effective date of such expiration or termination (the "Sell-Off Period"), and in
connection therewith, Manufacturer shall use the Wink Trademarks during the
Sell-Off Period pursuant to the provisions of Section 7.
9.6 Destruction of Inventory. Within thirty (30) days after
the end of the Sell-Off Period, Manufacturer shall destroy, and shall certify to
Wink the destruction of, all copies of the
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<PAGE> 13
Licensed Engine in its or its Subdistributors' possession if Manufacturer has
issued any copies of the Licensed Engine to any of its Subdistributors.
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:
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
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<PAGE> 14
and warrants that as of the Effective Date, no action or proceeding alleging
intellectual property infringement by the Wink Engine is proceeding against
Wink, except the "Berman" claim.
11.2 Indemnity. Wink agrees, at its expense, to defend, or at
its option to settle, any claim, suit, action or proceeding brought against
Manufacturer, Subdistributors, and/or customers by a third party alleging that
the use of the Licensed Engine or the exercise of any of the rights and licenses
granted hereunder infringes the copyright, trade secret, trademark or U.S.
patent rights (collectively "intellectual property rights") of such third party
(an "Action"), and to pay any settlement or final judgment entered thereon
against Manufacturer, subject to the limitations set forth hereafter. Wink shall
be relieved of its obligations hereunder unless Manufacturer 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 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 shall: (a) procure for Manufacturer 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, replace or
modify the Licensed 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 or authorized by Wink, (ii) Interactive Wink
Programs not supplied by Wink or (ii)any trademarks, trade names or other
branding 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
MANUFACTURER WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF ANY PATENT, COPYRIGHT,
TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT.
12. INDEMNITY BY MANUFACTURER
Except with respect to any claim, suit, action or proceeding
for which Wink is obligated to indemnify under Section 11, Manufacturer agrees,
at its expense, to defend, or at its option to settle, any such claim, suit,
action or proceeding brought against Wink, and to pay any settlement or final
judgment entered thereon against Wink, if such claim, suit or action is brought
by
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<PAGE> 15
a third party for the infringement of the third party's intellectual property
rights by the Manufacturer's use of the licensed engine or by the Manufacturer's
exercise of the rights and licenses granted. This indemnity obligation shall not
exist if the alleged infringement is necessary to utilize any aspect of the
functionality of the Licensed Engine or if the alleged infringement is necessary
to exercise any of the rights and licenses granted hereunder. Further, the
Manufacturer shall be relieved of its obligations hereunder unless Wink gives
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.
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. Manufacturer 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.
Manufacturer warrants that it will comply in all respects with all applicable
export and re-export restrictions. Manufacturer 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.
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<PAGE> 16
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. 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.
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, TRADE MARK OR PATENT
INFRINGEMENT CLAIMS UNDER SECTION 11, IN NO EVENT SHALL WINK BE LIABLE TO
MANUFACTURER 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 MANUFACTURER HEREUNDER. IN NO EVENT SHALL WINK BE LIABLE TO
MANUFACTURER, 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.
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
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<PAGE> 17
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.
IN WITNESS WHEREOF, the parties by their duly authorized
representatives have entered into this Agreement as of the Effective Date.
WINK COMMUNICATIONS, INC. MANUFACTURER
By: By:
---------------------------- ---------------------------------
Name: Name:
---------------------------- ---------------------------------
Title: Title:
---------------------------- ---------------------------------
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<PAGE> 18
EXHIBIT A-1
[SAMPLE] STATEMENT OF WORK
1. Device
Wink and Manufacturer agree that Wink shall port the Wink Engine to the DIRECTV
System Receiver.
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 Agreement Manufacturer no
Delivery of development equipment as Manufacturer no
required to a location specified
by Wink
Delivery by Wink of Project Plan for Wink no
development of Engine Version 2.0 as
customized for Manufacturer __________
First Delivery of Equipment to Wink Manufacturer no
On-site support at Wink to set Manufacturer no
up Equipment
Delivery by Wink of Alpha version of Wink no
object code of Wink Engine Version 2.0
as customized for __________
Final Delivery of Equipment to Wink Manufacturer no
Delivery by Wink of Beta version of Wink no
object code of Wink Engine Version
2.0 as customized for ____________
Acceptance of final version of object DIRECTV no
code of Wink Version 2.0 as
customized for __________
</TABLE>
A-1
<PAGE> 19
4. Materials and Equipment
First Delivery of Equipment
To be defined
Final Delivery of Equipment
To be defined
5. Payment Schedule: All amounts in US Dollars.
<TABLE>
<CAPTION>
NRE PAYMENT ROYALTY PAYMENT
<S> <C> <C>
EVENT
Signing of Agreement [ $0 ] [ $0 ]
Delivery by Wink of Project Plan for development of Wink Engine Version [ $0 ] [ $0 ]
2.0 as customized for Manufacturer ____________
Delivery by Wink of Alpha version of object code of Wink Engine Version [ $0 ] [ $0 ]
2.0 as customized for Manufacturer ____________
Acceptance of final version of object code of Wink Engine Version 2.0 [ TBD ] [ $0 ]
as customized for Manufacturer ____________
Totals: [ TBD ] [ $0 ]
</TABLE>
A-2
<PAGE> 20
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.
B-1
<PAGE> 21
EXHIBIT C - SUPPORT
The following provisions govern the support to be provided by Wink to
Manufacturer for the Licensed Engine.
1. Contact People. Manufacturer 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 Manufacturer's support inquiries
shall be initiated through the Contact People.
2. Support Obligations. Manufacturer 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. Manufacturer can escalate a problem to Third
Level Support, once Manufacturer exhausts the items enumerated above in First
and Second Level Support. When escalating, Manufacturer 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 Manufacturer, the parties will mutually assign a
Severity Level as specified below that describes the nature of the call and how
critical it is to Manufacturer's customer base(s).
C-1
<PAGE> 22
(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
</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 Manufacturer via email.
5. Exclusions. Wink's support obligations shall not extend to problems
that result from: (i) Manufacturer's failure to implement any Updates to the
Licensed Engine which are provided by Wink; (ii) changes to the operating system
or environment or Combined Products 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
C-2
<PAGE> 23
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. Change. These support terms are subject to change annually. Any
changes must be documented in writing and signed by both parties at least 90
days prior to the renewal date.
C-3
<PAGE> 1
EXHIBIT 10.22
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
-4-
<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
-5-
<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.
-6-
<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
-7-
<PAGE> 1
EXHIBIT 10.23
September 10, 1998
General Electric Capital Corporation
260 Long Ridge Road
Stamford, Connecticut 06927
Attention: Mr. Jeffrey Coats
Managing Director
Equity Capital Group
Ladies and Gentlemen:
This letter sets forth the agreement (the "Agreement") between Wink
Communications, Inc. ("Wink") and General Electric Capital Corporation ("GE
Capital") with respect to certain arrangements contemplated in connection with
GE Capital's purchase of additional shares of Series C Preferred Stock in the
sixth closing (the "Sixth Closing") pursuant to that certain Series C Preferred
Stock Purchase Agreement dated as of April 17, 1997, as most recently amended by
that certain Consent to Amend and Amendment of Series C Preferred Stock Purchase
Agreement dated as the date hereof (the "Preferred Stock Purchase Agreement").
For good and valuable consideration, the receipt of which is hereby
acknowledged, and the parties hereto hereby agree as follows:
1. Press Releases. Any press release relating to this Agreement
or any of the transactions contemplated herein or therein using GE Capital's
name or any of its trademarks, logos, trade names of other intellectual property
or otherwise referring to GE Capital shall be subject to the prior written
approval of GE Capital. Wink understands and agrees that it may not use or
deploy in any manner or for any purpose any logo, trade name, trademark or other
intellectual property of GE Capital or any of its wholly-owned subsidiaries,
without GE Capital's express prior written consent.
2. Wink Representations, Warranties and Covenants. As an
inducement to GE Capital to purchase additional shares of Series C Preferred
Stock pursuant to the Preferred Stock Purchase Agreement and to consummate the
transactions contemplated thereby, Wink hereby represents, warrants and
covenants to GE Capital as follows:
<PAGE> 2
General Electric Capital Corporation
September __, 1998
Page 2
(a) Except as set forth in Section 3.4 of the Preferred Stock Purchase
Agreement as updated by that certain Compliance Certificate of Wink, dated as of
the date hereof, there are no securities, capital stock, options, warrants or
any other security convertible into or exchangeable for capital stock or other
rights to purchase or subscribe for any of Wink's authorized and issued capital
stock, options, warrants, securities convertible into or exchangeable for
capital stock or other rights.
(b) Subject to the accuracy of GE Capital's representations in Section
4.2 of the Preferred Stock Purchase Agreement and in the Certificate of GE
Capital dated as of the date hereof relating to GE Capital's status as a
qualified institutional buyer as defined in Rule 144A under the Securities Act
of 1933, as amended, the offer and issuance of the additional shares of Series C
Preferred Stock to GE Capital as contemplated thereby constitute transactions
exempt from the qualification requirements of the California Corporations Code.
(c) Wink is not subject to any restriction of any kind or character
which prohibits its performance of or compliance with all or any part of this
letter agreement. Wink is not subject to or aware of any voting trust agreement,
shareholders agreement or other agreement, understanding or representation,
written or oral, pursuant to which any shareholder or any other person or entity
has any rights with respect to the appointment or election of any director to
the Board, which is more favorable in any respect to such stockholder, person or
entity, than the terms of Section 3 of that certain Letter Agreement dated June
18, 1997 between the Wink and GE Capital (the "1997 Letter Agreement").
(d) Within thirty (30) days after the date hereof, Wink shall take all
action necessary to obtain the consent of the parties to (i) that certain Third
Amended and Restated Investor Rights Agreement dated as of June 18, 1997, as
amended from time to time (the "Rights Agreement") and (ii) that certain Third
Amended and Restated Co-Sale Agreement dated as of June 18, 1997, as amended
from time to time (the "Co-Sale Agreement"), to amend the Rights Agreement and
Co-Sale Agreement in the substantially the form attached hereto as Exhibit 1 and
to obtain all necessary signatures thereto. Upon receipt of the consent and
amendment to the Rights Agreement and Co-Sale Agreement, Wink shall issue to GE
Capital the warrant and a side letter related thereto in the forms attached
hereto as Exhibit 2 and Exhibit 3, respectively. In connection therewith, Wink
shall cause its legal counsel to deliver a legal opinion with respect to the
issuance of the warrant delivered to GE Capital for 25,000 shares of Common
Stock with an exercise price of $8.00 per share substantially in the form of the
legal opinion delivered by its counsel on the date hereof, except where the
securities to which the opinion relates shall be the warrant and the shares of
Common Stock issuable upon the exercise of the warrant.
(e) The computer systems and software owned or licensed by Wink are able
to accurately process date data, including but not limited to, calculating,
comparing and sequencing
<PAGE> 3
General Electric Capital Corporation
September __, 1998
Page 3
from, into and between the twentieth century (through year 1999), the year 2000
and the twenty-first century, including leap year calculations. To the knowledge
of Wink, any and all computer hardware, software, firmware and other product or
service furnished by any vendor to Wink, including any and all enhancements,
upgrades, customizations, modifications, maintenance and the like, are able to
accurately process, provide and/or receive date data, including but not limited
to, calculating, comparing and sequencing from, into and between the twentieth
century (through year 1999), the year 2000 and the twenty-first century,
including leap year calculations.
(f) Wink has delivered to GE Capital its unaudited Balance Sheet
as of June 30, 1998 (collectively, the "Financial Statement"). The Financial
Statement is complete and correct in all material respects and has been prepared
in accordance with generally accepted accounting principles. The Financial
Statement accurately sets out and describes the financial condition and
operating results of Wink as of the date, and during the period, indicated
therein.
3. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York (without regard
to its conflict of laws provisions). 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 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.
4. Relationship of the Parties. It is understood and agreed 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
employees of any party shall be deemed to be employees of the other party for
any purpose.
5. 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 any
breach of this letter agreement or of any default hereunder shall be deemed a
waiver of any other breach or default of this letter agreement.
6. Entire Agreement. The provisions of this Agreement set forth
the entire Agreement and understanding between the parties as to the subject
matter hereof and supersede all prior agreements, oral or written, and all other
communications between the parties relating to the
<PAGE> 4
General Electric Capital Corporation
September __, 1998
Page 4
subject matter hereof other than the Preferred Stock Purchase Agreement, the
1997 Letter Agreement and related written agreements executed by the parties in
connection therewith.
7. 1997 Side Letter. Notwithstanding the execution of this
Agreement, the 1997 Side Letter shall remain to be in full force and effect, and
the terms, conditions, covenants and agreements contained in the 1997 Side
Letter shall not be deemed modified, amended or repeated by this Agreement.
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:
----------------------------
Title:
-------------------------
ACCEPTED AND AGREED TO THIS
__th DAY OF _________, 1998:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------------
Title:
-----------------------------------
<PAGE> 1
EXHIBIT 10.24
AGREEMENT
This Agreement, dated as of January 1, 1999, is made between Satellite Services,
Inc., and Wink Communications, Inc., with regard to the interactive programming
service currently known as "Wink," whether in its current form or any form
modified in the future (the "Wink Service"). The parties hereto agree as
follows:
1. Wink will be deployed on CPT-2200 set top boxes in Elmhurst, IL and
Lansing, MI by August 1, 1999, provided that such systems are acquired
by TCI Communications, Inc., by June 1, 1999.
2. The term of this agreement shall commence January 1, 1999, and expire
December 31, 2001, but may be terminated by SSI upon thirty days prior
written notice to Wink. This Agreement shall be subject to approval by
AT&T or its designee.
3. Wink will waive all deployment costs, and will take all steps and incur
all costs to deliver all software, hardware, and ancillary data to each
system headend.
4. Wink will pay SSI revenue on each Wink transaction generated per the
attached Schedule A which will be subject to a term-by-term,
size-based, unconditional MFN against any other party distributing the
Wink service.
5. Wink will waive all server and engine software license fees. Wink will
also provide hardware at no cost to SSI. SSI shall not be obligated to
pay any fees with respect to deployment of Wink.
6. Wink will idemnify and hold harmless Telecommunications, Inc., TCI
Communications, Inc., SSI, and each of their respective affiliates and
related companies, including without limitation each such entities'
directors, employees, officers, and agents, against any and all claims,
costs, or causes of action arising directly or indirectly out of the use
and delivery of the Wink service, including without limitation, the
content of the Wink service, software or hardware used for the
deployment or use of the Wink service, and the sale of products or
services on the Wink service.
7. The terms of this Agreement shall be kept confidential by the parties,
and shall not be disclosed by either party except with the prior written
approval of the non-disclosing party. ANY PRESS RELEASE OR PUBLIC
DISCLOSURE RELATING TO THE AGREEMENT SHALL BE MORALLY APPROVAL BY THE
PARTIES.
Wink Communications, Inc. Satellite Services, Inc.
By: By:
Maggie Wilderotter
President & CEO
<PAGE> 1
EXHIBIT 10.25
SOFTBANK
MASTER SERVICE AGREEMENT
CONFIDENTIAL
This Master Service Agreement is made this 8th day of June, 1998, between Wink
Communications Inc., a Delaware Corporation, with offices located at 1001 Marina
Village Parkway, Alameda, California 94501 (hereinafter referred to as "CLIENT")
and Upgrade Corporation of America d/b/a SOFTBANK Services Group, a Delaware
Corporation, with offices located at 699 Hertel Avenue, Buffalo, New York
14207-2398 (hereinafter referred to as "SOFTBANK").
RECITALS
WHEREAS, CLIENT has developed and owns or acquired all rights to a list
of the registered or prospective users of its products; and
WHEREAS, CLIENT intends to market and sell its product or services to
its registered or prospective user base; and supporting such a user base; and
WHEREAS, SOFTBANK has certain experience and capabilities in handling
the tasks involved in selling to and supporting such a user base; and
WHEREAS, CLIENT wishes to obtain the benefit of such experience and
capabilities by utilizing certain services of SOFTBANK in CLIENT's marketing
effort to sell its product or services; and
WHEREAS, SOFTBANK agrees to supply CLIENT with the services of its staff
to perform the services described in this Agreement and CLIENT agrees to use
such services of SOFTBANK's staff for such purposes;
NOW, THEREFORE, in consideration of the covenants derived hereunder the
parties agree as follows:
1. SOFTBANK SCOPE OF SERVICES
SOFTBANK agrees to use its best efforts to provide one or more of the
following services, as mutually agreed upon and further set forth in the Service
Fee & Responsibilities Attachment and detailed Specifications Form prepared by
SOFTBANK at the direction of the CLIENT.
2. SOFTBANK RESPONSIBILITIES
SOFTBANK will provide to CLIENT its services in a good and workmanlike
manner and as set forth in the Service Fee & Responsibilities Attachment.
3. CLIENT RESPONSIBILITIES
In order for SOFTBANK to fulfill its obligations under this Agreement,
it is necessary that CLIENT fully cooperate and assist SOFTBANK in SOFTBANK's
performance of its obligations under this Agreement. Therefore, CLIENT agrees to
perform in a timely fashion as applicable, its responsibilities set forth in the
Service Fee & Responsibilities Attachment.
In the event CLIENT fails to perform its Client Responsibilities in a
timely manner and such failure causes SOFTBANK to incur additional cost, CLIENT
shall reimburse SOFTBANK for such additional costs, provided they are reasonable
and documented by SOFTBANK and provided there has been notice by SOFTBANK of a
failure that will cause such costs to be incurred.
4. DEDICATED REPRESENTATIVES
SOFTBANK shall appoint one qualified staff member ("SOFTBANK Account
Service Representative"), who will (i) have authority to act for SOFTBANK and to
make binding decisions with respect to this Agreement, unless otherwise limited
herein; (ii) submit material and information requests to CLIENT; (iii) provide
access to SOFTBANK's staff to answer questions; and (iv) provide schedules and
plans to CLIENT for CLIENT's review and/or approval.
CLIENT shall appoint one qualified staff member ("CLIENT Account Service
Representative"), who will (i) have authority to act for CLIENT and to make
binding decisions with respect to this Agreement; (ii) to execute any Addendums,
Attachments or documents incorporated as a part of this Agreement on behalf of
CLIENT; (iii) review promptly information supplied by SOFTBANK; (iv) provided
and assume responsibilities for accuracy of CLIENT's information and data
required by this Agreement; and (v) provide access to CLIENT staff to answer
questions, and provide training to SOFTBANK.
CONFIDENTIAL & PROPRIETARY
Page 1
<PAGE> 2
5. CLIENT PRODUCT/LITERATURE
(THIS SECTION HAS BEEN INTENTIONALLY REMOVED)
6. CONFIDENTIALITY
Both parties acknowledge that each party will be disclosing to the other
confidential and proprietary information relating to their past, present and
future activities, products, services, customer lists, customer profiles,
business plans, business practices and other information designated as
confidential ("Confidential Information"). The Confidential Information may be
disclosed orally or in writing, and all information, unless otherwise indicated,
shall be deemed to be confidential and proprietary. Confidential Information,
however, does not include information that: (i) is now or subsequently becomes
generally available to the public through no fault or breach on the part of
recipient; (ii) recipient can demonstrate to have had Confidential Information
rightfully in its possession prior to disclosure; (iii) is independently
developed by recipient without the use of any Confidential Information; or (iv)
is information intended to be shared with CLIENT's customers or other third
party; or (v) recipient rightfully obtains from a third party who has the right
to transfer or disclose it.
Both parties agree to hold the Confidential Information confidential and
will not disclose it, and will prevent dissemination to any person who is not an
employee of CLIENT or SOFTBANK without the prior written consent of the other
party.
SOFTBANK acknowledges that it has all employees enter into an agreement
whereby they agree not to disclose or use the Confidential Information.
SOFTBANK agrees that as a result of SOFTBANK's performance of the
services, SOFTBANK enhances or improves the CLIENT's customer lists, such
enhancements or improvements will be the property of CLIENT.
All Confidential Information remains the property of the disclosing
party and no license or other rights in the Confidential Information are granted
hereby. Further, both parties agree to return all Confidential Information
regardless of the media in which it is stored, including, but not limited to,
records released to either party for marketing and distribution services,
immediately upon either party's written request and in the case of termination
or expiration of this Agreement, within thirty (30) days of such event.
Both parties acknowledge that unauthorized disclosure or use of
Confidential Information could cause irreparable harm and significant injury
which may be difficult to ascertain. Accordingly, both parties agree that the
aggrieved party will have the right to seek immediate injunctive relief from
breaches of this Agreement, in addition to any other rights and remedies it may
have.
7. PROPRIETARY RIGHTS
a) SOFTBANK retains the right, title and interest in and to the
copyrights and moral and author rights throughout the world, including all
renewals and extensions thereof and including the rights to prepare and.
distribute derivatives thereof, for works of authorship, created, made or
conceived by SOFTBANK (i) prior to this Agreement; or (ii) in support of
SOFTBANK's staff or internal systems.
b) Except as provided in Section 7(a) above, CLIENT shall be the sole
and exclusive owner of any works of authorship and other proprietary materials,
including any modifications of derivative works thereof (e.g., screens and
transaction processes, training materials, customer order transaction database,
and programming code) created by CLIENT or developed by SOFTBANK at the
instruction of CLIENT (such works created or developed by SOFTBANK shall be
deemed "works for hire" and SOFTBANK hereby assigns all rights and ownership in
such works to CLIENT).
8. WARRANTY DISCLAIMERS
NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND,
INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS OF
EITHER PARTY'S WORK OR PRODUCT FOR ANY PARTICULAR PURPOSE. NEITHER PARTY SHALL
BE LIABLE TO THE OTHER PARTY, OR TO ANY THIRD PARTY, FOR ANY CONSEQUENTIAL,
INCIDENTAL, OR SPECIAL DAMAGES (INCLUDING WITHOUT LIMITATION LOST PROFITS)
INCURRED BY EITHER PARTY AS A RESULT OF ANY BREACH BY EITHER PARTY ARISING FROM
OR RELATED TO THIS AGREEMENT, EXCEPT AS PROVIDED IN SECTION 9 (INDEMNIFICATIONS)
HEREOF.
THE END-USER WILL RECEIVE THE BENEFITS AND WARRANTIES CONTAINED IN THE
CLIENT SOFTWARE LICENSE AGREEMENT THAT ACCOMPANIES EACH AND EVERY COPY OF THE
PRODUCT.
CONFIDENTIAL & PROPRIETARY
Page 2
<PAGE> 3
9. INDEMNIFICATIONS
To the extent liability is the result of SOFTBANK's error or omission in
its performance of its obligations under this Agreement, SOFTBANK shall
indemnify and hold CLIENT harmless from any demands, claims or suits from third
parties for damages, taxes, penalties, interest or expenses, including
attorneys' fees.
Notwithstanding any of the following, CLIENT will not be liable to
indemnify SOFTBANK under the terms of any provision to the extent SOFTBANK's
liability is in any way the result of SOFTBANK's error.
a) CLIENT shall indemnify and hold SOFTBANK harmless from any demands,
claims or suits from third parties for damages or expenses, including attorneys'
fees, arising out of the use or sale of CLIENT's products or SOFTBANK's use of
CLIENT provided resources or information including, but not limited to, suits or
proceedings based upon (i) a claim of infringement or wrongful use of any
patent, copyright, trade secret or other right of any third party; or (ii) a
claim of product defect or failure to conform to published specifications; or
(iii) SOFTBANK's authorized use of CLIENT's Confidential Information, in
SOFTBANK's performance of this Agreement as provided herein; or (iv) a claim of
an unfair or deceptive act and practice of the CLIENT; or (v) any acts, which do
not comply with applicable State or Federal law and were performed by SOFTBANK
at the direction of the CLIENT.
10. REMITTANCE PROCESSING
(THIS SECTION HAS BEEN INTENTIONALLY REMOVED)
11. SOFTBANK FEES
CLIENT agrees to pay SOFTBANK for the performance of its services in
accordance with the Service Fee & Responsibilities Attachment.
Within fifteen (15) days from the end of each calendar month, SOFTBANK
will submit an invoice to CLIENT for such services. SOFTBANK reserves the right
to adjust monthly invoicing to weekly invoicing upon notification to CLIENT.
SOFTBANK invoices to CLIENT are payable within thirty (30) days of receipt, net
of disputed items, which must be brought to SOFTBANK's notice within the payment
term. All SOFTBANK invoices are immediately due and payable upon termination of
this Agreement.
SOFTBANK reserves the right, without further notice, to assess a one
percent (1%) finance charge (12% per annum) on any unpaid balances not paid
within thirty (30) days. All amounts payable to SOFTBANK by CLIENT or to CLIENT
by SOFTBANK shall be in United States currency, unless otherwise specifically
provided in accordance with this Agreement.
Set-up Fees and deposits must be paid prior to SOFTBANK's services being
provided. A minimum monthly volume commitment fee, as set forth in the Service
Fee & Responsibilities Attachment, is charged per program for each calendar
month or portion of a calendar month that a program is active. Deposits may be
applied towards any outstanding amounts due and owing and are refundable upon
payment of all outstanding invoices.
12. COMMENCEMENT OF SERVICES
SOFTBANK will use its best efforts to provide services to CLIENT at the
earliest possible date or by the start date set forth in the Specifications
Form. It is understood by the parties that if SOFTBANK assigns CLIENT a toll
free number, toll number, P.O. box or fax number prior to the commencement of
SOFTBANK services (for use in mailers, ads or other announcements) such numbers
will only be activated upon SOFTBANK's receipt of a fully executed contract and
applicable set-up fees and deposits.
13. MODIFICATIONS
Definitions: "Material Change" is defined as any addition or alteration
of the terms of this Agreement that
(i) alters the original intent of the parties as expressed in
this Agreement: or
(ii) adds services or fees not included in this Agreement; or
(iii) alters services or fees included in this Agreement.
"Non-Material Change" is defined as a change that
(i) initiates or curtails services and appropriate fees as
included in this Agreement; or
(ii) affects product additions or deletions; or
(iii) affects product price, weight, shipping and handling or
product release date to SOFTBANK; or
(iv) other change which does not constitute a material change as
defined above.
CONFIDENTIAL & PROPRIETARY
Page 3
<PAGE> 4
Modification: A material change shall be executed in writing and signed
by a duly authorized representative of each party. A non-material change shall
be agreed to by the CLIENT's Account Representative. Such Representative will
have the authority and will execute a Specifications Form or Set-Up Billing
Form. Any of the above executed documents shall be incorporated as part of this
Agreement and shall be binding upon both parties. Any changes will be
implemented as per CLIENT's request, upon SOFTBANK's receipt of an executed
addendum or appropriate form and at a time mutually agreed upon by both parties.
14. TERM OF AGREEMENT
The term of this Agreement shall be for three (3) years from the date of
this Agreement. At such time the parties shall have the opportunity to renew
and/or renegotiate this Agreement. However, either party may renegotiate
pricing, at any time after the first anniversary date of this Agreement, but no
more frequently than once in any twelve (12) month period by giving written
notice of the intent to renegotiate along with a written revised pricing
schedule. If the parties cannot agree upon pricing modifications within sixty
(60) days of notification, either party may terminate this Agreement in
accordance with the default remedy (a), set forth below. If no new Agreement is
made, this Agreement shall remain in force and renew on an annual basis
thereafter.
Notwithstanding the above, either party by written notice can terminate
this Agreement as follows:
a) for default if such party has previously given written notice including a
detailed description of the default by the other party and the other party has
not cured such default within sixty (60) days of receipt of written notice; or
b) for default due to non-payment of fees under this Agreement, if not cured
within ten (10) days after written notice is provided to recipient; or
c) CLIENT may terminate without cause on thirty (30) days written notice of
termination subject to the following:
(1) If either this Agreement or a new campaign/program is terminated by
CLIENT without cause during the first six (6) months, CLIENT shall pay
to SOFTBANK an amount equal to the higher of:
(i) the highest actual ninety (90) day forecast during the six
(6) months preceding the termination date of the Agreement or
campaign/program; or
(ii) three (3) times the average monthly billings of the highest
consecutive three (3) month period during the six (6) months
preceding the termination of this Agreement or campaign/program.
(2) If either this Agreement or a new campaign/program is terminated by
CLIENT without cause during the first ninety (90) days, CLIENT shall pay
to SOFTBANK an amount equal to the higher off
(i) the actual initial ninety (90) day forecast; or
(ii) three (3) times the highest monthly invoice during the
Agreement or the campaign/program.
d) SOFTBANK may terminate without cause on ninety (90) days written notice of
termination.
The remedies provided above in Section (c) are intended to reimburse
SOFTBANK for its investment in people and equipment relating to this Agreement,
plus all SOFTBANK Fees earned prior to the termination date. CLIENT acknowledges
that the actual amount of SOFTBANK's investment would be difficult to calculate
and agrees that such calculation shall not be required. In the event of default,
the parties shall have all remedies provided in this Agreement or otherwise
available under law.
Upon termination, each party shall return any Confidential Information
of the other party. In addition, SOFTBANK will assign any and all rights which
it may hold in databases and Works of authorship referenced in Section 7(b)
above and assist CLIENT in transitioning such materials to CLIENT or a third
party designated by CLIENT. Upon request and at the direction of the CLIENT,
SOFTBANK agrees to transfer toll free number phone lines accordingly, provided
that all amounts due SOFTBANK are paid and CLIENT has met all obligations
pursuant to this Agreement.
15. GENERAL PROVISIONS
a) CLIENT grants SOFTBANK permission to install CLIENT's product on
SOFTBANK's internal network for SOFTBANK internal purposes only, including
training.
b) CLIENT acknowledges that SOFTBANK will retain a copy of the Customer
order database as support for all transactions processed by SOFTBANK. CLIENT
agrees to cooperate and comply with any applicable laws or regulations which
otherwise require SOFTBANK to retain copies of CLIENT's records and to cooperate
and provide access to any documentation which may be requested of SOFTBANK by
governmental authorities.
CONFIDENTIAL & PROPRIETARY
Page 4
<PAGE> 5
c) SOFTBANK reserves the right to pass on any unanticipated price
increases from its suppliers that directly affect the pricing of this Agreement
and are effective during the term of this Agreement. This is limited to freight,
telephone, credit card fees, postal rates and other pass through costs as
specifically set forth in the Service Fees and Responsibilities Attachment. Said
price increases shall be effective upon implementation of the price change by
the supplier.
d) CLIENT agrees that for quality control purposes SOFTBANK, at its sole
discretion, may contact CLIENT's customers previously serviced by SOFTBANK to
gather statistical information relating to customer satisfaction and SOFTBANK's
performance under this Agreement. Such contact may include a variety of methods
including, but not limited to, telephone, postal and email surveys, in box
questionnaires and focus groups. SOFTBANK shall immediately comply with any
CLIENT request to discontinue contacting CLIENT's customers for the purpose set
forth in this sub-paragraph.
e) This Agreement is not intended to create any relationship other than
CLIENT as consignor and SOFTBANK as consignee of the product covered by this
Agreement and SOFTBANK as independent contractor performing services covered by
this Agreement. Neither party is a partner or legal representative of the other
for any purpose whatsoever. It is understood between the parties that SOFTBANK
is not authorized to make any contract, agreement or warranty on behalf of the
CLIENT.
f) This Agreement contains the entire agreement between the parties with
the exception of the Attachments, Addendums or forms provided for in this
Agreement, which are incorporated herein. This Agreement shall supersede all
prior agreements and understandings between the parties with respect to the
subject matter hereof. To the extent that any provision contained in any other
document incorporated as part of this Agreement is inconsistent or conflicts
with this Agreement, the provisions of this Agreement shall control. This
Agreement may be amended only in writing signed by both parties or as otherwise
provided for in this Agreement.
g) Both parties agree to comply with all federal, state, local laws and
regulations that are applicable to the services to be provided herein.
h) This Agreement shall be governed by the laws of the State of New York
and the venue shall be Buffalo, New York.
i) Failure of either party to exercise its rights under this Agreement
shall not be construed as a waiver thereof and shall not prevent said party from
thereafter enforcing strict compliance with any of the terms thereof.
j) Any notice which may be or is required to be given under this
Agreement shall be written. Any written notices shall be sent by registered mail
or certified mail, postage prepaid, return receipt requested or by other prepaid
delivery method which is traceable. A fax notice does not constitute receipt of
written notice and must be followed by written notice. All such notices shall be
deemed to have been given when received and properly addressed as set forth
below. Either party may change its address by giving notice to the other party
pursuant to this Section.
All notices must be sent to:
<TABLE>
<S> <C>
SOFTBANK: CLIENT:
UPGRADE CORPORATION OF AMERICA WINK COMMUNICATIONS INC.
d/b/a SOFTBANK SERVICES GROUP 1001 MARINA VILLAGE PARKWAY
699 HERTEL AVENUE ALAMEDA, CALIFORNIA 94501
BUFFALO, NEW YORK 14207 ATTENTION: TIM TRAVAILLE, VICE PRESIDENT
ATTENTION: PRESIDENT OPERATIONS AND DEPLOYMENT
FAX NUMBER (716) 871-6668 FAX NUMBER (510) 337-2960
CC: CONTRACT ADMINISTRATOR
</TABLE>
k) Neither party shall be liable for a failure or delay in the
performance of any of its obligations under this Agreement, except obligations
for the payment of money, if such delay or failure is caused by circumstances
beyond the reasonable control of the party affected. Strikes and other labor
difficulties which are not capable of being terminated on terms acceptable to
the party affected shall not be considered circumstances within the control of
such party.
l) No Assignment of this Agreement shall release CLIENT or change
CLIENT's primary responsibility to make payments under this Agreement. Upon
occurrence of any default under this Agreement, SOFTBANK may proceed directly
against CLIENT without the necessity of exhausting any remedies against any
assignee.
CONFIDENTIAL & PROPRIETARY
Page 5
<PAGE> 6
m) The terms and conditions of Sections 5, 6, 7, 8, 9, 11, 14 and
15(b)(d)(h) will survive any termination or expiration of this Agreement.
Acceptance:
WINK COMMUNICATIONS INC.:
By: Date : 6/11/98
Name & Title:
Acceptance:
UPGRADE CORPORATION OF AMERICA D/B/A SOFTBANK SERVICE GROUP
By: Date: 8/10/98
Name & Title: Gary M. Crosby, Executive Vice President & CEO
CONFIDENTIAL & PROPRIETARY
Page 6
<PAGE> 7
SOFTBANK
MASTER SERVICE AGREEMENT
SERVICE FEE & RESPONSIBILITIES ATTACHMENT
WINK COMMUNICATIONS INC.
FEES EFFECTIVE UPON COMMENCEMENT OF SERVICES
All services performed by SOFTBANK shall be rendered in accordance with the fees
defined herein:
<TABLE>
<CAPTION>
SERVICE/SOFTBANK RESPONSIBILITIES SOFTBANK FEE CLIENT RESPONSIBILITIES
- --------------------------------- ------------ -----------------------
<S> <C> <C>
A. SET-UP FEES & DEPOSITS Payable Upon Execution of Contract
Set-Up Fee Quoted based on specific needs and set forth in
the Set-Up Billing Form
(30000)
Deposits (Refundable upon termination of the $75,000.00 Submit payment for deposit upon
contract, provided outstanding invoices To be applied to invoices at a maximum of execution of the contract and
have been paid) $8,500.00 per month until the deposit on prior to the start of the
balance is $25,000.00. Said balance is to be campaign/program
refunded to CLIENT one (1) year after the
effective date of the contract.
B. CAMPAIGN/PROGRAM MANAGEMENT:
(20400)
Monthly Campaign/Program Management fee $30.00 per hour Provide campaign or program
specific information as requested
by the SOFTBANK Account Service
Representative and as requested
in the Specifications Form.
Participate in development of
Telemarketing Call Guides,
providing information including
but not limited to: Product
capabilities & technical
requirements Marketing research
questions (if required) Sales and
technical objections Help desk
issues "End of Call" coding
C. ORDER PROCESSING: (NOTE: SOFTBANK does not accept purchase
Telemarketing orders, check orders or tax exempt orders
via telephone.)
(1X10) Inbound service - (6:00 a.m. - PER CAMPAIGN Produce, mail and/or insert direct
10:00 p.m., 7 days a week, 365 days a year) Billable Talk marketing promotions (mails pieces
Includes order entry, customer inquiries Minutes per Month Fee per Minute or ads) for product(s) or
and call back, add new records, database 0-10,000 $1.00 service(s) to its registered or
edits, marketing/demographic surveys, 10,001 - 30,000 $0.95 prospective user base. Such
if applicable 30,001 - 50,000 $0.90 promotions should include:
50,001 - 99,999 $0.85 Assigned toll free number(s), fax
100,000 + $0.75 number(s), mailing address,
+ phone charges previously defined product or
(See Telecommunications) service pricing, customer shipping
& handling charges and sales tax
instructions. CLIENT will submit
promotions to SOFTBANK for review
before final printing or
publication. CLIENT will also
provide samples of final pieces
for reference by SOFTBANK
Associates working on CLIENT's
behalf.
</TABLE>
CONFIDENTIAL & PROPRIETARY
Page 7
<PAGE> 8
SOFTBANK
MASTER SERVICE AGREEMENT
SERVICE FEE & RESPONSIBILITIES ATTACHMENT
WINK COMMUNICATIONS INC.
FEES EFFECTIVE UPON COMMENCEMENT OF SERVICES
All services performed by SOFTBANK shall be rendered
in accordance with the fees defined herein:
<TABLE>
<CAPTION>
SERVICE/SOFTBANK RESPONSIBILITIES SOFTBANK FEE CLIENT RESPONSIBILITIES
- --------------------------------- ------------ -----------------------
<S> <C> <C> <C>
(25950) Minimum Monthly Volume Commitment Forecasted billable unit of measure per month In the event CLIENT's actual
shall be billed at the corresponding fee set volume does not meet the minimum
forth in this Agreement and CLIENT's payment forecasted volume commitments,
of fees shall be equal to eighty percent CLIENT is responsible for payment
(80%) of the forecast. of fees as set forth under the
"SOFTBANK Fee" column. CLIENT
shall make monthly payments based
on the foregoing commitments and
said payments shall be reflected
in CLIENT's invoice. CLIENT must
provide SOFTBANK with a ninety
(90) day rolling forecast to be
submitted to SOFTBANK on the
CLIENT Forecast Form, attached
hereto. A Revised Forecast (thirty
(30) day minimum forecasted time
period) may be provided at least
fifteen (15) days prior to the
start of the billing period
covered by the forecast. In the
event SOFTBANK does not receive
said forecast, it shall be
entitled to rely upon the previous
forecast for minimum monthly
volume commitment purposes.
D. IVR (INTERACTIVE VOICE RESPONSE) SERVICES:
Inbound call fee: PER CAMPAIGN Provide first draft of script.
(3100) Call Routing Minutes per Month Fee per Minute Provide sign-off for script and
(3230) Automated Technical Tips 0 - 25,000 $0.25 call-flow in timely manner before
(3210) Automated Dealer Locator 25,001 - 40,000 $0.225 SOFTBANK begins to program
(3210) Automated Order Inquiry 40,001 - 60,000 $0.20 Provide Closed and Holiday
Automated Registration 60,001 - 75,000 $0.1875 Schedule.
(3321) Tel-Address(SM)(CLIENT Provided Database) 75,000 + $0.15 If applicable:
+ phone charges (See Telecommunications) o Provide first draft of "tech
tips" (Q&As) and symptom based
logic in. script format.
o Provide dealer database in
acceptable SOFTBANK format that
includes telephone numbers with
area codes (no Toll Free numbers).
o Provide Business Rules for how
dealers will be found.
o Provide campaign or program
specific information including,
but not limited to: Product
description, customer pricing
information, survey data,
acceptable payment options and
applicable customer S&H charges.
o Provide registered or
prospective user database (with
unique numeric identifier), on
acceptable media and in an
applicable format readable by
SOFTBANK.
</TABLE>
CONFIDENTIAL & PROPRIETARY
Page 8
<PAGE> 9
SOFTBANK
MASTER SERVICE AGREEMENT
SERVICE FEE & RESPONSIBILITIES ATTACHMENT
WINK COMMUNICATIONS INC.
FEES EFFECTIVE UPON COMMENCEMENT OF SERVICES
All services performed by SOFTBANK shall be rendered in accordance
with the fees defined herein:
<TABLE>
<CAPTION>
SERVICE/SOFTBANK RESPONSIBILITIES SOFTBANK FEE CLIENT RESPONSIBILITIES
- --------------------------------- ------------ -----------------------
<S> <C> <C> <C>
(3320) Tel-Address(SM) (National Database) PER CAMPAIGN
(Customer interaction with automated Connected
address location and verification Minutes per Month Fee per Minute
system) 0 - 25,000 $0.45
25,001 - 40,000 $0.425
40,001 - 60,000 $0.40
60,001 - 75,000 $0.3875
75,000 + $0.35
+ phone charges (See Telecommunications)
E. TELECOMMUNICATIONS: $35.00 per line per month
(18100) Additional Toll Free lines
(beyond three (3) on sales programs
and/or one (i) on automated technology
or technical support programs)
Phone charges: (applies to all
services provided)
(9001) Toll Free inbound - SOFTBANK lines Carrier rates
(includes line/access charges + taxes)
(n/a) Toll inbound CUSTOMER pays toll charges
(9210) Toll outbound calls and call backs Carrier rates
(includes toll charges + taxes)
F. ADMINISTRATIVE:
(19500) Custom reporting/additional data
imports/specialized $75.00/hour
(19550)(19560) data transfers billed in fifteen (15) minute increments,
(19570) (beyond initial set up and/or
standard activity reporting options) 1 hour minimum
+ fee per transfer, if applicable
(19510) Campaign/program modifications $75.00/hour
beyond initial set-up (e.g. CLIENT billed in fifteen (15) minute increments,
requested changes or additions, 1 hour minimum
call guide updates, telecommunications
programming, prompt changes. custom
fax cover pages (CLIENT to supply
artwork), additional fax documents,
etc.)
</TABLE>
CONFIDENTIAL, & PROPRIETARY
Page 9
<PAGE> 10
SOFTBANK
MASTER SERVICE AGREEMENT
SERVICE FEE & RESPONSIBILITIES ATTACHMENT
WINK COMMUNICATIONS INC.
FEES EFFECTIVE UPON COMMENCEMENT OF SERVICES
All services performed by SOFTBANK shall be
rendered in accordance with the fees defined herein:
<TABLE>
<CAPTION>
SERVICE/SOFTBANK RESPONSIBILITIES SOFTBANK FEE CLIENT RESPONSIBILITIES
- --------------------------------- ------------ -----------------------
<S> <C> <C>
(14510) Training (includes client/product Provide training to SOFTBANK
training provided by CLIENT or by Associates or appropriate
SOFTBANK and includes agent and/or training information or
trainer time) documentation covering specifics
of the product and details of
the campaign/program for
SOFTBANK to provide training to
Training $25.00 per agent/trainer hour its employees.
Overtime training $30.00 per agent/trainer hour
Provide additional training as
needed on an ongoing basis to
support any additions or
modifications to existing
programs.
All related training expenses,
such as travel, shall be the
responsibility of(he CLIENT.
(14515) Curriculum Development $75.00 per hour
(Development of training manuals
and materials on behalf of
the CLIENT)
(9400) Videoconferencing $75.00 per hour
(20191) Faxes $0.25 per page
(requested by CLIENT/Customer
other than provided under
Automated Fax Services)
(10050) Photocopies $0.10 per page
(requested by CLIENT/Customer)
(10050) Envelopes, stationery, other
out-of-pocket Cost
(8100-8250) Postage Cost
G. END OF CAMPAIGN/PROGRAM:
(19495) Reporting/analysis (Quote based on specific needs)
(20230) Data transfer (Quote based on specific needs)
</TABLE>
CONFIDENTIAL & PROPRIETARY
Page 10
<PAGE> 11
CLIENT FORECAST FORM
*IMPORTANT INFORMATION: In the event the actual volume does not meet the
forecasted volume commitments you are providing below, you will be responsible
for payment of minimum monthly fees as set forth in the agreement between you
and SOFTBANK. You shall make payments based on the agreed upon commitments and
said charges for said commitments shall be reflected in your monthly invoice.
You must provide SOFTBANK with a ninety (90) day rolling forecast to be
submitted to SOFTBANK on this CLIENT Forecast Form. In the event SOFTBANK does
not receive an ongoing forecast, it shall be entitled to rely upon the previous
forecast for minimum monthly volume commitment purposes and charges.
CLIENT ID Number: CLIENT Name:
--------------- ----------------
Campaign Number: Start Date:
--------------- ----------------
[ ] Initial Forecast (Minimum ninety (90) days)
[ ] Ongoing Forecast (thirty (30) day minimum forecasted time period, to be
provided at least thirty (30) days prior to the start of the billing
period covered by the forecast)
[ ] Revised Forecast (thirty (30) day minimum forecasted time period, to be
provided at least fifteen (15) days prior to the start of the billing
period covered by the forecast)
90 DAY FORECAST
<TABLE>
<CAPTION>
1st Period 2nd Period 3rd Period
(Period must be equivalent to a billing/reporting period.)
<S> <C> <C> <C>
Forecast Period Date
Inbound Talk Minutes
ACW Minutes
Outbound Agent Hours
M2FRP Mail Orders
Fax Orders
ETS Cases
</TABLE>
The foregoing is the undersigned's forecast of volume under the services
agreement between CLIENT and SOFTBANK Services Group.
UPGRADE CORPORATION OF AMERICA
d/b/a SOFTBANK SERVICES GROUP
CLIENT Name
Signature Signature
Signator's Printed Name Signator's Printed Name
General Manager
Signator's Title Signator's Title
Date: Date:
<PAGE> 1
Exhibit 10.26
SYSTEM ADDENDUM
This System Addendum is made as of the 25th day of NOVEMBER, 1998 (the
"Commencement Date"), by and among WINK COMMUNICATIONS, INC., a California
corporation ("Wink"), whose address is 1001 Marina Village Parkway, Alameda, CA
94501, TIME WARNER CABLE OF NEW YORK CITY ("TWCNYC"), a division of Time Warner
Entertainment Company, L.P., ("TWE") a Delaware limited partnership, whose
address is 120 East 23rd Street, New York, NY 10010, and TIME WARNER CABLE, a
division of TWE ("Affiliate"), whose address is 290 Harbor Drive, Stamford, CT
06902.
1. RECITALS
WHEREAS, on September 23, 1998, Wink and Affiliate executed a Master
Cable Affiliation Agreement (the "Master Agreement");
WHEREAS, TWCNYC desires to become a Participating System pursuant to the
Master Agreement;
NOW THEREFORE, the parties agree to be bound by the following terms and
conditions.
2. GENERAL
2.1 All capitalized terms used herein shall have the same meaning and
definition as set forth in the Master Agreement.
2.2 Except as otherwise set forth herein, all terms and conditions set forth
in the Master Agreement shall apply to Wink and to TWCNYC, as a
Participating System thereunder.
2.3 For purposes of this System Addendum, TWCNYC's Operating Area shall be
Manhattan, Queens, Brooklyn, and Mt Vernon, Staten Island is not
included in this Agreement.
2.4 This System Addendum shall not be effective unless and until executed by
Affiliate's Senior Vice President of Programming (or another person
designated by him in writing), TWCNYC and Wink.
3. ADDITIONAL OR AMENDED TERMS AND CONDITIONS
Wink acknowledges and agrees that the performance by TWCNYC of its
obligations hereunder is conditioned on the compliance of Wink and the
Wink Software with the acceptance criteria and specifications set forth
on Schedule A (the "Acceptance Criteria"). Accordingly, if Wink or the
Wink Software does not comply with or satisfy the Acceptance Criteria,
TWCNYC shall be relieved of its obligations hereunder,
<PAGE> 2
3.2 Deployment:
A. In One-Way Network Environment. TWCNYC shall use commercially
reasonable efforts to install and test the Wink Software and to
provide resources reasonably necessary to distribute Interactive
Wink Programs to at least 100 Wink STB Subscribers in a cable
network environment that does not permit responses by the Wink
STB Subscriber (a 'One-Way Environment') beginning February 15,
1999, beginning in TWCNYC's Southern Manhattan system (the
"Pre-Launch"), provided that the failure of TWCNYC to do so
shall not constitute a breach of the Master Agreement or this
System Addendum and TWCNYC may change the foregoing date in its
sole discretion at any time, TWCNYC shall use commercially
reasonable efforts to distribute Interactive Wink Programs in a
One-Way Environment to all Wink STB Subscribers in the Operating
Area (the "One-Way Launch") by April 1, 1999, provided that the
failure of TWCNYC to do so shall not constitute a breach of the
Master Agreement or this System Addendum and TWCNYC may change
the foregoing date in its sole discretion at any time.
B. In Two-Way Network. Environment. By May 1999, TWCNYC may (but
has no obligation to) test the distribution of Interactive Wink
Program in a network environment that permits a Wink STB
Subscriber to interact with and respond to an Interactive Wink
Programs (a "Two-Way Environments. TWCNYC may change the
foregoing date in its sole discretion at any time. In the event
that TWCNYC distributes the Interactive Wink Programs to 75,000
Wink STB Subscribers ('Two-Way Distribution'), then, as of the
date of such launch, the last sentence often 5.4 of the Master
Agreement shall be deleted in its entirety and replaced with the
following:
'If, within eighteen (18) months of the date Participating
System first commences Two-Way Distribution Participating
System's incremental Wink Revenues have not reached a cumulative
total of [*] per Wink Subscriber Unit, Wink shall pay
Participating System, within forty five (45) days, the
difference between [*] per Wink Subscriber Unit and the actual
cumulative incremental Wink Revenues per Wink Subscriber Unit.'
C. Digital Service: If TWCNYC deploys digital converter boxes to
its subscribers, TWCNYC may, at its sole discretion, offer to
distribute Interactive Wink Programs to its digital subscribers,
provided that nothing herein shall be construed to obligate
TWCNYC to commence a digital product offer.
D. Upgrades: Wink acknowledges that TWCNYC is upgrading its cable
television systems on a node by node basis and that only those
subscribers in the upgraded areas will have access to an
advanced analog or digital set-
- -------------
* 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
top box which is capable of utilizing the Wink Software (e.g.,
the Instrument CFT2200 set top box), and therefore the option of
becoming Wink STB Subscribers Wink agrees that TWCNYC has made
no representation as to when or if TWCNYC will complete the
upgrades and that TWCNYC not be in breach of System Addendum or
the Master Agreement E such upgrade in whole or in part is not
completed.
3.3 Exclusivity: Wink shall not enter into an agreement or understanding for
the distribution of Interactive Wink Programs with any other entity that
provides, via terrestrial facilities (except television broadcasters).
multi-channel video programming in the Operating Area for a period of
ten (10) months from the Commencement Date (the "Exclusivity Period").
if TWCNYC agrees to test the distribution of the interactive Wink
Program in a Two-Way Environment on or before May 31, 1999, the
Exclusivity Period shall be extended up to and including March 1, 2000.
If TWCNYC commences Two-Way Distribution by August 1, 1999 (the 'Two-Way
Launch Target Date'), the Exclusivity Period wilt be extended for the
duration of the Term. If TWCNYC is unable to meet the Two-Way Launch
Target Date because Wink has not complied with (or the Wink Software
does not comply with) the Acceptance Criteria, then the Exclusivity
Period will continue through the Term, provided that TWCNYC commences
Two- Way Distribution within sixty (60) days from the date that Wink
satisfies the Acceptance Criteria. If TWCNYC fails to commence Two-Way
Distribution by the Two-Way Launch Target Date and such failure is not
caused by the non-compliance of Wink or the Wink Software with the
Acceptance Criteria but does so on or before October 1, 1999, then the
Exclusivity Period shall be extended through October 2, 2000. If TWCNYC
fails to commence Two-Way Distribution on or before October 1, 1999 and
such failure is not caused by the non-compliance of Wink or the Wink
Software with the Acceptance Criteria, then the Exclusivity Period shall
expire as of October 2, 1999. Notwithstanding the foregoing, Wink
acknowledges that achieving Two-Way Distribution by August 1, 1999 is
contingent upon Pioneer delivering a Wink-capable STB to TWCNYC by June
30, 1999. Wink agrees that in the event that Pioneer fails to deliver
such a Wink-capable STB by June 30, 1999, the Exclusivity Period shall
be extended through the end of the Term.
3.4 License Fees. Notwithstanding Section 5.1 of the Master Agreement,
TWCNYC shall not be required to pay, for the Term, any license fees for
the Wink Software specified in Section A of Exhibit D of the Master
Agreement. In addition, notwithstanding Section 5.1 of the Master
Agreement, Wink shall pay (or reimburse TWCNYC if applicable) any
license fees due and owing by TWCNYC for the first 75,000 CFT-2200 set
top boxes deployed by TWCNYC. TWCNYC shall pay to the applicable
manufacturer all license fees due for the CFT-2200 set top boxes
deployed the thereafter.
3
<PAGE> 4
3.5 Development Funds. Notwithstanding Section 6.6 of the Master Agreement,
within the first eighteen (18) months following the date on which TWCNYC
commences the Pre-Launch, Wink shall provide TWCNYC with [*] as
launch and development funds ("Development Funds'}. The parties agree
that [*] of such Development Funds shall be provided to TWCNYC
within thirty (30) days of the execution of this System Addendum and
shall be used prior to June 30, 1999 to promote the distribution of
interactive Wink Programs in a One-Way Environment. The balance of the
Development Funds shall be distributed by Wink when requested by TWCNYC.
3.6 Termination. Upon expiration of the Term (including any extensions
thereof) or upon the termination of this Master Agreement or this System
Addendum, within ninety (90) days of such expiration or termination,
Wink shall retrieve from TWCNYC's premises all equipment provided by
Wink on notice during regular business hours and without interrupting
TWCNYC's operation.
3.7 Certification. Wink shall obtain from General Instrument ("GI")
certification that the Wink Software functions according to published
specifications in a live environment in conjunction with version 2.3 of
the ware in GI's CFT2200
.(512K) and the CFT2200 (lmg) Wink-capable set top boxes. Wink agrees
that TWCNYC shall have no obligations under this System Addendum or the
Master Agreement unless and until Wink obtains the foregoing
certification from GI and that such certification is condition precedent
to TWCNYC's performance hereunder.
IN WITNESS WHEREOF, the parties by their duly authorize representatives have
Entered into this System Addendum as of the Effective Date
WINK THE WARNER CABLE
By: By:
Name: Name:
Title: Title:
TIME WARNER CABLE NEW YORK CITY
By:
Name:
Title:
- -------------
* 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.
4
<PAGE> 5
TIME WARNER CABLE NEW YORK CITY ACCEPTANCE CRITERIA
---SCHEDULE A--
1. [*]
1.1 [*]
1.2 [*]
1.3 [*]
1.4 [*]
2. [*]
2.1 [*]
2.2 [*]
2.3 [*]
3. [*]
3.1 [*]
- -------------
* 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.
SchA - 1
<PAGE> 6
3.2 [*]
3.3 [*]
3.4 [*]
3.5 [*]
3.6 [*]
4. [*]
4.1 [*]
4.2 [*]
4.3 [*]
- -------------
* 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.
Sch.A - 2
<PAGE> 7
4.4 [*]
4.5 [*]
4.6 [*]
4.7 [*]
4.8 [*]
- -------------
* 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.
Sch. A-3
<PAGE> 8
4.9 [*]
4.10 [*]
- -------------
* 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> 1
EXHIBIT 10.27
AGREEMENT OF DEVELOPMENT OF
DEMONSTRATION SOFTWARE
THIS AGREEMENT (the "Agreement") is executed as of this 25th day of January 1999
("Execution Date") between Toshiba Corporation with offices at 1-1, Shibaura
1-Chome, Minato-ku, Tokyo 105-8001, Japan ("Toshiba") and Wink Communications,
Inc., a California corporation with offices at 1001 Marina Village Parkway,
Alameda, CA 94501, U.S.A. ("Wink").
BACKGROUND
1. Toshiba and Wink (hereafter "Parties") have concluded "Wink Engine
License Agreement" on September 30, 1997, pursuant to which Wink is
licensing its interactive television software "Wink Engine version 1.x"
to Toshiba and Toshiba is selling interactive television receivers using
the said software.
2. Toshiba wishes to develop more advanced interactive television receivers
using more enhanced software "Wink Engine version 2.0" and an associated
authoring tool "Wink Studio version 2.0" (hereafter collectively
"version 2.0") which Wink wishes to develop under this Agreement.
Detailed specification of the version 2.0 is under discussion between
the Parties.
3. Meanwhile, Toshiba wishes to evaluate demonstration software of the
version 2.0 for the purpose of sales promotion of the version 2.0, and
the Parties have agreed on the specification of the demonstration
software of the version v2.0.
4. It is the intent but not obligation of the Parties that a separate
license agreement shall be concluded regarding the version 2.0 in the
near future when the specification of the version 2.0 is agreed upon and
that this Agreement may be possibly superseded by the said license
agreement.
5. Since development of the demonstration software has been agreed upon by
the Parties and since the license agreement of the version 2.0 is not
yet practical, the Parties execute this Agreement to memorize the
agreement between the Parties regarding development of the demonstration
software.
AGREEMENT
1. DEVELOPMENT
Wink agrees to develop the demonstration software for the version 2.0 (hereafter
the "Demonstration Software") as listed in Exhibit A (entitled "Development
items for Demonstration Software") in accordance with the mutuall-agreed-upon
specification by the end of June 1998, and releases a follow-up version to
Toshiba in object code form by the end of July 1998.
2. LICENSES
Wink hereby grants to Toshiba a right to copy and use the Demonstration Software
for demonstration purposes. In case that Toshiba should want in the future to
use the Demonstration Software in Toshiba's products for sales or for other ways
of business, the Parties shall faithfully negotiate to conclude the license
agreement as mentioned in BACKGROUND 4, above.
<PAGE> 2
3. PAYMENT
Toshiba shall pay US $76,000.00 within 30 days after the Execution Date of this
Agreement. 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 and pay the withheld amount to the Japanese tax
authorities to the extent that Toshiba is legally required to do so. Toshiba
shall send tax certificates issued by such Japanese tax authorities in order for
Wink to fully receive tax credit against the US tax authorities.
4. TERM
Upon execution of this Agreement, this Agreement shall retroactively become
effective as of June 1, 1998 and continue to be effective until terminated by
Toshiba upon a thirty (30) days written notice.
5. CONFIDENTIALITY
Any information furnished by the disclosing party to the receiving party
pursuant to this Agreement and clearly identified as confidential by the
disclosing party shall be deemed confidential information (hereinafter
"Confidential Information"). The receiving party agrees not to disclose the
Confidential Information to third parties for a period of five (5) years after
the receipt of such Confidential Information. 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 write
down such information and deliver it to the receiving party in writing within
fifteen (15) days after such disclosure. Notwithstanding above, the confidential
obligation shall not apply to the information which:
(1) is or becomes part of the public domain through no fault or
breach on the part of the receiving party;
(2) is known to the receiving party prior to the disclosure by the
disclosing party;
(3) is subsequently rightfully obtained by the receiving party from
a third party who has the legal right to disclose it;
(4) is independently developed by the receiving party without the
use of any Confidential Information or any breach of this
Agreement;
(5) 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;
(6) the disclosure is approved by the disclosing party in writing.
<PAGE> 3
6. INDEMNITY
Wink will indemnify Toshiba against any and all third party claims of
infringement of intellectual property rights which may be asserted against
Toshiba on the grounds that the Demonstration Software infringes upon such third
party's intellectual property rights. Wink will have the right to defend
against, control the defense of, and settle any action based upon any such
claims. Wink will bear all costs and expenses, including reasonable attorney's
fees, incurred in connection with the defense of any such claims or as a result
of any settlement made or judgment rendered on the basis of such claims. If any
legal action alleging infringement is commenced or any threat thereof is made
against Toshiba, Wink shall, at its expense and at its option, either secure for
Toshiba the right to continue to use the Demonstration Software or replace or
modify the Demonstration Software so that it no longer constitutes an
infringement.
7. GOVERNING LAW; DISPUTE RESOLUTION
This Agreement shall be governed by and construed under the laws of the State of
California, without referece to conflict of laws principles. Any dispute or
claim arising out of or relation to this Agreement, or the interpretation,
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 the said Rules. Judgment on the award rendered
maybe entered in any court having jurisdiction thereof. The arbitration shall be
conducted in English and take place in USA if initiated by Toshiba, and in Japan
if initiated by Wink.
8. EXPORT CONTROL
Neither party shall export or re-export, directly or indirectly, any technical
information disclosed hereunder or direct product thereof to any destination
prohibited or restricted by the export control regulations of U.S.A. and Japan
without the prior authorization form the appropriate governmental authorities.
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: By:
Name: Name:
Title: President & CEO Title: GENERAL MANAGER
AOI GROUP
<PAGE> 4
EXHIBIT A
DEVELOPMENT ITEMS FOR DEMONSTRATION SOFTWARE
Display resolution
Color system
JPEG/PNG graphic support
Cursor-moved event script
Resident Japanese font sizes
Increased Japanese font sizes
Improvement of resident icons
Gradient fill hint
Wallpaper hint
<PAGE> 5
AMENDMENT NO.1 TO
AGREEMENT OF DEVELOPMENT
OF DEMONSTRATION SOFTWARE
THIS AMENDMENT (the "Amendment") hereby mends the terms and conditions
of the "Agreement of Development of Demonstration Software" executed as of the
25th day of January 1999 (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 14 Shibaura,
1-Chome, Minato-ku, Tokyo 105-8001, Japan ("Toshiba"). The Amendment is
effective by the parties as of this 23rd day of February 1999 ("Execution
Date").
Whereas Wink and Toshiba concluded the Agreement and completed
development and payment in accordance with the Agreement.
Now Toshiba desires and Wink agrees to add more features to the
Demonstration Software in the Agreement, as provided in this Amendment.
Unless specifically amended in this Amendment, all terms of the
Agreement remain in force.
AMENDMENT
1. Added development items
Exhibit A (entitled "Development items for Demonstration Software") of
the Agreement shall be added with the items (hereafter "Added Development
Items") listed in Exhibit A' in this Amendment.
Wink shall develop these Added Development Items in accordance with the
mutually-agreed- upon specification and release to Toshiba in object code form
(hereafter "Release") by the end of March, 1999.
2. Payment
Toshiba shall pay to Wink US $150,000 for the Release of the Added
Development Items within 30 days after test and acceptance of the Release. All
provisions in "3. Payment" of the Agreement remain in force.
<PAGE> 6
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: By:
Name: Name:
Title: Title:
<PAGE> 7
EXHIBIT A
ADDED DEVELOPMENT ITEMS
The following features shall be added on the Demonstration Software for Wink
Engine version 2.0. In addition, all the features of Demonstration Software in
the Agreement shall be supported by the Demonstration Software for Wink Studio
version 2.0 in its simulator.
Added Japanese Font Styles
Translucent Hint
Blinking Cursor in Entryfield
Character Alignment Hint in Entryfield
Hint to Map Select Button on List/Entryfield Object
Vertical Auto-Scrolling Lists
TCP/IP Support for On-line Sessions
Second Level Kanji Characters in ROM
Smooth Scroll
Improvement of Resident Icons
Improvement of Resident Icons (Set 2)
Memory Available Capacity
Memo Application
Application in Cache Command
Multiple Application Request Command
Flash Memory Table Management
Check Applications Update Flag Command
Flash Memory Table Refresh Command
IT1.x On-line
App Support
with Cache
Feature IT 1.x
VBI APP
Support with
Cache Feature
Display Resolution
Vertical Auto-Scrolling Text Object
Simple Resonse Support
<PAGE> 1
EXHIBIT 10.28
February 23, 1999
The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Attention: Kevin Mayer
Dear Kevin:
This letter summarizes the principal terms of the proposed investment by
The Walt Disney Company, directly or through a direct or indirect subsidiary
("Disney"), in Wink Communications, Inc. ("Wink" or the "Company"), a California
corporation. Upon the execution of a definitive licensing agreement pursuant to
which Wink will license to the ABC Television Network ("ABC") certain Wink
software for the purpose of creating and airing Wink enhanced broadcasting
applications (the "Master Agreement"), Wink will grant to Disney:
(a) Warrants to purchase 200,000 shares of Wink's common stock
(the "Warrants"). The Warrants will have an exercise price of $12 per
share and will be exercisable at any time between the first and fifth
anniversary of the date of issuance, subject to acceleration of vesting
upon the occurrence of certain events, including the filing of a
registration statement for an initial public offering of Wink common
stock or the execution of an agreement for the acquisition of Wink by a
third party. The Warrants will not be transferable prior to vesting, and
will contain standard provisions for warrants of this type, including
provisions permitting exercise on a "cashless" or "net exercise" basis
and providing for adjustments in the case of stock splits,
recapitalizations, other extraordinary corporate transactions and
below-market common stock issuances. Disney shall be entitled to
registration and information fights, fights of first refusal and co-
sale and the like, all on terms no less favorable to Disney than those
granted to any other holder of Wink warrants or similar equity
securities.
(b) A right to purchase, in connection with the Company's next
private equity financing, up to five percent (5%) of the outstanding
capital
<PAGE> 2
The Walt Disney Company
February 23, 1999
Page 2
stock of the Company at that time (the "Right"). Disney's purchase of
such shares shall be at the same price and on substantially the same
terms and conditions as are offered to other investors in the financing,
and Disney shall be entitled to all rights granted to such other
investors. The Right will lapse upon the earlier to occur of an initial
public offering by the Company or the termination of the Master
Agreement or a similar successor agreement. In addition, Disney's
exercise of the Right is conditioned upon ABC not being in default under
the Master Agreement at the time of exercise.
(c) A preemptive right to purchase additional equity in
connection with any subsequent private equity offering to the extent
necessary to maintain Disney's proportionate interest in the Company
after giving effect to the transactions contemplated by paragraphs (a)
and (b) above. The preemptive right would be exercisable on the same
terms and conditions offered to other purchasers.
The foregoing is subject to the obtaining by Wink of all necessary
consents and waivers by existing Wink shareholders and other holders of rights
with respect to Wink securities.
Yours very truly,
WINK COMMUNICATIONS, INC.
By:
Name:
Title: President & CEO
The foregoing is accepted and approved
as of the date first above written.
THE WALT DISNEY COMPANY
By:
Name:
Title
<PAGE> 1
EXHIBIT 10.30
[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.
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<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;
10
<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,
11
<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.
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<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
13
<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.
2
<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
5
<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.
6
<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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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.
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<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
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<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
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<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
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<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.
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<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
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<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
24
<PAGE> 58
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
25
<PAGE> 60
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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<PAGE> 64
(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
28
<PAGE> 66
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
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EXHIBIT A
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1001 MARINA VILLAGE PARKWAY
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1001 MARINA VILLAGE PARKWAY
(CONTINUED)
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EXHIBIT A
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1001 MARINA VILLAGE PARKWAY
(CONTINUED)
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EXHIBIT A
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(CONTINUED)
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EXHIBIT B
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EXHIBIT "B" INTENTIONALLY OMITTED.
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EXHIBIT C
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OUTLINE OF PROJECT
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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 10.31
================================================================================
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>
-i-
<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>
-ii-
<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.
-1-
<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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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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"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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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,
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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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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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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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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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(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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(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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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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(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,
-14-
<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.
-15-
<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
-----------------------------------
-16-
<PAGE> 1
EXHIBIT 10.32
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 10.33
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.
3
<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).
4
<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
5
<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
6
<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.
7
<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.
8
<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.
9
<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
10
<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.
11
<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
12
<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:
13
<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.
1
<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 10.34
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
-2-
<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.
-7-
<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 10.35
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.
VOID AFTER AUGUST 27, 2003
WINK COMMUNICATIONS, INC.
WARRANT TO PURCHASE
25,000 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 25,000 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 fully vested and
immediately exercisable for up to 25,000 Shares.
This Warrant may be exercised, in whole or in part, at any
time or from time to time from and after August 27, 1998 and before 5:00 p.m.,
California local time, on August 27, 2003, 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
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<PAGE> 3
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, 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:
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<PAGE> 4
(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
$9.00 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:
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<PAGE> 5
(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 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
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<PAGE> 6
(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.
(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., up to 525,000
shares of Common Stock issuable upon exercise of the warrant issued to the
Holder on June 18, 1997 and 25,000 shares of Common Stock issuable upon exercise
of this Warrant; and
(4) up to 5,564,546 shares of Common Stock
(and/or options or warrants therefor) issued after February 1, 1995 (and net of
any repurchases) to employees, officers, directors, contractors, advisors,
consultants of the Company pursuant to incentive agreements or plans approved by
the Board of Directors 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 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 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.
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<PAGE> 7
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 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.
(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 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 (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.
-7-
<PAGE> 8
(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.
(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. In this connection, the Holder understands that, in the view of the
Securities and Exchange Commission ("SEC"), the statutory
-8-
<PAGE> 9
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 Amened and Restated Investor Rights Agreement dated as of
June 18, 1997, as further amended by that certain Waiver of Rights of First
Refusal and Amendment to Investor Rights Agreement dated as of October 15, 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.
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<PAGE> 10
(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 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,
-10-
<PAGE> 11
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 further
amended by that certain Waiver of Right of First Refusal and Amendment to
Investor Rights Agreement dated as of October 15, 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.
-11-
<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 (the "Securities Act") 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.
Dated: August 27, 1998
WINK COMMUNICATIONS, INC.
By: /s/ Paritosh K. Choksi
-------------------------------------
Paritosh K. Choksi
Chief Financial Officer
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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)
Title
- ----------------------------- ---------------------------
(Date)
-13-
<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.
(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:
----------------------------------
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<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 10.37
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 HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER OR
PLEDGE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS SOLD PURSUANT TO RULE
144 OF THE ACT.
VOID AFTER FEBRUARY 25, 2004
WINK COMMUNICATIONS, INC.
WARRANT TO PURCHASE 200,000 SHARES OF COMMON STOCK
----------
THIS CERTIFIES THAT, for value received, The Walt Disney Company (the
"HOLDER") is entitled to subscribe for and purchase 200,000 shares (as adjusted
pursuant to Section 3 hereof) of fully paid and nonassessable Common Stock (the
"SHARES") of Wink Communications, Inc., a California corporation (the
"COMPANY"), at the price of $12.00 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.
1. Exercise; Payment.
(a) Time of Exercise. This Warrant may be exercised, in whole
or in part, at any time or from time to time, on any business day, from and
after February 25, 2000 and before 5:00 p.m., California local time, on February
25, 2004, for the full or any partial number of Shares for which this Warrant is
then exercisable; provided that this Warrant shall become immediately
exercisable in full upon (i) the filing of a registration statement for an
initial public offering by the Company registered under the Securities Act of
1933 (an "IPO") or (ii) the execution of a definitive agreement for (A) the
merger or consolidation of the Company into a third party pursuant to which the
Company's shareholders immediately prior to such merger or consolidation own
less than fifty percent (50%) of the outstanding voting securities of the
surviving entity, or (B) the sale of all or substantially all of the assets of
the Company.
<PAGE> 2
(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
Exhibit A duly executed) at the principal office of the Company, and by the
payment to the Company, by certified, cashier's 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, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being exercised) 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 purchasable under this Warrant
(or the portion thereof being exercised).
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
Warrant, the "Fair Market Value" of the Company's Common Stock shall mean:
A. The average of the closing ask prices of
the Company's Common Stock quoted in the NASDAQ Over-the-Counter 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 (or such lesser number of days as the
Company's stock has been so traded) prior to the date of determination of fair
market value; provided, however, if this Warrant is exercised in connection with
an IPO, the fair market value shall be the gross price to the public per share
in such offering.
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.
(c) Stock Certificates. 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 within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a
-2-
<PAGE> 3
new Warrant representing the shares with respect to which this Warrant has not
have been exercised shall be issued to the Holder.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of 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. During the period
within which 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 this Warrant.
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
$12.00 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
then current Fair Market Value of the Common Stock 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 (A) the
product of such Exercise Price multiplied by (B) 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, plus
(z) the number of shares of Common
Stock the consideration received by the Company upon such issuance would have
purchased at the then current Fair Market Value of the Common Stock, 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
-3-
<PAGE> 4
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.
(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
-4-
<PAGE> 5
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 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 the date hereof;
(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., up to
550,000 shares of Common Stock issuable upon exercise of the warrants issued to
General Electric Capital
-5-
<PAGE> 6
Corporation and shares of Common Stock issuable upon exercise of warrants issued
to CBS Corporation or its affiliates; and
(4) up to 6,589,546 shares of Common Stock
(and/or options or warrants therefor) issued after February 1, 1995 (and net of
any repurchases) to employees, officers, directors, contractors, advisors,
consultants of the Company pursuant to incentive agreements or plans approved by
the Board of Directors 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 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.
-6-
<PAGE> 7
(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 (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.
(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 pursuant hereto
and the performance of the Company's obligations hereunder have been taken prior
to and are effective as of the effective date of this Warrant.
-7-
<PAGE> 8
7. Representations and Warranties by the Holder. The Holder represents
and warrants to the Company as follows:
(a) This Warrant and the Shares issuable upon exercise thereof
are 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"). Upon
exercise of this Warrant, the Holder shall, if so requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the securities
issuable upon exercise of this Warrant are being acquired for investment and not
with a view toward distribution or resale.
(b) The Holder understands that the Warrant and the Shares
have not been registered under the Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Act pursuant to Section 4(2) thereof, that they must be held by the Holder
indefinitely, and that the Holder must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition is registered under the
Act or is exempted from such registration. 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
acquiring this Warrant and the Shares issuable upon exercise hereof and of
protecting its interests in connection herewith.
(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, AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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 THE ACT. COPIES OF THE INSTRUMENT COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO
-8-
<PAGE> 9
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
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 transferee agrees in writing to
be subject to the terms hereof to the same extent as if such transferee were the
original holder 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 Exhibit C).
10. Associated Rights. The initial Holder shall be entitled such rights
as the Company has granted to investors in the Company generally, including
registration rights, information rights and rights of first referral and
co-sale, pursuant to the Third Amended and Restated Investor Rights Agreement
dated as of June 18, 1997, as amended to date and the Third Amended and Restated
Founder's Co-Sale Agreement dated as of June 17, 1997, as amended. The Company
agrees to take promptly appropriate steps to obtain all necessary waivers from
existing investors and amend such agreements to provide the initial Holder with
such rights.
11. Rights of Shareholders. Notwithstanding Section 10 hereof, 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 or subscription rights or otherwise
-9-
<PAGE> 10
until the Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
12. Expiration of Warrant. This Warrant shall expire and shall no
longer be exercisable upon the earlier to occur of:
(a) 5:00 p.m., California local time, on February 25, 2004.
(b) The closing of a merger or consolidation of the Company
into a third party pursuant to which the Company's shareholders immediately
prior to such merger or consolidation own less than fifty percent (50%) of the
outstanding voting securities of the surviving entity;
(c) The closing of a sale of all or substantially all of the
assets of the Company; or
(d) The closing of an IPO.
13. 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 or sent by nationally recognized express courier, at such
address as may have been furnished to the Company in writing by the Holder.
14. 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.
Issued this 25th day of February, 1999.
WINK COMMUNICATIONS, INC.
By: /s/ Maggie Wilderotter
-------------------------------------
Maggie Wilderotter
Chief Executive Officer and President
-10-
<PAGE> 11
EXHIBIT A
NOTICE OF EXERCISE
TO: WINK COMMUNICATIONS, INC.
1001 Marina Village Parkway
Alameda, CA 94501
Attention: President
1. The undersigned hereby elects to exercise the attached Warrant as to
__________ shares of Common Stock of WINK COMMUNICATIONS, INC. pursuant to the
terms of such 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 Exhibit B.
--------------------------------
(Signature)
- ------------------------------ Title:
(Date) --------------------------
-11-
<PAGE> 12
EXHIBIT B
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 _____________, 1999
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 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.
(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 they are registered or such registration is not required in
the opinion of counsel for 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> 13
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 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 not
less than two years, (2) the availability of certain public information about
the Company, (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 (4) the amount
of securities being sold during any three month period not exceeding the
specified limitations stated therein.
(e) Purchaser agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by the undersigned (other than
those shares included in the registration) without the prior written consent of
the Company or the underwriters managing such initial underwritten public
offering of the Company's securities for one hundred eighty (180) days from the
effective date of such registration, and (2) Purchaser further agrees to execute
any agreement reflecting (1) above as may be requested by the underwriters at
the time of the public offering.
(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 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.
PURCHASER
By:
-------------------------------------
Title:
----------------------------------
Date:
-----------------------------------
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<PAGE> 14
EXHIBIT C
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 10.38
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
---------------------------------------
-12-
<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 10.39
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
-2-
<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.
-3-
<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.
-4-
<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.
-2-
<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
-3-
<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
- -----------------------------
-4-
<PAGE> 1
EXHIBIT 10.41
[WINK COMMUNICATIONS LETTERHEAD]
October 21, 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 on 12/2/96 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 our 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 unvested 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.
/s/ BRIAN P. DOUGHERTY
- ---------------------------------
Brian P. Dougherty
Chairman of the Board
Wink Communications
Signed and Accepted: /s/ MARY AGNES WILDEROTTER
--------------------------
Date: 10/21/96
--------------------------
<PAGE> 1
EXHIBIT 10.42
[WINK LOGO]
May 6, 1999
Mr. Howard L. Schrott
3652 Bay Road South Drive
Indianapolis, IN 46240
Dear Howard:
I know I speak for the Wink Leadership Team who have interacted with you in the
interview process that we are extremely excited about the potential of you
joining the Wink Team. On a personal note, I look forward to your leadership
and business experience as together we grow Wink to its full potential.
I am pleased to offer you the position of Chief Financial Officer with Wink
Communications, Inc., (The "Company"), at a semi-monthly salary of $7,292.00,
equivalent to $175,000 per year. You will also be eligible to participate in
our Executive Bonus Plan with a total bonus potential of $50,000 for this year.
The objectives for your 1999 bonus will be mutually set by you and I in the
first two weeks of your employment.
We will recommend to the Board of Directors that you be granted the right to
purchase, by way of a promissory note, 250,000 shares of Wink Common Stock. the
current fair market value of this stock has been set by the Board of Directors
at $8.00 per share. The vesting schedule will provide for 25% of your options
to become vested after your first year of regular, full-time employment, with
the remainder to vest at the rate of 1/48 of the original grant per month
thereafter.
To assist you with relocation from Indianapolis to the Bay Area, the Company
will provide you the following: real estate closing costs assistance on both the
sale and purchase of residences, moving expenses covered up to $15,000 (net) and
a temporary housing allowance up to $3,500 per month (net) for a maximum of
three (3) months in duration. If you voluntarily choose to leave Wink any time
during the first 18 months of employment, we will expect you to pay back these
relocation expenses to Wink on a pro-rata basis.
As a regular employee of the Company, you will become eligible to participate in
a number of Company-sponsored benefits, including medical, dental, vision, life
and LTD insurance coverage and participation in the Company's 401(k) Plan.
These benefits may be modified from time to time.
<PAGE> 2
If you accept this offer, please fax a copy of the Acceptance and Acknowledgment
to my private fax at (510) 337-2992 and return one signed original copy in the
enclosed stamped, self-addressed envelope to Nancy Frank in our People
Development Department at 1001 Marina Village Parkway, Alameda, CA 94501.
Howard, your role as Chief Financial Officer reports directly to me and will be
broad and include all financial responsibilities.
In addition, you will have direct oversight of legal, facilities and business
planning. As a member of my Executive Team I will also rely on your expertise in
helping me evaluate New Business opportunities and set strategy for the company.
We look forward to having you start your employment as soon as possible. Let's
discuss a mutually agreed upon date.
Howard, we are very excited about having you join Wink Communications. Please
feel free to contact me at 510-337-6305 if you have any additional questions.
Sincerely,
/s/ MAGGIE WILDEROTTER
- --------------------------
Maggie Wilderotter
President and CEO
* If you are terminated without cause in the first twelve months of employment,
Wink will provide six months of salary as severance.
<PAGE> 3
ACCEPTANCE AND ACKNOWLEDGEMENT
------------------------------
I have read, understand and accept the foregoing terms of employment described
in the letter dated May 6, 1999 and this Acknowledgment.
I also understand and agree that employment with the Company is "at will" and
can be terminated by me or by the Company at any time, for any reason, with or
without cause. I further understand that while my salary, job title and job
duties may change from time to time without a written modification of this
letter, such changes will not affect the validity of this agreement or my right
or the Company's right to terminate our employment relationship at will.
I further understand that the terms of this letter are the complete terms of my
employment and shall supersede any prior agreement or understanding.
Howard L. Schrott
- ---------------------------
Printed Name
/s/ HOWARD L. SCHROTT
- ---------------------------
Signature
5/6/99
- ---------------------------
Date Signed
<PAGE> 1
EXHIBIT 11.1
WINK COMMUNICATIONS, INC.
COMPUTATION OF HISTORICAL AND PRO FORMA NET LOSS PER SHARE
<TABLE>
<CAPTION>
PRO
FORMA(2)
HISTORICAL(1) ---------
------------------------------------------------ YEAR
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, ENDED MARCH 31, MARCH 31,
---------------------------- ----------------- ---------
1996 1997 1998 1998 1999 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net loss.............................. $(5,884) $(9,166) $(14,036) (2,656) $(5,497) $(5,497)
======= ======= ======== ======= ======= =======
Weighted average common shares
outstanding......................... 8,128 9,269 10,072 9,257 10,556 10,556
Unvested portion of weighted average
shares subject to repurchase
rights.............................. (1,696) (1,932) (1,118) (1,226) (650) (650)
Assumed conversion of Preferred Stock
into Common Stock on January 1,
1999, or at date of original
issuance, if later.................. -- -- -- -- -- 7,806
Weighted average common equivalent
shares outstanding(3)............... -- -- -- -- -- --
------- ------- -------- ------- ------- -------
Weighted average common and common
equivalent shares outstanding....... 6,432 7,337 8,954 8,031 9,906 17,712
======= ======= ======== ======= ======= =======
Basic and diluted net loss per
share............................... $ (0.91) $ (1.25) $ (1.57) $ (0.33) $ (0.55) $ (0.31)
======= ======= ======== ======= ======= =======
</TABLE>
- ---------------
(1) See computation of historical net loss per share in Note 1 to the
Consolidated Financial Statements.
(2) See computation of pro forma net loss per share in Note 1 to the
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
LIST OF SUBSIDIARIES
1. Wink Japan, Inc.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated February 23, 1999 relating to the consolidated financial
statements of Wink Communications, Inc., which appears in such Registration
Statement. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
PricewaterhouseCoopers LLP
San Jose, California
June 7, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND FOR THE YEAR
ENDED DECEMBER 31, 1998 AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF
MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 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-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 MAR-31-1999
<CASH> 16,892 14,294
<SECURITIES> 4,441 2,995
<RECEIVABLES> 239 102
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 21,873 17,626
<PP&E> 3,463 3,738
<DEPRECIATION> 1,701 1,940
<TOTAL-ASSETS> 23,920 19,735
<CURRENT-LIABILITIES> 4,430 3,694
<BONDS> 0 0
0 0
8 8
<COMMON> 11 11
<OTHER-SE> 19,106 15,767
<TOTAL-LIABILITY-AND-EQUITY> 23,920 19,735
<SALES> 517 339
<TOTAL-REVENUES> 517 339
<CGS> 513 90
<TOTAL-COSTS> 15,212 6,051
<OTHER-EXPENSES> 813 242
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 154 27
<INCOME-PRETAX> (14,036) (5,497)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (14,036) (5,497)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (14,036) (5,497)
<EPS-BASIC> (1.57) (0.55)
<EPS-DILUTED> (1.57) (0.55)
</TABLE>
