<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A1
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _____________
Commission file number 0-26074
------------
SPYGLASS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 37-1258139
- ---------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1240 E. Diehl Road, 4th Floor, Naperville, IL 60563 (708) 505-1010
(Address of principal executive offices, zip code, registrant's telephone
number, including area code)
1230 E. Diehl Road, Suite 304, Naperville, IL 60563
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at February 1, 1996
- --------------------------------------- -------------------------------
Common Stock (par value $.01 per share) 10,762,014
<PAGE> 2
PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
The exhibits are listed in the accompanying Index to Exhibits immediately
following the signature page.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the quarter ended December 31, 1995.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Spyglass, Inc.
--------------
Registrant
Date: May 17, 1996 /s/ Gary Vilchick
---------------------------
Gary Vilchick
Executive Vice President, Finance,
Administration and Operations and
Chief Financial Officer
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1* Amended and Restated Certificate of Incorporation
3.2* By-laws
4.1* Specimen certificate for shares of Common Stock
10.1* 1991 Stock Option Plan
10.2 1995 Stock Incentive Plan, as amended
10.3* 1995 Director Stock Option Plan
10.4* Registration Rights, Right of First Refusal and Right of Co-
Sale Agreement dated September 20, 1991
10.5** First amendment to Lease between 1230 Diehl Associated
Limited Partnership and the Registrant dated February 1, 1995. (The lease
was previously filed and is incorporated herein by reference from the
Company's Registration Statement on Form S-1 (File No. 33-92174))
10.6* Lease between Regency Farber Limited Partnership and the
Registrant dated February 21, 1995
10.7* Employment and Confidentiality Agreement between the
Registrant and Douglas P. Colbeth dated April 1, 1991
10.8* Employment and Confidentiality Agreement between the
Registrant and Michael F. Tyrrell dated April 29, 1991
10.9* Employment and Confidentiality Agreement between the
Registrant and Marcus C. Miller
10.10** Standard form of Employment and Confidentiality Agreement
10.11** Amendment No. 4 to NCSA Mosaic Software License
Agreement between the Registrant and the Board of Trustees for the University
of Illinois dated June 28, 1995. The NCSA Mosaic Software License
Agreement was previously filed and is incorporated herein by
reference from the Company's Registration Statement on Form S-1 (File No. 33-92174)***
</TABLE>
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<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.12 Amendment No. 1 to the OEM/Source License Agreement
between the Registrant and Microsoft Corporation dated
September 26, 1995. The OEM/Source License Agreement
dated December 12, 1994 was previously filed and is
incorporated herein by reference from the Company's
Registration Statement on Form S-1 (File No.
33-92174)***
10.13 Technology Cooperation Agreement, Including Amendment of
OEM/Source License Agreement between the Registrant and Microsoft
Corporation dated December 6, 1995 ***
10.14** RSA Data Security, Inc.-BSAFE/TIPEM OEM Master License
Agreement dated August 8, 1995 ***
</TABLE>
* Incorporated herein by reference from the Company's
Registration Statement on Form S-1 (file No. 33-92174)
** Incorporated herein by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1995
*** Confidential treatment previously granted from the Securities and
Exchange Commission as to certain portions
<PAGE> 1
Confidential material omitted and
filed separately with the Securities
and Exchange Commission. Asterisks
denote such omissions.
EXHIBIT 10.13
TECHNOLOGY COOPERATION AGREEMENT,
INCLUDING AMENDMENT OF OEM/SOURCE LICENSE AGREEMENT
This Technology Cooperation Agreement, Including Amendment of the OEM/Source
License Agreement (the "Agreement") is entered into and effective as of
December 6, 1995 (the "Effective Date") by and between MICROSOFT CORPORATION, a
Washington corporation located at One Microsoft Way, Redmond, WA 98052
("Microsoft") and SPYGLASS, INC., an Illinois corporation located at 1230 East
Diehl Road, Naperville, IL 60563("Spyglass").
RECITALS
Microsoft and Spyglass have previously entered into an OEM/Source License
Agreement effective December 9, 1994, as amended by the parties in Amendment #1
effective September 26, 1995, regarding the license to and distribution by
Microsoft of Spyglass' and NCSA's Mosaic browser software and related
technology (collectively, the "OEM Agreement," a copy of which is attached to
this Agreement as Exhibit A).
Under Section 2.2(d) of the OEM Agreement, until December 31, 1996, Microsoft
is restricted from distributing certain versions of Spyglass' and NCSA's Mosaic
browser software, defined in the OEM Agreement as "Licensed Software," as a
separate, standalone browser product on platforms other than Windows 95,
defined in the OEM Agreement as a "Standalone Product."
Microsoft and Spyglass wish to amend the OEM Agreement to enable Microsoft to
distribute Standalone Product(s).
Microsoft and Spyglass further wish to agree upon a framework for cooperating
in the Internet client and server technology areas.
The parties hereby agree as follows:
PART I - AMENDMENT TO OEM AGREEMENT
1.1 DEFINITIONS. Except as otherwise provided in this Section 1.1,
terms defined in the OEM Agreement shall have the same meanings
ascribed to them as used in this Agreement, including "Licensed
Software," "OEM Product," "Reseller" and "End User."
References to "Microsoft" in this Agreement, or to "OEM" in the
OEM Agreement, shall be considered to be the same. References to
"Effective Date" in this Agreement shall, unless otherwise noted, be
considered a reference to the Effective Date of this Agreement and not
the OEM Agreement. The following definitions are added or amended as
applicable:
(a) "Standalone Product" shall mean a separately packaged,
Microsoft or Microsoft-licensee labeled application product
which contains the Licensed Software and for which: (i) the
primary function is to implement features performed by the
Licensed Software; and (ii) which is principally designed to run
on the Apple Macintosh, IBM OS/2, X-Windows, and/or Microsoft
Windows NT 3.5, Windows 3.xx and Windows For Workgroups 3.xx
platforms. "Standalone Product" shall not include: (i) any
application containing the Licensed Software designed to work
solely with Windows 95 and/or Windows NT SUR; (ii) updates to
any Microsoft System Product wherein the Licensed Software is
made a part of and distributed with such Microsoft System
Product; (iii) separately distributed updates of the Licensed
Software, shipped by Microsoft to licensees of the OEM Product
to which the update relates, whether or not such OEM Product is
a Standalone Product; and (iv) copies or the right to make
copies of a
<PAGE> 2
Standalone Product distributed with client licenses for use
with Microsoft's NT Server OEM Product.
(b) "Windows 95" shall mean Microsoft's operating system
environment, and including successor, replacement and derivative
products regardless of how the products are named, or regardless of
whether such products are marketed under a Microsoft trademark.
(c) "Windows NT SUR" shall mean Microsoft's Windows NT "shell
update release," a release of Microsoft's Windows NT operating
system environment containing a user interface shell which is the
same or similar to the Windows 95 user interface, and including
successor, replacement and derivative products regardless of how the
products are named, or regardless of whether such products are
marketed under a Microsoft trademark.
(d) "Microsoft System Products" shall mean Microsoft (i) operating
system environments, including, without limitation, Windows NT,
Windows NT SUR, Windows 95, Windows 3.xx, Windows for Workgroups
3.xx; and MS-DOS; (ii) add-on or developer-related products
distributed separate from the foregoing systems products that add
functionality to or enable development for such system products; and
(iii) successor, replacement and derivative products to the
foregoing systems products regardless of how the products are named,
or regardless of whether such products are marketed under a
Microsoft trademark.
(e) "Distribute" or "Distribution" shall mean: (i) the packaged
product distribution (other than a Broadcast Copy) of a copy of a
Standalone Product by Microsoft or its Resellers; (ii) the
distribution of an electronic copy of a Standalone Product by means
of Electronic Access and whereby an End User of the copy of the
Standalone Product actually pays the royalty fee for such Electronic
Access; (iii) the distribution of a Broadcast Copy which results in
either an existing End User licensee of Microsoft (or a Microsoft
Reseller which runs an on-line or Internet access service) paying
for the copy of a Standalone Product (other than as a update for a
previously licensed copy of a Standalone Product) for more than
ninety (90) days and/or a new End User of both the copy of the
Standalone Product and the on-line or Internet access service; or
(iv) the issuance of a Site License for copies of Standalone
Product.
(f) "Electronic Access" shall mean the making available of a
downloadable electronic copy of a Standalone Product on any
electronic bulletin board, on-line service, Local or Wide Area
Network, Internet or World Wide Web site, whereby the prospective
End User is licensed to download and use a copy of the Standalone
Product for free for some period of time (an unlimited period of
time for non-commercial uses and up to ninety (90) days for
commercial uses), and whereby if such End User wishes to obtain a
fully authorized commercial license to use such copy of the
Standalone Product, such End User must make a payment to Microsoft
and/or its licensees.
(g) "Broadcast Copy" shall mean an electronic distribution of a
copy, or distribution of a packaged diskette or other fixed media
containing a copy, of a Standalone Product distributed to existing
and prospective subscribers to an on-line or Internet access service
for purposes of: licensing the Standalone Product on a free 90-day
evaluation basis similar to Electronic Access; replacing prior,
non-Standalone Product, client access software; or to use for
purposes of subscribing to and using the on-line or Internet access
service.
(h) "Site License" shall mean a commercial license for a specific
or blanket number of copies of Standalone Product issued to a
corporation, organization or other entity.
(i) "Net Receipts" shall mean the royalties, fees, and other sums
received by Microsoft from the direct or indirect Distribution of
Standalone Products, less returns, rebates, applicable freight, and
taxes.
<PAGE> 3
Confidential material omitted and
filed separately with the Securities
and Exchange Commission. Asterisks
denote such omissions.
(j) "Royalty Term" shall mean a three (3) year period commencing
upon the Effective Date and ending December 5, 1998.
1.2 AMENDMENT OF SECTION 2.2(d). Section 2.2(d) of the OEM Agreement is
hereby deleted in its entirety.
1.3 ROYALTIES FOR STANDALONE PRODUCT. For Distributions of copies
of a Standalone Product pursuant to Section 2.1(b) or 2.1(c) of the
OEM Agreement, Microsoft shall pay Spyglass a royalty as set forth in
this Section 1.3.
(a) Royalty Payments.
(1) Minimum Quarterly Purchase Commitments. Commencing
upon the Effective Date, for each calendar quarter during
the Royalty Term, Microsoft shall purchase the dollar
amount of copies of Standalone Products, at the rates set
forth in Sections 1.3(a)(2)(ii) and 1.3(a)(2)(iii),
pursuant to the purchase schedule below (the "Quarterly
Fees"). The initial Quarterly Fee for calendar Q4, 1995,
shall be ***** and shall be paid within fifteen (15) days
of the Effective Date. All other Quarterly Fees are as
follows:
<TABLE>
<CAPTION>
CALENDAR Q1 CALENDAR Q2 CALENDAR Q3 CALENDAR Q4
<S> <C> <C> <C> <C>
**** ***** ***** ***** *****
**** ***** ***** ***** *****
**** ***** ***** ***** *****
</TABLE>
Such Quarterly Fees shall be paid and delivered along
with the quarterly royalty report specified in Section
1.3(b). All Quarterly Fees specified in this Section
1.3(a)(1), totaling ***** shall be applied against and
recouped from future earned royalties. Notwithstanding the
foregoing, once the total amount of cumulative earned
royalties paid to Spyglass (with credit for Quarterly Fees
already paid) equals or exceeds
*********************************************************
(2) Earned Royalties.
(i) Royalties will be owing to Spyglass only *****
of Standalone Product which have been Distributed.
No royalties shall be due or owing for those copies
of the Standalone Product distributed by Electronic
Access or Broadcast Copy for which an End User fails
to pay a license or fails to subscribe to an on-line
or Internet access service, and neither Microsoft nor
its Licensees shall be required to police or pursue
End Users for payment of fees even if such End Users
continue to use copies of the Standalone Product
obtained by Electronic Access or Broadcast Copy
without making proper payment. Similarly, no
royalties shall be due or owing for those copies of
the Standalone Product distributed as a Broadcast
Copy where such copies are not Distributed, and
neither Microsoft nor its licensees shall be required
to police or pursue End Users for payment of fees
even if such End Users continue to use copies of the
Standalone Product obtained by Broadcast Copy without
making proper payment..
(ii) For each Standalone Product Distributed by
Microsoft, Microsoft shall pay to Spyglass a royalty
equal to **********.
(iii) For each Standalone Product Distributed by
Microsoft Resellers which package the Standalone
Product as a Reseller-labeled product, Microsoft
shall pay to Spyglass a royalty equal to
***************************************** received by
page 3 of 16
<PAGE> 4
Confidential material omitted and
filed separately with the Securities
and Exchange Commission. Asterisks
denote such omissions.
Microsoft from such Reseller for Distribution of a
Reseller-labeled Standalone Product. In the event that
Microsoft or a Microsoft Reseller Distributes a Standalone
for which the precise number of copies of Standalone
Product and/or the Net Receipts are indeterminate or
otherwise not clearly identifiable, Microsoft and Spyglass
shall negotiate in good faith the appropriate earned
royalty therefor.
(iv) No royalty shall be owed or paid with respect
to full packaged product sent to End Users which have
properly paid for their copies of the Standalone Product
obtained by Electronic Access.
(v) No royalty shall be owed or paid with respect to
Standalone Products used for demonstration purposes or
distributed for Microsoft's internal use and sale to
employee copies.
(b) Payments & Reports. Within forty five (45) days after the end of each
calendar quarter with respect to which Microsoft owes Spyglass any
royalties, Microsoft shall furnish Spyglass a statement together with
**************************************** and shall contain information
sufficient to discern how the royalty payment was computed.
*********************** to date plus Microsoft's reserve against returns
as described below.
(1) Reserve. Microsoft shall be entitled to withhold from all
royalty sums otherwise payable hereunder a reasonable reserve,
made in good faith, against anticipated returns of copies of
Standalone Products Distributed, which reserve shall not exceed
fifteen percent (15%) of all amounts due hereunder for the two
(2) most recent calendar quarters, without adjustment for
reserve, and which reserve shall be reviewed quarterly in light
of the actual returns of the preceding two (2) quarters. The
excess (short-fall), if any, of such reserve balance at the time
of such quarterly review over (under) the actual aggregate amount
of returns for such period shall be credited to (debited against)
the next payment due Spyglass hereunder.
**************************
(2) Records. Microsoft agrees to keep all proper records and books of
account and all proper entries therein relating to the
Distribution of copies of Standalone Products, and Microsoft's
Net Receipts therefrom.
(3) Audit. Spyglass may cause an audit to be made of Microsoft'
applicable records in order to verify statements rendered
hereunder. Any such audit shall be at the expense of Spyglass
unless such audit discloses an underpayment by Microsoft in
excess of five percent (5%), in which case Microsoft shall
reimburse Spyglass for such expenses; provided, however, than an
underpayment shall only apply to the extent Microsoft owes
Spyglass for earned royalties in excess of the
********************** due at the time of such audit. Any such
audit shall be conducted only by an independent certified public
accountant (other than on a contingency fee basis) after prior
written notice to Microsoft, and shall be conducted during
regular business hours at Microsoft's offices and in such a
manner as not to interfere with Microsoft's normal business
activities. In no event shall an audit with respect to any
royalty statement commence later than eighteen (18) months from
the date of the statement involved, nor shall the audits be made
hereunder more frequently than once annually, nor shall the
records supporting any statements be audited more than once. The
results of any such audit shall be subject to the nondisclosure
obligations set forth in this Agreement. In the event that
Spyglass makes any claim against Microsoft with respect to such
audit, Spyglass hereby agrees to make available to Microsoft,
upon request, its records and reports pertaining to the audit and
any such records and reports prepared for Spyglass by its
accountant(s).
Page 4 of 16
<PAGE> 5
Confidential material omitted and
filed separately with the Securities
and Exchange Commission. Asterisks
denote such omissions.
(c) Royalty Cap. Notwithstanding any other provision of this
Agreement, the maximum amount of cumulative earned royalties,
including Quarterly Fees, required to be paid by Microsoft in
********** of the Royalty Term shall not exceed ***** in each such
year. *********************** Should Microsoft reach the *****
royalty cap in the second or third year, no further royalties
whatsoever (including further Quarterly Fees) shall be due or owed
to Spyglass in that particular year of the Royalty Term.
(d) No Further Royalties. Following the Royalty Period, no
royalties whatsoever shall be due or owed to Spyglass with respect
to any distribution or Distribution of Standalone Products or for
any other exercise of Microsoft's rights under the OEM Agreement.
1.4 OTHER TERMS. Except as expressly amended by this Agreement, all other
terms of the OEM Agreement shall continue in full force and effect. In
particular, nothing in this Agreement shall be construed as altering or
limiting the existing, royalty-free rights Microsoft has with respect to
use and distribution of Licensed Software which would not be considered a
Standalone Product as defined anew in this Agreement.
PART II - TECHNOLOGY COOPERATION AGREEMENT
2.1 DEFINITIONS.
(a) "Support" shall mean to publicly and privately embrace,
sustain, develop, market and distribute products and services based
upon or using one or more Standards.
(b) "Standard" shall mean a protocol, specification, standard,
technology and/or implementation thereof.
(c) "Windows 3.xx Client" shall mean a version of Microsoft's
Internet Explorer software designed to run on Microsoft's Windows
3.xx and Windows For Workgroups 3.xx operating system software.
(d) "Spyglass Client" shall mean a Windows 3.xx version of Spyglass
most current World Wide Web browser software in Object Code
Form, excluding Spyglass' JAVA and RSA software implementations,
which incorporates the user interface and other visual aspects of
Microsoft's Internet Explorer software.
(e) "Visual Basic Scripting" shall mean Microsoft's Visual Basic
scripting language, as more fully described in Exhibit B.
(f) "SSL/PCT" shall mean Microsoft's implementation of Secured
Sockets Layer version 2.0 and Private Communication Technology, as
more fully described in Exhibit B.
(g) "STT Toolkits" shall mean Microsoft's implementation of
client/server portions of Secured Transaction Technology, as more
fully described in Exhibit B.
(h) "Microsoft Software" shall mean the "Windows 3.xx Client,"
"SSL/PCT," and "STT Toolkits."
(i) "TCP/IP Stack" shall mean Microsoft's Windows TCP/IP stack as
more fully described in Exhibit B.
Page 5 of 16
<PAGE> 6
(j) "Office Viewer Code" shall mean Microsoft's view/print versions
of Microsoft Word, Excel, and PowerPoint software, as such versions
become available, as more fully described in Exhibit B.
(k) "Microsoft Binaries" shall mean the TCP/IP Stack and the Office
Viewer Code.
(l) "Blackbird" shall mean a Microsoft Standard regarding object
linking and embedding within HTML and HTML layout features, as
more fully described in Exhibit B.
(m) "Server APIs" shall mean a Microsoft Standard regarding
interfaces for Microsoft's Internet Information Server, as more
fully described in Exhibit B.
(n) "Derivative Works," "Licensed Software," "Source Code Form" and
"Object Code Form" shall have the meaning set forth in the OEM
Agreement.
(o) "Confidential Information" shall mean confidential, non-public
information relating to either party's product plans, designs,
costs, prices and names, finances, marketing plans, business
opportunities, personnel, research development or know-how.
"Confidential Information" shall not include information that: (i)
is or becomes generally known or available by publication,
commercial use or otherwise through no fault of the receiving
party; (ii) is known and has been reduced to tangible form by the
receiving party at the time of disclosure and is not subject to
restriction; (iii) is independently developed or learned by the
receiving party; (iv) is lawfully obtained from a third party that
has the right to make such disclosure; or (v) is made generally
available by the disclosing party without restriction on disclosure.
2.2 INTENT. Microsoft and Spyglass wish to publicly and privately
cooperate extensively in the areas of client and server software
development and the promotion of Standards for the Internet and the World
Wide Web. In that respect, each party undertakes to use its reasonable
commercial efforts to undertake and successfully complete the obligations
set forth below during the term of this Agreement.
2.3 SPYGLASS OBLIGATIONS.
(a) Information Sharing. Spyglass shall disclose to Microsoft
relevant confidential information (to the extent it is able to do
so) and public information with respect to relevant Internet and
World Wide Web Standards. Spyglass will use its reasonable
commercial efforts to provide Microsoft with such information on the
same or better terms as Spyglass's other integrated software
vendors, including invitation to all Spyglass developer conferences,
and receipt of all developer information and alpha or beta versions,
in Object Code Form, of all Spyglass software products that are
relevant to the intent set forth in Section 2.2.
(b) Client Activities.
(1) Standards Support. Spyglass shall Support Internet
client technology Standards promoted by Microsoft including,
but not limited to, SSL/PCT, STT Toolkits, Office Viewers, OLE
Component Object Model, OLE Automation, OLE Controls, Visual
Basic Scripting.
(2) Delivery of Windows 3.xx Client and Other Clients.
Microsoft shall, pursuant to the OEM Agreement and this
Agreement, distribute as a browser for Windows 3.xx the
Spyglass Client. Accordingly, Spyglass shall, during the term
of this Agreement, use its reasonable commercial efforts to
deliver to Microsoft versions of the Spyglass Client.
Microsoft shall be licensed to use and distribute the Spyglass
Client as "Licensed Software" under the terms of the OEM
Agreement (subject to Section 1.3 of this Agreement and as
applied to
Page 6 of 16
<PAGE> 7
Object Code Form use and distribution only). Up to
four times yearly, Microsoft may request Spyglass to create a
new version of the Spyglass Client including Spyglass' most
recent browser technology and modified to resemble Microsoft's
own Internet Explorer software. Spyglass shall deliver each
such newly requested version with six (6) weeks of Microsoft's
request. Should Spyglass fail to deliver a version of the
Spyglass Client within such six (6) week period, then Spyglass
shall have ten (10) business days to cure such non-delivery.
Should Spyglass fail to deliver at the end of such ten (10)
day period, then Spyglass shall immediately deliver to
Microsoft the Spyglass Client in Source Code Form. In such
event, Microsoft's license to the Source Code Form of the
Spyglass Client shall be the same as that set forth for
Licensed Software in the OEM Agreement.
(3) Limited Source License to Spyglass Client. Microsoft shall be
able to use the Source Code Form of the Spyglass Client
pursuant to Section 2.1(a) of the OEM Agreement, subject to
the restrictions of the OEM Agreement (including Section
2.2(c) and the confidentiality provisions of Section 2.6) and
the restriction that Microsoft may only use the Source Code
Form of the Spyglass Client for purposes of graphical or user
interface changes for identification or branding and/or
creating localized versions of the Spyglass Client.
(c) Server Activities.
(1) Standards Support. During the term of this Agreement,
Spyglass shall Support Internet server technology Standards
promoted by Microsoft including, but not limited to, HTTP,
ISAPI, PCT, STT, SNMP MIB and HTML Management pages.
(2) UNIX Server Development. Spyglass shall Support
Internet server development on UNIX platforms, including, but
not limited to, Irix, SunOS, Solaris and HP-UX.
(3) Server Products. Spyglass shall market and distribute
UNIX server technology meeting Microsoft Internet server
technology Standards within six (6) months of Spyglass'
receipt of such Standards from Microsoft.
(d) Joint Marketing and Promotion Activities. Spyglass will
cooperate and work with Microsoft on joint marketing and promotion
activities with respect to client and server activities and
products. In particular, Spyglass shall: (i) be given an
opportunity for twice quarterly mailings to Microsoft's Internet
Solution Providers, with mailing managed by Microsoft at Spyglass'
expense; (ii) may, as reasonably agreed to by Microsoft, seed
Microsoft's sales force with free and evaluation copies of Spyglass
server products; (iii) as agreed to by Microsoft be invited to
present at major Microsoft internal sales training conferences; and
(iv) as agreed to by Microsoft, place a hyperlink on Microsoft's
World Wide Web site to and from Spyglass' World Wide Web site.
2.4 MICROSOFT OBLIGATIONS.
(a) Information Sharing. Microsoft shall disclose to Spyglass
relevant confidential information (to the extent Microsoft is able
to do so) and public information with respect to relevant Internet
and World Wide Web Standards. Microsoft will use its reasonable
efforts to provide Spyglass with such information on the same or
better terms as Microsoft's other integrated software vendors,
including invitation to all Microsoft developer conferences, and
receipt of all developer information and alpha or beta versions, in
Object Code Form, of all Microsoft software products that are
relevant to the intent set forth in Section 2.2.
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<PAGE> 8
(b) License To Microsoft Software.
(1) License Grant. Microsoft hereby grants to Spyglass a
nonexclusive, perpetual, royalty-free, fully paid up, worldwide
right and license to:
(i) Use, copy, edit, format, modify, translate and create
Derivative Works of the Source Code Form and Object Code
Form of the Microsoft Software;
(ii) Reproduce, license, rent, lease or otherwise
distribute, and have reproduced, licensed, rented, leased
or otherwise distributed, to and by third parties, in
Object Code Form only, the Microsoft Software, and any
Derivative Works thereof; and
(iii) Grant, subject to the restrictions of Section
2.4(b)(2), the rights set forth in this Section 2.4(b)(1)
in the Microsoft Software to third parties, including the
right to license such rights to further third parties.
The foregoing license grants include a license under
any current and future patents owned or licensable by Microsoft
to the extent necessary: (i) to exercise any license right
granted herein; and (ii) to combine the Microsoft Software or
Derivative Works thereof with any hardware and software.
Any Derivative Works of Microsoft Software distributed by
Spyglass pursuant to the foregoing license grant shall be implemented
to Microsoft's Standard(s), and shall interoperate with Microsoft's
implementation, for such software.
(2) License Restrictions. Spyglass may distribute Object
Code Form of the Microsoft Software pursuant to terms and
conditions commensurate with that set forth in Section 2.5 of
the OEM Agreement.
(3) Ownership. Except as expressly licensed to Spyglass in
this Agreement, Microsoft retains all right, title and interest
in and to the Microsoft Software; provided, however, that,
subject to the license grant in Section 2.4(b) and Microsoft's
ownership of the underlying Microsoft Software, Spyglass shall
own all right, title and interest in and to any Derivative
Works of the Microsoft Software created by or for Spyglass.
(4) License Back to SSL/PCT and STT Toolkits. Without
further consideration, Spyglass hereby grants to Microsoft a
nonexclusive, perpetual, royalty-free, fully paid up, worldwide
right and license to (i) use, copy, edit, format, modify,
translate and create Derivative Works of the Source Code Form
and Object Code Form of any Derivative Works of the SSL/PCT
and/or STT Toolkits created by or for Spyglass, (ii) reproduce,
license, rent, lease or otherwise distribute, and have
reproduced, licensed, rented, leased or otherwise distributed,
to and by third parties, source and/or object code versions of
such Derivative Works of the SSL/PCT and/or STT Toolkits, and
(iii) grant the rights set forth in this Section 2.4(b)(4) in
such Derivative Works of the SSL/PCT and/or STT Toolkits to
third parties, including the right to license such rights to
further third parties.
The foregoing license grant includes a license under any
current and future patents owned or licensable by Spyglass
to the extent necessary: (i) to exercise any license right
granted herein; and (ii) to combine the Derivative Works of the
Microsoft Software created by or for Spyglass with any hardware
and software.
(5) No Other Rights. Except as expressly granted in this
Agreement, Spyglass shall have no other rights in the Windows
3.xx Client. Under no circumstances will anything in this
Agreement be construed as granting to Spyglass, by implication,
estoppel or otherwise, a license to any Microsoft technology
other than the Windows 3.xx Client.
Page 8 of 16
<PAGE> 9
Confidential material omitted and
filed separately with the Securities
and Exchange Commission. Asterisks
denote such omissions.
(c) Visual Basic Scripting License. Under terms and conditions to
be separately negotiated between the parties, Microsoft shall grant
Spyglass a limited Source Code Form license to Visual Basic
Scripting. Such license shall be royalty free and be under terms
and conditions no less restrictive than Microsoft grants to other
licensees of Visual Basic Scripting.
(d) Joint Marketing and Promotion Activities. Microsoft will
cooperate and work with Spyglass on joint marketing and promotion
activities with respect to client and server activities and
products.
(e) License to Microsoft Standards.
(1) License Grant. Microsoft hereby grants to Spyglass a
nonexclusive, perpetual, royalty-free, fully paid up, worldwide
right and license to:
(i) Use, copy, edit, format, modify, translate and create
Derivative Works of the Microsoft Standards solely for
purposes of creating implementations thereof; and
(ii) Reproduce, license, rent, lease or otherwise
distribute, and have reproduced, licensed, rented, leased
or otherwise distributed, to and by third parties,
implementations or Derivative Works of the Microsoft
Standards.
(2) Ownership. Except as expressly licensed to Spyglass in
this Agreement, Microsoft retains all right, title and interest
in and to the Microsoft Standards. Spyglass shall own all
right, title and interest in and to any implementations created
using the Microsoft Standards.
(f) License to Microsoft Binaries.
(1) License Grant. Microsoft hereby grants to Spyglass a
nonexclusive, perpetual, royalty-free, fully paid up,
worldwide right and license to:
(i) Reproduce, license, rent, lease or otherwise
distribute, and have reproduced, licensed, rented, leased
or otherwise distributed, to and by third parties, in
Object Code Form only, the Microsoft Binaries; and
(ii) Grant, subject to the restrictions of Section
2.4(b)(2), the rights set forth in this Section 2.4(f)(1)
in the Microsoft Binaries to third parties, including the
right to license such rights to further third parties.
(2) License Restrictions. Spyglass may distribute the
Object Code Form of the Microsoft Binaries pursuant to terms
and conditions commensurate with that set forth in Section 2.5
of the OEM Agreement.
(3) Ownership. Except as expressly licensed to Spyglass in
this Agreement, Microsoft retains all right, title and interest
in and to the Microsoft Binaries.
(g)
*********************************************************************
********************************************************************
****************************************
2.5 PRESS RELEASES. The parties will cooperate with each other on press
releases and similar communications regarding the non-confidential
subject matter of this Agreement. The content, timing and necessity of
all such communications will be agreed upon in writing by both parties.
Page 9 of 16
<PAGE> 10
Specifically, the parties will announce, at an agreed upon public event,
Spyglass as a primary Microsoft multiplatform Internet software
developer. The basic scope of Part II of this Agreement will be
announced, including the joint cooperation and multiplatform development
of Active Basic, OLE Controls, SSL/PCT, STT and Blackbird viewing
technologies. The parties will also announce that Spyglass will create a
compatible server that will be made available through Microsoft's
distribution channel.
2.6 NONEXCLUSIVE. Nothing in this Agreement will be construed as
establishing an exclusive relationship between the parties.
PART III - GENERAL
3. CONFIDENTIALITY
3.1 Each party shall protect the other's Confidential Information from
unauthorized dissemination and use with the same degree of care that such
party uses to protect its own like information. Neither party will use
the other's Confidential Information for purposes other than those
necessary to directly further the purposes of this Agreement. Neither
party will disclose to third parties the other's Confidential Information
without the prior written consent of the other party. Except as
expressly provided in this Agreement, no ownership or license rights is
granted in any Confidential Information.
3.2 The parties' obligations of confidentiality under this Agreement shall
not be construed to limit either party's right to independently develop
or acquire products without use of the other party's Confidential
Information. Further, either party shall be free to use for any purpose
the residuals resulting from access to or work with such Confidential
Information, provided that such party shall maintain the confidentiality
of the Confidential Information as provided herein. The term "residuals"
means information in non-tangible form, which may be retained by persons
who have had access to the Confidential Information, including ideas,
concepts, know-how or techniques contained therein. Neither party shall
have any obligation to limit or restrict the assignment of such persons
or to pay royalties for any work resulting from the use of residuals.
However, the foregoing shall not be deemed to grant to either party a
license under the other party's copyrights or patents.
4. WARRANTIES
4.1 Spyglass. Spyglass warrants and represents that it has the full power
to enter into this Agreement. Since the Spyglass Client is considered
"Licensed Software" under the OEM Agreement, the warranty and indemnity
provisions of the OEM Agreement shall apply to the Spyglass Client.
4.2 Microsoft. Microsoft warrants and represents that that it has the full
power to enter into this Agreement.
5. DISCLAIMER OF OTHER WARRANTIES
5.1 EXCEPT AS PROVIDED IN THE OEM AGREEMENT, THE SPYGLASS STANDARDS AND
SPYGLASS CONFIDENTIAL INFORMATION ARE PROVIDED "AS IS" AND SPYGLASS MAKES
NO WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
Page 10 of 16
<PAGE> 11
PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT, WITH RESPECT TO THE
SPYGLASS STANDARDS AND CONFIDENTIAL INFORMATION.
5.2 THE MICROSOFT SOFTWARE, MICROSOFT BINARIES,MICROSOFT STANDARDS AND
MICROSOFT CONFIDENTIAL INFORMATION ARE PROVIDED "AS IS" AND MICROSOFT
MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE AND NONINFRINGEMENT, WITH RESPECT TO THE MICROSOFT
SOFTWARE, MICROSOFT BINARIES, MICROSOFT STANDARDS AND CONFIDENTIAL
INFORMATION.
6. INDEMNITY
6.1 Microsoft shall defend and indemnify Spyglass from and against any
damages, liabilities, costs and expenses (including reasonable attorneys'
fees) arising out of any claim that the Microsoft Software and Microsoft
Binaries infringe or violate any valid patent or copyright, or
misappropriates a trade secret of a third party, provided that Spyglass
shall: (i) provide Microsoft reasonably prompt notice in writing of any
such claim or action and permit Microsoft, through counsel mutually
acceptable to Spyglass and Microsoft, to answer and defend such claim or
action; and (ii) provide Microsoft information, assistance and authority,
at Microsoft's expense, to help Microsoft to defend such claim or action.
Microsoft will not be responsible for any settlement made by Spyglass
without Microsoft's written permission, which permission will not be
unreasonably withheld.
6.2 Microsoft shall have no liability or obligation to Spyglass under this
Section 6 with respect to any patent, copyright or trade secret
infringement or claim thereof based upon (i) use or distribution of the
Microsoft Software and/or Microsoft Binaries by Spyglass or its licensees
in combination with other devices or products where such infringement or
claim would not have occurred but for such combination, (ii)
modifications, alterations, enhancements or other Derivative Works of the
Microsoft Products and/or Microsoft Binaries not created by or for
Microsoft where such infringement or claim would not have occurred but
for such modifications, alterations, enhancements or other Derivative
Works, or (iii) any claims of infringement of a patent, copyright or
trade secret in which Spyglass has an interest. Spyglass shall indemnify
and hold Microsoft harmless from all costs, damages and expenses
(including reasonable attorneys' fees) arising from or related to any
claim enumerated in the foregoing clauses (i) through (iii); provided
that Microsoft: (a) provides Spyglass reasonably prompt notice in writing
of any such claim or action and permits Spyglass, through counsel
mutually acceptable to Spyglass and Microsoft, to answer and defend such
claim or action; and (ii) provides Spyglass information, assistance and
authority, at Spyglass' expense, to help Spyglass to defend such claim or
action.
6.3 This Section 6 states the entire liability of Microsoft with respect to
infringement of patents, copyrights and trade secrets by the Microsoft
Software and/or Microsoft Binaries or any part thereof.
7. TERMINATION
7.1 Termination By Either Party For Cause. Either party may suspend
performance and/or terminate this Agreement in part immediately upon
written notice at any time if:
(a) The other party is in material breach of any material
warranty, term, condition or covenant of this Agreement, other than
those contained in Section 3, and fails to cure that breach within
thirty (30) days after written notice thereof; or
(b) The other party is in material breach of Section 3.
Page 11 of 16
<PAGE> 12
Any termination shall specify whether it is a termination under Part I or
Part II of this Agreement. Termination under Part I of this Agreement
shall not necessarily terminate the remainder of this Agreement, nor the
OEM Agreement. Failure by Microsoft to pay the royalties specified in
Part I of this Agreement shall never be sufficient grounds for
termination of the entire OEM Agreement or termination of the license
grant under the OEM Agreement. Similarly, failure by Microsoft to pay
royalties under Part I of this Agreement shall not be grounds for
termination of the license to distribute copies of Standalone Product
under the OEM Agreement since such failure can be corrected by the
payment of damages as agreed to by the parties under the dispute
resolution procedures of Section 7.2 or a court of law.
7.2 Dispute Resolution. Prior to any termination of any part of this
Agreement or the OEM Agreement as amended by this Agreement, the parties
shall submit any dispute to structured negotiation as follows:
(a) Coverage. Other than actual or imminent material breaches of
Section 8, any dispute between the parties with respect to this
Agreement and OEM Agreement shall be submitted for structured
negotiation. The commencement, and any resolution reached as a
result, of any dispute resolution under this Section 7.2 shall be
considered Confidential Information and protected under Section 3.
(b) Structured Negotiation. Either party may invoke this
procedure by giving written notice to the other party designating a
corporate officer with appropriate authority to be its
representative in negotiations relating to the dispute. Upon
receipt of such notice, the other party shall, within five (5)
business days, designate a corporate officer with similar authority
to be its representative. The designated officers shall, following
whatever investigation each deems appropriate, but no event later
than twenty (20) business days after the original notice, enter into
discussions concerning the dispute. If within an additional thirty
(30) business days of their initial meeting, the representatives do
not resolve the dispute, either party take whatever steps it deems
necessary, at law or in equity, to protect its rights under the
Agreement and/or the OEM Agreement.
7.3 Effect of Termination on Agreement. Neither party shall be liable to the
other for damages of any sort resulting solely from terminating this
Agreement in accordance with its terms.
7.3 Survival. In the event of termination or expiration of this Agreement
for any reason, Sections 1.2, 1.3, 1.4, 3, 5, 6, 8 and 9 shall survive
termination. Unless this Agreement is terminated for Microsoft's
material breach of Section 1.3, any source license to the Spyglass Client
granted, pursuant to the terms and conditions of Section 2.3(b)(2), under
the OEM Agreement shall also survive termination. Unless this Agreement
is terminated for Spyglass' material breach of such license grants and/or
Section 3 with respect to the software in such license grants, Sections
2.4(b), 2.4(e) and 2.4(f) shall survive any termination of this
Agreement.
8. LIMITATION OF LIABILITIES
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT,
INCIDENTAL, PUNITIVE, SPECIAL OR OTHER DAMAGES WHATSOEVER, INCLUDING WITHOUT
LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS
OF BUSINESS INFORMATION, AND THE LIKE, ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE USE OF OR INABILITY TO USE THE MICROSOFT SOFTWARE, THE
MICROSOFT BINARIES, THE LICENSED SOFTWARE, THE SPYGLASS CLIENT, THE MICROSOFT
STANDARDS, OR EITHER PARTY'S CONFIDENTIAL INFORMATION, EVEN IF A PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Page 12 of 16
<PAGE> 13
EXCEPT AND ONLY TO THE EXTENT CONSTITUTING DIRECT DAMAGES OF SPYGLASS
INDEMNIFIED UNDER SECTION 6, IN NO EVENT SHALL MICROSOFT BE LIABLE TO SPYGLASS'
OEMS, LICENSEES, RESELLERS, DISTRIBUTORS AND END USERS OF THE MICROSOFT
SOFTWARE AND MICROSOFT BINARIES FOR ANY DAMAGES WHATSOEVER.
9. GENERAL
9.1 Notices. All notices and requests in connection with this Agreement
shall be deemed given as of the day they are received either by
messenger, delivery service, or in the United States of America mails,
postage prepaid, certified or registered, return receipt requested, and
addressed as follows:
<TABLE>
<S> <C>
To Spyglass: To Microsoft:
Spyglass, Inc. Microsoft Corporation
1230 East Diehl Road One Microsoft Way
Naperville, IL 60563 Redmond, WA 98052-6399
Attention: Doug Colbeth, President & CEO Attention: Brad Silverberg, Senior VP
Phone: (708) 505-1010 Phone: (206) 936-6460
Fax: (708) 505-4944 Fax: (206) 703-1360
Copy to: Mike Bevilacqua, Hale & Dorr Copy to: Law & Corporate Affairs
Fax: (617)526-5000 Fax:(206) 936-7409
</TABLE>
or to such other address as a party may designate pursuant to this notice
provision.
9.2 Independent Parties. Nothing in this Agreement shall be construed as
creating an employer-employee relationship, a partnership, or a joint
venture between the parties.
9.3 Governing Law. This Agreement shall be governed by the laws of the
State of Illinois. Should, after dispute resolution fails under Section
7.2, Spyglass bring a cause of action arising out of or related to this
Agreement, Spyglass may only file its action in the state and/or federal
courts sitting in the State of Washington. Should, after dispute
resolution fails under Section 7.2, Microsoft bring a cause of action
arising out of or related to this Agreement, Microsoft may only file its
action in the state and/or federal courts sitting in the State of
Illinois.
9.4 Attorneys' Fees. In any action or suit to enforce any right or remedy
under this Agreement or to interpret any provision of this Agreement, the
prevailing party shall be entitled to recover its costs, including
reasonable attorneys' fees.
9.5 Assignment. This Agreement shall be binding upon and inure to the
benefit of each party's respective successors and lawful assigns;
provided, however, that Spyglass may not assign this Agreement, in whole
or in part, to Apple, IBM, Sun Microsystems, Oracle, Netscape or their
successors, without the prior written approval of Microsoft.
9.6 Construction. If for any reason a court of competent jurisdiction
finds any provision of this Agreement, or portion thereof, to be
unenforceable, that provision of the Agreement will be enforced to the
maximum extent permissible so as to effect the intent of the parties, and
the remainder of this Agreement will continue in full force and effect.
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. This Agreement has been negotiated by the parties and their
respective counsel and will be interpreted fairly in accordance with its
terms and without any strict construction in favor of or against either
party.
Page 13 of 16
<PAGE> 14
9.7 Restricted Rights; Export. The Microsoft Software and Microsoft
Binaries are subject to RESTRICTED RIGHTS. Use, duplication or
disclosure by the Government is subject to restriction as set forth in
subparagraph (c)(1)(ii) of the rights in Technical Data and Computer
Software clause at DFAR 252.227-7013, or as set forth in the particular
department or agency regulations or rules which provide Microsoft
protection equivalent to or greater than the above- cited clause.
Spyglass acknowledges that the Microsoft Software and Microsoft Binaries
are subject to the export control laws and regulations of the United
States. Spyglass confirms that with respect to the Microsoft Software
and Microsoft Binaries it will not export or re-export it, directly or
indirectly, either to (i) any countries that are subject to United States
export restrictions (currently including, but not necessarily limited to,
Cuba, the Federal Republic of Yugoslavia (Serbia and Montenegro), Iran,
Iraq, Libya, North Korea, South Africa (military and police entities),
and Syria); (ii) any end user who Spyglass knows or has reason to know
will utilize the Microsoft Software and Microsoft Binaries in the design,
development or production of nuclear, chemical or biological weapons; or
(iii) any end user who has been prohibited from participating in the
United States export transactions by any federal agency of the United
States government. Spyglass further acknowledges that the Microsoft
Software and Microsoft Binaries may include technical data subject to
export and re-export restrictions imposed by United States law.
9.8 Entire Agreement. This Agreement does not constitute an offer by
Microsoft and it shall not be effective until signed by both parties.
This Agreement, together with the OEM Agreement as amended by this
Agreement, constitutes the entire agreement between the parties with
respect to the subject matter hereof and merges all prior and
contemporaneous communications. It shall not be modified except by a
written agreement dated subsequent to the date of this Agreement and
signed on behalf of Spyglass and Microsoft by their respective duly
authorized representatives.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.
MICROSOFT CORPORATION SPYGLASS
/s/ John Ludwig /s/ Michael F. Tyrrell
- ---------------------------------- -----------------------------
By (Sign) By (Sign)
John Ludwig Michael F. Tyrrell
- ---------------------------------- -----------------------------
Name (Print) Name (Print)
Vice President Executive Vice President
- ---------------------------------- -----------------------------
Title Title
12/6/95 12/6/95
- ---------------------------------- -----------------------------
Date Date
Page 14 of 16
<PAGE> 15
EXHIBIT A
COPY OF OEM AGREEMENT
Attached 14 page agreement plus 4 pages of exhibits, and
2 page Amendment #1.
1. OEM/Source License Agreement incorporated by reference to Exhibit 10.13 to
the Company's Registration Statement on Form S-1, filed with the Commission
on May 11, 1995 (File No. 33-92174)
2. Amendment No. 1 to OEM/Source License Agreement incorporated by reference
to Exhibit 10.12 for the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995 (File No. 0-26074), filed with the
Commission on February 14, 1996
Page 15 of 16
<PAGE> 16
EXHIBIT B
DESCRIPTION OF MICROSOFT TECHNOLGY
"Visual Basic Scripting"
A compatible subset of the Visual Basic language meant for scripting OLE
Controls and Java applets. Visual Basic Scripts are small programs embedded
within HTML. Deliverable includes source code to the compiler and runtime.
Source files are to be determined.
"SSL/PCT"
Source code for implementing security protocols within the Windows NT security
API. Source files are to be determined.
"STT Toolkits"
Source code and validation programs for implementing electronic commerce
protocols in Internet clients and servers. This does not include technology
for implementing protocols between servers and payment clearinghouse, such as
Visa or Mastercard. Source files are to be determined.
"TCP/IP Stack"
Binary code implementation of the TCP/IP protocol suite. The code relies upon
the NDIS3 network driver definition. Binary files are to be determined.
"Office Viewer Code"
Binary code for View/Print versions of Microsoft Word, Microsoft Excel, and
Microsoft PowerPoint. These are 16-bit versions, and will be updated to 32-bit
versions. Binary files are to be determined.
"Blackbird"
A set of specifications detailing how to render and play enhanced Internet
content as authored by Microsoft's Internet Studio product. These are a set of
additions to the existing HTML 2 and HTTP standards. They explain how to
leverage Microsoft's Object Linking and Embedding technology within HTML, as
well as new HTML features for 2-dimensional page layout.
"Server APIs"
A set of specifications including, but not limited to, Internet Information
Server API, and SNMP Server Management MIB.
Page 16 of 16
