UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND 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)
Delaware 37-1258139
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1240 E. Diehl Road, 4th Floor, Naperville, IL 60563 (630) 505-1010
(Address of principal executive offices, zip code, registrant's
telephone number, including area code)
_________________________________________________
(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 August 10, 1998
Common Stock (par value $.01
per share) 13,863,827
<PAGE>
Spyglass, Inc.
Form 10-Q
Index
Page No.
Part I. Financial Information
Item 1. Consolidated Balance Sheets
June 30, 1998 and September 30, 1997 3
Consolidated Statements of Operations
Three Months Ended June 30, 1998 and 1997
Nine Months Ended June 30, 1998 and 1997 4
Consolidated Statement of Changes in
Stockholders' Equity Nine Months Ended
June 30, 1998 5
Consolidated Statements of Cash Flows
Nine Months Ended June 30, 1998 and 1997 6
Notes to the Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
<PAGE>
<TABLE>
SPYGLASS, INC.
Consolidated Balance Sheets
(Unaudited)
June 30, September 30,
(In thousands) 1998 1997
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $22,518 $22,841
Short-term investments 0 4,929
Accounts receivable, net of allowance for doubtful
accounts of $416 and $350, respectively 5,032 3,792
Prepaid expenses and other current assets 2,606 2,195
------- -------
Total current assets 30,156 33,757
Properties and equipment, net 3,990 5,037
Long-term accounts receivable 150 250
Other assets 428 1,536
------- -------
Total Assets $34,724 $40,580
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,898 $2,162
Deferred revenues 791 1,256
Accrued compensation and related benefits 1,458 1,322
Accrued expenses and other liabilities 304 173
------ ------
Total current liabilities 4,451 4,913
------ ------
Long-term deferred revenues 100 100
Total liabilities 4,551 5,013
------ ------
Stockholders' equity:
Preferred stock, $.01 par value, 2,000,000 shares
authorized, none issued 0 0
Common stock, $.01 par value, 50,000,000 shares
authorized, 13,851,141 and 12,362,823 shares
issued and outstanding, respectively 138 124
Additional paid-in capital 43,481 40,746
Accumulated deficit (12,768) (5,303)
Treasury common stock at cost, 9,714 shares held (55) 0
Unamortized value of restricted stock issued (623) 0
------- -------
Total stockholders' equity 30,173 35,567
------- -------
Total Liabilities and Stockholders' Equity $34,724 $40,580
======= =======
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<TABLE>
SPYGLASS, INC.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, Nine Months Ended June 30,
(In thousands, except per share amounts) 1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net revenues:
Internet technology revenues $3,241 $1,179 $8,712 $15,154
Service revenues 2,135 1,037 5,924 2,962
------ ------ ------ -------
Total net revenues 5,376 2,216 14,636 18,116
Cost of revenues:
Cost of internet technology revenues 651 200 1,449 1,326
Cost of service revenues 784 477 1,973 1,017
------ ------ ------ ------
Total cost of revenues 1,435 677 3,422 2,343
------ ------ ------ ------
Gross profit 3,941 1,539 11,214 15,773
Operating expenses:
Sales and marketing 2,371 1,813 6,930 5,843
Research and development 1,676 3,714 7,630 10,074
General and administrative 1,428 2,162 4,508 5,282
Restructuring charge 0 0 0 900
One-time acquisition costs 0 0 496 0
------ ------ ------ ------
Total operating expenses 5,475 7,689 19,564 22,099
------ ------ ------ ------
Loss from operations (1,534) (6,150) (8,350) (6,326)
Other income, net 284 307 923 1,299
------ ------ ------ ------
Loss before income taxes (1,250) (5,843) (7,427) (5,027)
Income tax benefit 0 (310) 0 0
------ ------- ------ ------
Net loss ($1,250) ($5,533) ($7,427) ($5,027)
====== ====== ====== ======
Loss per common share-basic and diluted ($0.09) ($0.45) ($0.56) ($0.42)
Weighted average number of common
shares outstanding-basic and diluted 13,602 12,188 13,283 12,013
====== ====== ====== ======
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<TABLE>
SPYGLASS, INC.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
Unamortized
Additional Treasury Value of
Common Stock Paid-in Accumulated Common Stock Restricted
(In thousands, except share amounts) Shares Amount Capital Deficit Shares Amount Stock Issued
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1997 12,362,823 $124 $40,746 ($5,303) 0 $0 $0
Adjustment for acquisition accounted
for as a pooling of interests 639,246 6 204 (38)
Exercise of stock options 611,093 6 1,326
Exercise of employee stock purchase
plan stock options 37,979 0 179
Issuance of restricted stock 200,000 2 1,011 (1,013)
Amortization of deferred compensation
related to issuance of restricted stock 390
Purchase of treasury shares 9,714 (55)
Accelerated vesting of options 15
Net loss (7,427)
---------- ---- ------- -------- ----- ----- -------
Balance at June 30, 1998 13,851,141 $138 $43,481 ($12,768) 9,714 ($55) ($623)
========== ==== ======= ======= ===== ===== ======
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<TABLE>
SPYGLASS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended June 30,
(In thousands) 1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss ($7,427) ($5,027)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 2,490 1,301
Loss on disposal of fixed assets 12 0
Amortization of deferred compensation related
to issuance of restricted stock 390 0
Bad debt provision 309 858
Incentive stock option compensation 15 279
Changes in operating assets and liabilities:
Accounts and long-term receivables (1,011) 3,705
Prepaid expenses and other current assets (229) (992)
Accounts payable (267) 314
Deferred revenues (839) (628)
Accrued compensation and related benefits (549) 107
Accrued restructuring costs 0 309
Accrued expenses and other liabilities 118 110
------- ------
Net cash(used in) provided by operating activities (6,988) 336
------- ------
Cash flows from investing activities:
Cash acquired in business combination 574 0
Short-term investments, net activity 4,929 7,762
Proceeds from sale of fixed assets 82 0
Capital expenditures (376) (2,792)
------- -------
Net cash provided by investing activities 5,209 4,970
------- -------
Cash flows from financing activities:
Proceeds from exercise of stock options, including
tax related benefits 1,511 768
Purchase of treasury common stock (55) 0
------ ------
Net cash provided by financing activities 1,456 768
------- -------
Net (decrease) increase in cash and cash equivalents (323) 6,074
Cash and cash equivalents at beginning of period 22,841 16,490
------- -------
Cash and cash equivalents at end of period $22,518 $22,564
======= =======
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<PAGE>
Spyglass, Inc.
Form 10-Q
Notes to the Consolidated Financial Statements
(Unaudited)
June 30, 1998
Note 1. Basis of Presentation
The accompanying financial statements have been prepared by
the Company in accordance with generally accepted accounting
principles, although certain information and footnote
disclosures normally included in the Company's audited annual
financial statements have been condensed or omitted. In the
opinion of management, the accompanying unaudited financial
statements include all adjustments (consisting only of normal
recurring items) necessary for a fair presentation of the
Company's financial position, results of operations and cash
flows at the dates and for the periods indicated. It is
suggested that these interim financial statements be read in
connection with the audited financial statements for the fiscal
years ended September 30, 1997, 1996 and 1995 which are included
in the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1997.
The results of operations for the three and nine months
ended June 30, 1998 are not necessarily indicative of the
results of operations to be expected for the full fiscal year.
Note 2. Earnings Per Share
Earnings per common share-basic was calculated by dividing
net income by the weighted average number of common shares
outstanding during the period. Earnings per share-diluted was
calculated by dividing net income by the sum of the weighted
average number of common shares outstanding plus all common
shares that would have been outstanding if potentially dilutive
common shares had been issued. The table below reconciles the
number of shares utilized in the earnings per share calculations
for the three month periods ending June 30, 1998 and 1997,
respectively.
<TABLE>
Three Months Ended June 30,
1998 1997
<S> <C> <C>
Net loss $ (1,250) $ (5,533)
Loss per common share - basic $ (0.09) $ (0.45)
Loss per common share - diluted $ (0.09) $ (0.45)
Weighted average number of
common shares outstanding -basic 13,602 12,188
Effect of dilutive securities,
stock options - -
Weighted average number of common
shares outstanding - diluted 13,602 12,188
</TABLE>
<PAGE>
Spyglass, Inc.
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
Spyglass, Inc. (_ Spyglass_ or the _Company_ ) was
organized as an Illinois corporation in February 1990 and
reincorporated in Delaware in May 1995. Spyglass entered the
Internet market during fiscal 1994 and from fiscal 1994 through
fiscal 1996, focused its efforts on developing, marketing and
distributing Internet client and server technologies for
incorporation into a variety of Internet-based software products and
services. Since fiscal 1997, the Company has been focusing on the
development, marketing and distribution of its technologies and
services to the non-PC Internet device marketplace. In February
1998, Spyglass reorganized its business to integrate its development,
professional services and marketing resources. This change has
allowed Spyglass to target its tailored solutions to the needs of the
various vertical sectors within the Internet device market.
Spyglass provides its customers with expertise, software and
professional services that enable them to rapidly deploy cost-
effective Internet-enabled devices. The professional services
offered include custom engineering for defining, developing and
delivering complete, end-to-end project solutions. Spyglass
solutions have been integrated into a variety of products, including
but not limited to televisions, office equipment, television set-top
boxes, network computers and screen and cellular phones. In
addition, several major corporations have deployed SurfWatch, a
leading content filtering software designed to block unwanted
material from the Internet.
On November 14, 1997, the Company acquired AllPen Software
(_AllPen_ ). AllPen, located in Los Gatos, California, develops
software solutions and technologies and provides professional
services for the Internet device marketplace. This transaction was
accounted for under the pooling of interests method of accounting.
Because the effect of this transaction on prior year financial
statements is considered immaterial, such financial statements have
not been restated but rather the Company's equity accounts have been
adjusted for the effect of the pooling.
The Company licenses technology from a number of third party
vendors for incorporation into the Company's products. As a result,
the Company pays royalties to the University of Illinois with respect
to licenses of Spyglass Device Mosaic, to RSA Data Security, Inc.
with respect to licenses of the Company's technologies containing
certain RSA code and to Sun Microsystems, Inc. with respect to
licenses of the Company's technologies containing certain Java code.
These and other royalties are reflected in cost of Internet
technology revenues.
<PAGE>
On January 21, 1997, the Company amended its license arrangement
with Microsoft Corporation (_ Microsoft_) to convert Microsoft's
existing license for the Spyglass Mosaic browser technology into a
fully paid-up license in consideration of an additional $8,000,000
payment from Microsoft. Spyglass recognized the revenue from this
payment in the quarter ended March 31, 1997. Management believes
that its results of operations, without giving effect to this one-
time event, present a more accurate presentation of the Company's
ongoing business. Accordingly, the following analyses, including
amounts and percentages, exclude the $8,000,000 of revenue as well as
the associated $600,000 of cost of sales and $400,000 of sales
expense for the nine months ended June 30, 1997.
Quarter Ended June 30, 1998 Compared with Quarter End June 30, 1997
Internet technology revenues for the quarter ended June 30, 1998
increased $2,062,000 or 175%, to $3,241,000 from $1,179,000 for the
quarter ended June 30, 1997. This growth was due to an increase in
licensing the Company's technologies to device manufacturers with one
customer accounting for 78% of the increase. Internet technology
revenues from vendors of desktop software applications, excluding
SurfWatch revenues, decreased $538,000 while revenues from device
manufacturers increased $2,286,000. During the development of the
Internet device market, initial Internet technology revenues on a
given contract will typically comprise a smaller component of total
expected Internet technology revenues than was previously recorded in
licensing the desktop software applications. Internet technology
revenues derived from future royalties will not be realized until
such time as customer devices utilizing the Company's technology are
introduced commercially and the contractual royalty revenue stream
commences.
Service revenues for the quarter ended June 30, 1998, which
include both professional services revenues and revenues from
customer support agreements, increased $1,098,000, or 106%, to
$2,135,000 from $1,037,000 for the quarter ended June 30, 1997.
Revenues from professional services increased approximately
$1,283,000 for the quarter ended June 30, 1998 as compared to the
quarter ended June 30, 1997 due to an increase in the number of and
dollar value of professional service agreements. Revenues from
customer support agreements decreased $142,000 during the same time
period. The Company expects professional service revenues to
increase in absolute dollars but remain relatively constant, as a
percentage of total net revenues, during the remainder of fiscal
1998. Service revenues from customer support agreements, as a
percentage of total net revenues, are expected to decline slightly
during the same period.
Gross profit as a percentage of total net revenues was 73.3% for
the quarter ended June 30, 1998 compared to 69.4% for the quarter
ended June 30, 1997. This improvement was a result of a decrease in
professional service cost, as a percentage of both total net revenues
and service revenues, due to higher utilization of professional
service engineers. Higher royalty costs, as a percentage of Internet
technology revenues, partially offset the improved margins from
professional service revenue.
<PAGE>
Sales and marketing expenses for the quarter ended June 30,
1998 increased $558,000, or 31%, to $2,371,000 from $1,813,000 for
the quarter ended June 30, 1997, but decreased as a percentage of
total net revenues to 44.1% from 81.8%. Factors in this increase
were $235,000 in additional compensation and personnel expenses
incurred as a result of the addition of sales and marketing staff,
primarily at the Company's SurfWatch business, and the ratable
compensation expense related to the prior issuance of restricted
stock to certain officers of the Company. Additionally, during the
third quarter of fiscal 1998, the Company increased its marketing
efforts relating to the device market, specifically the television
market, which increased marketing costs by $205,000.
Research and development expenses for the quarter ended June
30, 1998 decreased $2,038,000, or 55%, to $1,676,000 from
$3,714,000 for the quarter ended June 30, 1997 and decreased
significantly as a percentage of total net revenues to 31.2% from
167.6%. The decrease in research and development expenses was due
primarily to a decrease in salary costs and related personnel
expenses of $1,652,000 as a result of the increased utilization of
development engineers in a professional services role, as reflected
by the increase in cost of service revenues, as well as an overall
reduction in engineering staff. Likewise, reduced use of outside
consultants accounted for an additional $222,000 of the decrease in
research and development expenses. The Company believes that its
direct investment in research and development is sufficient when
combined with its retained ownership in the engineering
developments of its professional service engineers.
General and administrative expenses for the quarter ended June
30, 1998 decreased $734,000, or 34%, to $1,428,000 from $2,162,000
for the quarter ended June 30, 1997 and decreased as a percentage of
total net revenues to 26.6% from 97.6%. A $567,000 reduction in bad
debt expense was the primary factor in this decrease as market
changes in the Company's desktop application business required
certain accounts receivable balances to be reserved for or written
off in the quarter ended June 30, 1997. Additionally, the Company
reduced conference, travel, meeting and consulting expenses by a
total of $258,000 in the quarter ended June 30, 1998 as higher
expenditures of these types were required in the corresponding prior
year period due to the Company's transition from the desktop market
to the Internet device market.
The Company recorded no income tax benefit for the quarter ended
June 30, 1998 and an income tax benefit of $310,000 for the quarter
ended June 30, 1997. The Company believes that it is appropriate to
defer recognition of potential tax benefits until such time when its
return to profitability can provide assurances that these tax
benefits will be realized.
Nine months Ended June 30, 1998 Compared with Nine months Ended
June 30, 1997.
Internet technology revenues for the nine months ended June
30, 1998 increased $1,558,000 or 22%, to $8,712,000 from $7,154,000
for the nine months ended June 30, 1997. This growth was due
primarily to a significant increase in revenues from the Internet
device market. Specifically, Internet technology revenues from
vendors of desktop software applications, excluding SurfWatch
software revenues, decreased $3,094,000 while Internet technology
revenues from device manufacturers increased $3,991,000, 40% of
which was from one customer.
<PAGE>
Service revenues for the nine months ended June 30, 1998, which
include both professional services revenues and revenues from
customer support agreements, increased $2,962,000, or 100%, to
$5,924,000 from $2,962,000 for the nine months ended June 30, 1997.
Professional service revenues increased approximately $3,517,000 for
the nine months ended June 30, 1998 as compared to the nine months
ended June 30, 1997 due primarily to increased revenues as a result
of the AllPen acquisition. Revenues from customer support agreements
decreased $555,000 for the nine months ended June 30, 1998 as
compared to the nine months ended June 30, 1997 due primarily to the
change in focus from the desktop market to the Internet device
market.
Gross profit as a percentage of revenues was 76.6% for the nine
months ended June 30, 1998 compared to 82.8% for the nine months
ended June 30, 1997. This reduction was primarily the result of a
change in the revenue mix as total net revenue consisted of a higher
percentage of lower margin professional services revenues. In
addition, the cost of technology revenues increased due to the use of
third party products, increasing the Company's royalty costs.
Sales and marketing expenses for the nine months ended June
30, 1998 increased $1,487,000, or 27%, to $6,930,000 from
$5,443,000 for the nine months ended June 30, 1997, but decreased
as a percentage of total net revenues to 47.3% from 53.8%. A major
factor in this increase was the addition of sales staff,
particularly at international locations, and of marketing staff,
primarily at its SurfWatch and corporate headquarters locations, as
well as the issuance of restricted stock to certain officers of the
Company, all of which accounted for $892,000 of the increase in
expense over the corresponding nine month period in the prior year.
Additionally, during the first nine months of fiscal 1998, the
Company increased its marketing efforts to include a direct
marketing campaign targeted at consumer electronic, wireless,
telecom, television and office equipment companies as well as
increased marketing campaigns relating to its SurfWatch products.
These efforts increased marketing costs by $561,000. Increases in
these expenditures were partially offset by a decrease in travel
and travel related costs of $120,000 primarily due to a change in
location and number trade shows attended as the Company's focus
shifted from the desktop market to the Internet device market.
Research and development expenses for the nine months ended
June 30, 1998 decreased $2,444,000, or 24%, to $7,630,000 from
$10,074,000 for the nine months ended June 30, 1997 and decreased
as a percentage of total net revenues to 52.1% from 99.6%. The
decrease in research and development expenses was due primarily to
a decrease in salary costs and related personnel expenses of
$2,150,000 related to the increased utilization of development
engineers in a professional services role, as reflected by the
increase in cost of service revenues, as well as an overall
reduction in engineering staff. Facility related costs decreased
$246,000 between these periods due to the consolidation of the
Company's operations in March 1997. Additionally, travel and
travel related costs decreased by $213,000 primarily due to the
consolidation of the company's facilities as well as a reduction in
staffing.
<PAGE>
General and administrative expenses for the nine months ended
June 30, 1998 decreased $774,000, or 15%, to $4,508,000 from
$5,282,000 for the nine months ended June 30, 1997 and decreased as a
percentage of total net revenues to 30.8% from 52.2%. %. A $549,000
reduction in bad debt expense was the primary factor in this
reduction as market changes in the Company's desktop application
business required certain accounts receivable balances to be reserved
for or written off in the quarter ended June 30, 1997. Additionally,
the Company reduced conference, travel, meeting and consulting
expenses by a total of $847,000 in the quarter ended June 30, 1998 as
higher expenditures of these types were required in the corresponding
prior year period due to the Company's transition from the desktop
market to the Internet device market. The decreases in these types
of expenses were partially offset by an increase in salary and
related personnel expenses of $749,000 due to both the enhancement
of the Company's general and administrative functions and the
issuance of restricted stock to certain officers of the Company.
A pre-tax charge of $900,000 ($558,000 or $0.05 per share-basic
after-tax for the three months ended June 30, 1997) was recorded in
the second quarter of fiscal 1997 and consisted primarily of
severance and related personnel costs of $730,000 and lease
cancellation and other exit costs of $170,000 related to the
consolidation of the Company's research and development facilities.
In connection with the acquisition of AllPen Software on
November 14, 1997, the Company recorded, in the first quarter of
1998, a charge to operating expenses of $496,000 or $0.04 per share
for direct acquisition related costs. These costs consisted
primarily of professional fees.
The Company recorded no income tax benefit for the nine months
ended June 30, 1998 and 1997. The Company believes that it is
appropriate to defer recognition of potential tax benefits until such
time when its return to profitability can provide assurances that
these tax benefits will be realized.
Liquidity and Capital Resources
As of June 30, 1998, the Company had no debt and had cash and
cash equivalents of $22,518,000 and working capital of $25,705,000.
The Company's operating activities used cash of $6,988,000 and
provided cash of $336,000 for the nine months ended June 30, 1998 and
1997, respectively. The Company received a one-time payment of
$7,500,000 in cash from Microsoft during 1997 in connection with the
Company's license arrangement, as discussed in the Overview section.
The Company's net accounts receivable balance increased to
$5,032,000 at June 30, 1998 from $3,792,000 at September 30, 1997.
This increase was primarily due to an increase in revenues.
The Company's capital expenditures totaled $376,000 and
$2,792,000 for the nine months ended June 30, 1998 and 1997,
respectively. During the nine months ended June 30, 1997 the Company
made significant enhancements to its internal computer systems.
<PAGE>
The Company believes that its current cash and cash equivalents,
together with funds expected to be generated from operations, will be
sufficient to finance the Company's operations through at least the
twelve-month period ending June 30, 1999.
Future Operating Results
This Form 10-Q contains a number of forward-looking
statements. Any statements contained herein (including without
limitation statements to the effect that the Company or its
management _ believes_, _expects_ , _anticipates_ , _ plans_ and
similar expressions) that are not statements of historical fact
should be considered forward-looking statements. There are a
number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-
looking statements. These factors include, without limitation,
those set forth below.
During fiscal 1997, the Company announced an increased
strategic focus on the Internet device market. The Company is
focused on the development, marketing and distribution of its
technologies and services to the non-PC Internet device
marketplace. Because this is a new and undeveloped market, there
can be no assurance as to the extent of the demand for product
offerings similar to those of the Company, or the extent to which
the Company will be successful in penetrating this market. The
Company expects moderate revenue growth during the remainder of
fiscal 1998 as the Company continues to direct its business
strategy to the Internet device market. The Company expects gross
profit as a percentage of revenues to remain relatively constant
throughout the remainder of fiscal 1998. Research and development,
general and administrative costs and sales and marketing expenses,
as a percentage of revenues, are expected to decline throughout the
remainder of fiscal 1998.
The Company derived approximately 34% and 14% of its revenues
for the three and nine months ended June 30, 1998, respectively, from
one customer. As the Internet device market develops, the Company
expects to continue to derive a significant portion of its revenues
from a relatively limited number of customers. Although the Company
expects that its reliance on any particular customer will decline as
the Internet device market develops and its customer base expands,
the failure of the Company to enter into a sufficient number of
licensing agreements or sustain revenues from major customers during
a particular period could have a material adverse effect on the
Company's future operating results.
The Company's future results of operations will also be
largely dependent upon a number of factors relating to development
and acceptance of the Internet as a commercial market. In
particular, commercial use of the Internet continues to be
constrained by the need for reliable processes such as security
measures for electronic commerce as well as the need for regularly
available customer support and a supporting infrastructure
providing widespread Internet accessibility and high-speed
communications capabilities. In addition, the market for Internet
software products is characterized by rapidly changing technology,
evolving industry standards and customer demands, and frequent
product introductions and enhancements, which make it difficult to
predict whether any initial commercial acceptance of the Company's
products can be sustained over a period of time.
<PAGE>
The market for Internet technologies and services is extremely
competitive, and competition is likely to increase in the future.
The Company currently faces competition from other Internet device
technology and software vendors such as Oracle, Sun Microsystems,
Microsoft, on-line service companies, Internet access providers and
networking software companies. In licensing its Internet
technologies, the Company considers a significant source of
competition to be the prospect company's internal software
development resources.
The Company licenses its products to a variety of companies
such as real-time operating system vendors, consumer and industrial
device manufacturers, regional bell operating companies, Internet
service providers and internetworking hardware providers that
incorporate the Company's technology into their products and
services. The success of the Company is therefore dependent in
large part on the performance of its customers, which is outside of
the Company's control.
The Company from time to time receives notices alleging that
its products infringe third party proprietary rights. For example,
Spyglass has received a notice from Elk Industries Inc. alleging
that one or more products of Spyglass infringe a patent owned by
Elk Industries Inc. Patent and similar litigation frequently is
complex and expensive and its outcome can be difficult to predict.
If, as a result of proprietary rights infringements by any of the
Company's products, the Company is required to discontinue sales of
certain products, eliminate certain features on its products, or
pay royalties to another party, the Company's future operating
results could be materially adversely affected.
The Company's quarterly operating results have varied and they
may continue to vary significantly depending on factors such as the
timing of significant license agreements, the terms of the
Company's licensing arrangements with its customers, the timing and
success of product introductions by its customers and the timing of
new product introductions and upgrades by the Company and its
competitors. The Company typically structures its license
agreements with customers to require an initial payment of a source
code access fee or binary access fee and, at times, initial
commitments for a minimum number of licenses. License revenues for
those minimum commitments are recognized as the committed licenses
are purchased. Additional license revenues from a customer will
not be earned unless and until the initial committed levels are
exceeded. The Company's revenues in any quarter will depend in
significant part on its ability to sell source and binary fees as
well as licenses to new customers in that quarter, the timing of
product deployment by its customers and the ability to sell
professional services. The Company typically structures its
professional service agreements with customers to recognize revenue
on the percentage of completion method of accounting. The
Company's expense levels are based in part on expectations of
future revenue levels and any shortfall in expected revenue could
therefore result in a disproportionate decrease in the Company's
net income in any given fiscal period.
<PAGE>
Impact of Year 2000
The Company has assembled a cross department task force (_ task
force_) to address the Year 2000 issue. The task force is
addressing Spyglass products, third party software and products used
by the Company and software utilized by third parties that perform
services for the Company. The task force is in the assessment phase
of its overall plan. The assessment phase has included a review of
Spyglass products and, as a result of these initial assessments, the
Company has determined that all Spyglass products and technologies
currently sold are Year 2000 compliant or will be so certified as new
versions and utilities are released. In addition, as part of the
assessment phase, the task force is diligently investigating other
associated Year 2000 issues such as ensuring that third party
software used internally and other products and services supplied to
Spyglass are ready to continue operation without interruption. The
task force anticipates completion of its assessment efforts during
the summer of 1998.
The next phase in the task force's efforts will be to plan and
conduct testing to confirm Year 2000 compliance on products and
services in which Year 2000 compliance is in question. For those
products and services that fail testing or are assessed as non-
compliant, Spyglass will implement any required software
modifications and/or replacements of those products so that such
products will function properly with respect to dates in the year
2000. The task force has a January 1999 target date to complete its
testing efforts. Upon completion of its testing phase, the task
force will determine a time period during which to implement any
necessary changes.
As of June 30, 1998, the only cost incurred by the Company has been
the value of the time, based on standard hourly rates for employees,
spent by the task force, which approximates $50,000. The Company
estimates it will incur approximately $250,000 in future expenses to
ensure all systems will function properly with respect to dates in
the year 2000. These expenses are not expected to have a material
impact on the financial position, cash flow or operations of the
Company.
<PAGE>
Spyglass, Inc.
Form 10-Q
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
None.
<PAGE>
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: August 13, 1998 /s/ Gary Vilchick
Gary Vilchick
Executive Vice President, Finance,
Administration and Operations and Chief
Financial Officer
<PAGE>
INDEX TO EXHIBITS
Sequential
Page
Exhibit No. Description Number
10.27+ Source Code License and Distribution Agreement between
the Company and Motorola, Inc. dated as of
June 25, 1998
27 Financial Data Schedule
+ - Confidential treatment requested as to certain portions, which
portions are omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Spyglass, Inc.
(Source Code) LICENSE AND DISTRIBUTION AGREEMENT
Spyglass, Inc. has appointed the entity named below as the Licensee
("Licensee") on the terms and conditions set forth in the attached
License and Distribution Agreement:
Licensee: Motorola, Inc.
6501 William Cannon Drive West
Austin, Texas 78735
Main Phone: (512) 895-2931
Territory: Worldwide
Term: Perpetual
EXHIBITS
Exhibit A: Deliverables
Exhibit B: License Fee Schedule
Exhibit C: Technical Support Services
Exhibit D: Licensee Products
Exhibit E: Professional Services Agreement
<PAGE>
Spyglass, Inc.
LICENSE AND DISTRIBUTION AGREEMENT
This Source Code License and Distribution Agreement (the "Agreement")
effective as of the last date of signature hereto (the "Agreement
Date") between Spyglass, Inc., a Delaware corporation with its
principal offices at 1240 East Diehl Road, Naperville, IL 60563
("Spyglass") and the party identified as Licensee on the Cover Page
hereof ("Licensee"),
WHEREAS, pursuant to an agreement between the University of Illinois
(the "University") and Spyglass, the University has granted Spyglass
the right to modify, distribute and sublicense certain computer
software known as "NCSA Mosaic[Trademark]" , and the University has
granted Spyglass the right to use certain trademarks, including NCSA
Mosaic[Trademark], Mosaic[Trademark] and the Spinning Globe[Trademark]
progress indicator logo (collectively, the "University Trademarks"),
and
WHEREAS, Spyglass has developed and owns certain computer software
derivative works based on NCSA Mosaic ("Spyglass Device
Mosaic[Trademark]"), and
WHEREAS, Licensee desires to develop and/or distribute software
products based on Spyglass Device Mosaic, and Spyglass is willing to
grant to Licensee a non-exclusive right to develop and distribute such
software products on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants herein contained, the parties hereby agree as follows:
1. Definitions.
1.1 "End User" means the ultimate user of the Licensed Software who
has obtained such Licensed Software pursuant to an End User Sublicense
Agreement.
1.2 "End User Sublicense Agreement" means a sublicense agreement
granting an End User the right to use the Licensed Software internally
but not to further distribute or sublicense such Licensed Software,
which agreement meets the requirements of Section_2.4(a).
1.3 "Intellectual Property" means all patent, copyright, trademark,
trade secret and other industrial and intellectual property rights.
1.4 "Licensee Product" means the product or products set forth in
Exhibit D that are developed and distributed by the Licensee using,
incorporating or bundled with the Licensed Software and derivative
works thereof.
1.5 "Licensed Software" means the standard non-customized code base of
the software described in Exhibit A attached hereto, and any derivative
works thereof (created by or for Spyglass or created by or for
Licensee).
1.6 "Licensed Spyglass Trademarks" means the University Trademarks
listed in Exhibit A and the trademarks owned by Spyglass listed in
Exhibit A.
1.7 "Object Code Form" means a form of software code resulting from
the translation or processing of Source Code Form by a computer into
machine language or intermediate code, which thus is in a form that
would not be convenient to human understanding of the program logic,
but which is appropriate for execution or interpretation by a computer
1.8 "Reseller" means any dealer, reseller, distributor or other entity
authorized by Licensee pursuant to a Reseller Sublicense Agreement,
meeting the requirements of Section_2.4(b), to distribute (but not
modify) the Licensed Software as part of Licensee Products to End Users
or other intermediate parties, such as dealers, in Licensee's normal
distribution chain to End Users.
1.9 "Source Code Form" means a form in which a computer program's
logic is easily deduced by a human being with skill in the art, such as
a printed listing of the program or a form from which a printed listing
can be easily generated.
1.10 "Source Documentation" means the literature, programmer's notes
and other materials that are provided by Spyglass to the Licensee that
specify or describe the functions, characteristics, performance,
structure, sequence, organization and operation of the Licensed
Software, and any corrections, modifications, enhancements, extensions
or revisions thereto provided by Spyglass during the term of this
Agreement.
1.11 "Spyglass Software" means those software programs (including
modifications and enhancements) included in the Licensed Software which
were developed and are owned by Spyglass.
1.12 "Sublicensee" means an original equipment manufacturer or other
entity authorized by Licensee, pursuant to a Sublicensee Agreement
meeting the requirements of Section 2.4(c), to: (i) distribute the
Licensed Software as incorporated into the Licensee Product under a
private-label (i.e. under a brand name other than Licensee's), and/or
(ii) distribute the Licensed Software as incorporated into the Licensee
Product adding functionality or value enhancement thereto.
1.13 "Territory" means the territory or territories set forth on the
Cover Page hereto.
1.14 "Updates" means a revision of the Licensed Software and/or Source
Documentation or any components thereof that includes corrections and
minor modifications to existing features and which shall be designated
by a new version number which has changed from the prior number two
places to the right of the decimal point (e.g. Version 2.02 to Version
2.03), or any additional alphanumeric character beyond (e.g. Version
2.19 to 2.19r).
1.15 "Upgrades" means a revision of the Licensed Software and/or Source
Documentation or any components thereof that includes new features,
functionality or enhanced performance to the Licensed Software and
which shall be designated by a new version number to the left of the
decimal point (e.g. Version 2.03 to Version 3.00) or by a new version
number one place to the right of the decimal point (e.g. Version 2.1 to
2.2).
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
2. Licenses.
2.1 Development License.
(a) Subject to the terms and conditions contained herein, Spyglass
grants the Licensee, and the Licensee accepts, a non-exclusive, non-
transferable, perpetual, irrevocable (subject to Section 7.2) right and
license, under all Intellectual Property rights of Spyglass, to use,
copy, modify, have modified, prepare, and have prepared, derivative
works of the Licensed Software in Source Code Form and Object Code
Form, in the Territory, for the sole purpose of incorporating the
Licensed Software and derivative works thereof into or bundling with
the Licensee Product identified in Exhibit D.
(b) Subject to the terms and conditions contained herein, Spyglass
grants the Licensee, and the Licensee accepts, a non-exclusive, non-
transferable, perpetual, irrevocable (subject to Section 7.2) right and
license, under all Intellectual Property rights of Spyglass, to use,
copy, modify, have modified, prepare, and have prepared, derivative
works of the [**] functionality on [**] in Source Code
Form and Object Code Form, in the Territory. For purposes of this
specific development license grant, the [**] functionality shall not be
included in the Definition of "Licensed Software" herein and Sections
9, 10 and 11 shall not apply to such functionality.
2.2 Distribution License.
(a) Subject to the terms and conditions contained herein, Spyglass
grants the Licensee, and the Licensee accepts, a non-exclusive, non-
transferable, perpetual, irrevocable (subject to Section 7.2) right and
license, under all Intellectual Property rights of Spyglass, in the
Territory to copy and distribute copies of the Licensed Software in
Object Code Form only and only as incorporated into or bundled with the
Licensee Products to End Users, Resellers and Sublicensees, subject to
the requirements set forth in Section_2.4 below. Licensee, its
Resellers and Sublicensees are granted no right hereunder to distribute
the Licensed Software on a standalone basis.
(b) Subject to the terms and conditions contained herein, Spyglass
grants the Licensee, and the Licensee accepts, a non-exclusive, non-
transferable, perpetual, irrevocable (subject to Section 7.2) fully
paid-up, royalty free right and license, under all Intellectual
Property rights of Spyglass, in the Territory, to distribute and have
distributed the [**] functionality on [**] due Spyglass,
provided such distribution is separate and apart from, and not to be
used in conjunction or connection with, the Licensed Software or
components thereof. For purposes of this specific distribution license
grant, the [**] functionality shall not be included in the Definition
of "Licensed Software" herein and Sections 9, 10 and 11 shall not apply
to such functionality.
2.3 Source Documentation. Subject to the terms and conditions
contained herein, Spyglass grants the Licensee, and the Licensee
accepts, a non-exclusive, non-transferable right and license to use the
Source Documentation internally and solely for the development purposes
set forth in Section 2.1 above. No right is being granted to Licensee
hereunder to distribute the Source Documentation to any third parties.
2.4 Sublicense Agreement Requirements.
(a) End User Sublicense Agreements. The Licensed Software and
derivative works thereof shall be distributed to each End User under a
Sublicense Agreement entered into by such End User which may be a
shrinkwrap or break-the-seal agreement which shall include the material
substance of the following terms and conditions:
(1) use of the Licensed Software is for End User's own purposes;
(2) End User may not copy the Licensed Software in whole or in part,
except as permitted under applicable law, and then only with the
inclusion of all copyright, proprietary and other notices;
(3) End User may not decompile, disassemble or otherwise reverse
engineer the Licensed Software; and
(4) only one End User may use such Licensed Software on one
Licensee Product at a time.
(b) Reseller Sublicense Agreements. Each Reseller shall execute a
Reseller Sublicense Agreement which shall include the material
substance of the following terms and conditions pursuant to which it
shall agree,
(1) Reseller will directly distribute copies of the Licensed Software
or derivative works thereof in the Territory in Object Code Form only,
to End Users who are bound by End User Sublicense Agreements and are
not granted the rights to copy or distribute such Software directly or
indirectly;
(2) Reseller will not copy or reproduce the Licensed Software or
derivative works thereof;
(3) Reseller will not separate the Licensed Software from the Licensee
Product or decompile, reverse engineer or otherwise inspect the
functionality or derive a Source Code Form version of the Licensed
Software or any derivatives, or enhance, modify or prepare derivative
works of the Licensed Software and its derivatives; and
(c) Sublicensee Agreement Requirements. Each Sublicensee shall execute
a Sublicensee Agreement which shall include the material substance of
the following terms and conditions pursuant to which it shall agree,
(1) Sublicensee will not separate the Licensed Software from the
Licensee Product;
(2) Sublicensee will reproduce and directly distribute copies of the
Licensed Software in Object Code Form only and only as incorporated
into the Licensee Product, to End Users who are bound by End User
Sublicense Agreements and are not granted the rights to copy or
distribute such Software directly or indirectly;
(3) Sublicensee will not decompile, reverse engineer or otherwise
inspect the functionality or derive a Source Code Form version of the
Licensed Software or any derivatives, or enhance, modify or prepare
derivative works of the Licensed Software; and
<PAGE>
(d) U.S. Government Agencies. Licensee, its Resellers and
Sublicensees who provide Licensed Software or documentation to a unit
or agency of the United States Government shall include any necessary
provision in its contract with such unit or agency to limit the rights
of the Government in such Licensed Software or documentation to the
terms and conditions set forth in this License Agreement. Such
provision shall note that the Licensed Software or documentation is
"commercial computer software" or "commercial computer software
documentation" and that the Government's rights therein are limited by
the terms of this License Agreement, pursuant to FAR 12.212(a) and/or
DFARS 227.7202-1(a), as applicable.
3. Delivery of Licensed Products. Spyglass shall provide Licensee
with one (1) copy of the deliverables set forth in Exhibit A in
accordance with the delivery dates set forth in Exhibit A.
4. Ownership of Software.
4.1 Licensed Products. Spyglass and its licensors shall retain all
their respective rights, title and interest in the Licensed Software,
excluding modifications or derivative works thereof made by Licensee,
subject to Spyglass' underlying rights. Spyglass shall retain all
rights, title and interest in all modifications and derivative works
thereof made by Spyglass. Except for the rights and licenses granted
to Licensee herein, Licensee shall not take any action inconsistent
with such title and ownership. Licensee shall not have any ownership
interest in any element, segment or component of the Licensed Software
incorporated into the Licensee Products.
4.2 Licensee Developments. The Licensee shall own all right, title and
interest in any modifications or derivative works of the Licensed
Software made by the Licensee during the term of this Agreement,
subject to Spyglass' and its licensors underlying rights as set forth
in Section 4.1 above.
4.3 Intellectual Property Protection. The Licensee shall not alter or
delete any printed or on-screen copyright notices and/or other required
attributions contained on or in copies of Licensed Software or any
derivative works. Furthermore, Licensee agrees to provide Spyglass an
example of such "splash screens", "about boxes", and other
reproductions of all notices, copyrights, trademarks, and logos prior
to distribution of the Licensee Product for approval the first time the
Licensee reproduces such items and any time the Licensee substantially
changes such items;
4.4 Trademark License. Licensee has no obligation to use any of the
Licensed Spyglass Trademarks. However, any Licensee Products that do
use the Licensed Spyglass Trademarks shall be accompanied, where
reasonable and appropriate, by a proprietary notice consisting of the
following elements:
a. For the University Trademarks, the statement "[insert trademark(s)]
is a proprietary trademark(s) of the University of Illinois, and is
licensed to [Licensee] by Spyglass, Inc.", or, in the case of other
Licensed Spyglass Trademarks, the statement ""[insert trademark(s)] is
a proprietary trademark(s) of Spyglass, Inc., and is licensed to
[Licensee] by Spyglass, Inc."
b. Licensee will include the "[Registered Trademark]" symbol after the
first prominent use of the Trademark in the Licensee Product.
If Licensee elects in its sole discretion to use any of the Licensed
Spyglass Trademarks, the Licensee will also perform the following:
(i) the Licensee shall reproduce trademark (if a University Trademark
is used) notices of the University of Illinois and Spyglass, Inc. on
the "splash screen" (if any) or in the same location where the Licensee
reproduces its own trademark notices;
(ii) the Licensee may, at its option, utilize the Spinning GlobeO logo
as the progress indicator;
(iii) License. Spyglass hereby grants to Licensee a nonexclusive,
royalty-free license to use the Licensed Spyglass Trademarks in the
Territory to designate and promote the Licensee Products; and
(iv) Quality Standards. Licensee agrees in order to ensure that the
Licensee Products distributed under the Licensed Spyglass Trademarks
comply with the consistent quality standards of the University and
Spyglass, all such products distributed by or for Licensee which bear a
Licensed Spyglass Trademark shall conform to those standards which are
established from time to time by the Worldwide Web Consortium at the
Massachusetts Institute of Technology ("MIT") and the Internet
Engineering Task Force ("IETF") or other standards adopted by the
University of Illinois or Spyglass. Licensee shall cause each release
of such product(s) to comply with such standards or remove the
Trademark(s) from any release which does not comply with such
standards.
5. Payments.
5.1 Technology Access Fee - Source Code. Upon the Agreement Date,
Licensee shall pay Spyglass the "Technology Access Fee" as set forth in
Exhibit B for the development license granted to Licensee with respect
to each Licensee Product set forth in Exhibit D. Spyglass' then-
current Technology Access Fee shall become due for each additional
Licensee Product added to Exhibit D.
5.2 Initial Purchase Commitment. Upon the Agreement Date, Licensee
shall purchase the number of copies of the Licensed Software ("Initial
Purchase Commitment") set forth in Exhibit B at the Per Copy Fees
stated for such Initial Purchase Commitment.
5.3 Additional License Fees. Upon Licensee exhausting the number of
copies of the Licensed Software acquired in the Initial Purchase
Commitment, Licensee shall pay Spyglass on a calendar quarterly basis,
concurrent with the Licensee Report set forth in Section 5.4, a "Per
Copy Fee" equivalent to the Per Copy Fee which, in Exhibit B,
corresponds to the accumulated number of copies of the Licensed
Software, and derivative works thereof, distributed by Licensee, its
Resellers and Sublicensees ("Additional License Fees").
5.4 Licensee Report. Within thirty (30) days following the close of
each calendar quarter, Licensee shall furnish to Spyglass statements
accounting for (i) all copies of the Licensed Software and derivative
works thereof, distributed in such quarter, (ii) an accounting of all
fees due to Spyglass for such quarter, (iii) the names and locations of
all Resellers and Sublicensees authorized by Licensee in such quarter
to distribute the Licensed Software and derivative works thereof in
such quarter. Licensee Reports shall be due quarterly regardless of
the information, or lack thereof, to report.
5.5 Payment Terms. Payment of the Technology Access Fee and the
Initial Purchase Commitment are due as stated in Exhibit B. All other
payments due under this Agreement shall be payable within thirty (30)
days after the end of each calendar quarter, unless otherwise noted in
Exhibit B. All payments (accompanied by the Licensee Report identified
in Section 5.4) shall be made in U.S. dollars, either by check mailed
to Spyglass' principal office identified above or by wire transfer to
Harris Bank, 503 N. Washington Street, Naperville, IL 60566, ABA
071922696, Spyglass account number: 9131093. Any amount not paid when
due shall bear a late payment charge, until paid, at the rate of 1.5%
per month or, if lesser, the maximum amount permitted by law. Licensee
shall reimburse Spyglass for all reasonable costs (including attorneys'
fees) incurred by Spyglass in collecting late payments from Licensee.
5.6 Licensee's Accounting Information. Upon execution of this
Agreement, Licensee shall complete the Section below and return a
purchase order along with the executed copy of this Agreement. If
Licensee does not use purchase orders (or other similar items) in its
payment procurement system, Licensee shall note such fact in the space
below (i.e. "NA"); and in such case, Licensee need not return a
purchase order.
Accounts Payable Contact:
Address:
Phone Number:
E-mail Address:
Purchase Order Number:
5.7 Independent Audit. Spyglass shall have the right to have an
independent auditor acceptable to both parties (which acceptance will
not be unreasonably withheld) inspect such books and records of
Licensee as are necessary to verify the accuracy of the Licensee
Reports. Any such inspection shall be conducted in a manner which is
not unreasonably disruptive of Licensee's normal business operations.
Licensee shall make its books, records, personnel and office available
for such inspection during normal business hours at Licensee's
principal place of business. Spyglass agrees to provide Licensee with
reasonable advance written notice of its desire to perform an
inspection. Any such audit shall be at the expense of Spyglass, unless
such audit discloses an underpayment by the Licensee in excess of five
percent (5%), in which case Licensee shall reimburse Spyglass for such
expenses. If the audit discloses any underpayment by Licensee,
Licensee shall, within thirty (30) days)make payment to Spyglass of
such underpayment together with the interest provided in Section 5.5.
Furthermore, Licensee shall be required to pass through to its
Resellers and Sublicensees (and such Resellers and Sublicensees must
accept) the equivalent terms of this Section 5.7, therefore allowing
Licensee, or Spyglass, to audit such Resellers and Sublicensees,
subject to the terms of the above provision.
5.8 Taxes. All payments required by this Agreement are exclusive of
all federal, state, local and foreign taxes, levies or assessments.
Licensee agrees to bear and be responsible for the payment of such
taxes, levies and assessments imposed upon Licensee for Licensed
Software and Services used, copied, distributed or licensed by Licensee
hereunder, excluding any income tax imposed on Spyglass by a
governmental entity of the United States. Payments by Licensee to
Spyglass for Licensed Software and Technical Support Services under
this Agreement shall be reduced only to the extent that any taxes,
levies or assessments paid by Licensee to a governmental entity are
refundable to Spyglass, and provided Licensee secures and delivers to
Spyglass all documents, receipts and governmental entity approvals
relating to the payment of such tax, levy or assessment sufficient to
enable Spyglass to claim and receive a full refund to such taxes,
levies or assessments.
6. Support.
6.1 Support. Spyglass shall offer Technical Support Services to
Licensee for additional payments pursuant to the terms set forth in
Exhibit C ("Technical Support Services"). Any revisions to the
Licensed Software delivered by Spyglass to Licensee pursuant to an
agreement for Technical Support Services shall be treated for all
purposes under this Agreement as Licensed Software and all Intellectual
Property rights therein shall be retained by Spyglass.
6.2 No Obligation to Update. If Spyglass elects to make Updates or
Upgrades to the Licensed Software available to Licensee, such Updates
or Upgrades shall be provided solely in accordance with terms,
conditions and pricing addressed under a separately executed agreement.
7. Term and Termination.
7.1 This Agreement shall commence on the Agreement Date and shall
continue for the Term set forth on the Cover Page hereto, unless
earlier terminated pursuant to Section_7.2.
7.2 This Agreement may be terminated, prior to the expiration of its
term:
(a) By either party in the event the other party materially breaches a
provision of this Agreement and the breaching party fails to cure such
breach within thirty (30) days of the receipt of notice of such breach
from the non-breaching party. For purposes of this Agreement, a
material breach by Licensee is a breach of the use grant, payment terms
and/or confidentiality provisions of this Agreement;
(b) By either party immediately in the event any assignment is made by
the other party for the benefit of creditors, or if a receiver, trustee
in bankruptcy or similar officer shall be appointed to take charge of
any or all of the other party's property, or if the other party files a
voluntary petition under federal bankruptcy laws or similar state
statutes or such a petition is filed against the other party and is not
dismissed within sixty (60) days.
7.3 Effects of Termination. Upon termination of this Agreement for
any reason, all rights, obligations and licenses of the parties
hereunder shall cease, except as follows:
(a) Licensee's liability for any charges, payments or expenses due to
Spyglass which accrued prior to the termination date shall not be
extinguished by termination, and such amounts (if not otherwise due on
an earlier date), including all Additional License Fees, Technical
Support Services Fees and any payments for Additional Purchase
Commitments (if any) made by Licensee, shall be immediately due and
payable on the termination date.
(b) Immediately after the termination on the grounds of a material
breach by the Licensee, the Licensee shall have no further right to
copy, modify, create derivative works of, promote, market, sell,
distribute, sublicense or use the Licensed Software, and shall deliver
to Spyglass, at the Licensee's expense, (1) all originals and copies of
the Licensed Software, including all compilations, translations and
partial copies, whether or not modified or merged into other software
or documentation, in the possession or under the control of the
Licensee or any affiliate and (2) all materials in the possession of
the Licensee that display any trademark, trade name or other
proprietary mark of Spyglass and (3) a list of all current Resellers
and Sublicensees. The Licensee shall certify in writing to Spyglass
within ten (10) days following termination that it has complied with
this Section_7.3(b).
(c) The termination of this Agreement or any licenses hereunder shall
not affect the Sublicense Agreements granted under this Agreement by
Licensee, its Resellers and/or Sublicensees to End Users prior to
termination, so long as such End Users are not in breach of their
Sublicense Agreements with Licensee, Resellers or Sublicensees (as
applicable). Notwithstanding the above, if this Agreement is terminated
by Spyglass pursuant to Section 10.1 subsection (3), all Sublicense
Agreements granted to End Users hereunder shall immediately terminate
upon the termination date.
(d) The termination of this Agreement or any licenses hereunder shall
not affect the Sublicense Agreements granted under this Agreement by
Licensee to Resellers or Sublicensees prior to termination, so long as
such Resellers and Sublicensees are not in breach of their Sublicense
Agreements with Licensee and agree to owe all further obligations
thereunder directly to Spyglass. Notwithstanding the above, if this
Agreement is terminated by Spyglass pursuant to Section 10.1 subsection
(3), all Sublicense Agreements granted to Resellers and Sublicensees
shall immediately terminate upon the termination date and the terms of
Section 7.3(b) subsections (1) and (2) shall apply to such Resellers
and Sublicensees in the same manner they apply to Licensee hereunder.
(e) The provisions of Sections 8 (Confidentiality), 9 (Disclaimer of
Warranty), 10 (Infringement Indemnification), 11 (Limitations on
Liability), 12 (Compliance with Laws) and this Section_7 shall survive
any termination, cancellation or expiration of this Agreement according
to their terms.
8. Confidentiality.
8.1 Confidential Information. Each party may be required to disclose
to the other certain confidential information which will be identified
as such in writing ("Confidential Information"). The Licensed Software
and related documentation shall be regarded as Confidential Information
of Spyglass whether or not it is identified in writing as
"Confidential".
8.2 Protection of Confidential Information. Each party agrees to
protect the confidentiality of the other party's Confidential
Information for a period of ten (10) years after each disclosure of
Confidential Information and each party will protect such information
with at least the same degree of care that it utilizes with respect to
its own similar proprietary or confidential information, and except as
expressly granted herein, shall:
(a) Not to disclose or otherwise permit any other person or entity
access to, in any manner, the Confidential Information, or any part
thereof in any form whatsoever, except that such disclosure or access
shall be permitted to: (i) an employee of the receiving party requiring
access to the Confidential Information in the course of his or her
employment in connection with this Agreement and who has signed an
agreement obligating the employee to maintain the confidentiality of
the confidential information of third parties in the receiving party's
possession, and (ii) a contractor, working solely on behalf of the
receiving party who has signed an agreement obligating the contractor
to maintain the confidentiality of the confidential information of
third parties in the receiving party's possession, and provided such
contractor has agreed in writing to grant all rights, title and
interest in and to the work related to the Confidential Information to
the receiving party;
(b) To Notify the disclosing party promptly and in writing of the
circumstances surrounding any suspected possession, use or knowledge of
the Confidential Information or any part thereof at any location or by
any person or entity other than those authorized by this Agreement; and
(c) Not to use the Confidential Information for any purpose other than
as explicitly set forth herein.
8.3 Exceptions. Nothing in this Section_8 shall restrict the
receiving party with respect to information or data, whether or not
identical or similar to that contained in the Confidential Information,
if such information or data: (a) was rightfully possessed by the
receiving party before it was received from the disclosing party; (b)
is independently developed by the receiving party without reference to
the disclosing party's information or data; (c) is subsequently
furnished to the receiving party by a third party not under any
obligation of confidentiality with respect to such information or data,
and without restrictions on use or disclosure; or (d) is or becomes
public or available to the general public otherwise than through any
act or default of the receiving party.
8.4 Injunctive Relief. Because the unauthorized use, transfer or
dissemination of any Confidential Information provided by the
disclosing party to the receiving party may diminish substantially the
value of such materials and may irreparably harm the disclosing party,
if the receiving party breaches the provisions of this Section_8, the
disclosing party shall, without limiting its other rights or remedies,
be entitled to seek equitable relief, including but not limited to
injunctive relief.
9. Warranty.
9.1 On the Agreement Date, Spyglass warrants that, to the best of its
knowledge, it has the right and power to enter into this Agreement and
to grant Licensee the rights specified herein. Further, Spyglass
warrants that its Technical Support Services will be performed in a
professional and workmanlike manner. The warranty provided herein does
not supersede the warranty(ies) under the Professional Services
Agreement between the parties executed of even date herewith.
9.2 To the extent this License Agreement includes some form of
information technology, including anything that processes, provides
and/or receives date data, Spyglass represents and warrants, in
addition to all other representations and warranties, that until July
31, 2001, the Licensed Software supplied will be free from any error(s)
or defect(s) in date data relating to the change in the twentieth
century to the twenty-first century (including leap year calculations),
and will not generate any invalid and/or incorrect date-related results
(including leap year calculations); provided all associated products
(hardware and software) used with the Licensed Software properly
exchange accurate date data with it.
9.3 THE LICENSED SOFTWARE IS NOT DESIGNED OR INTENDED FOR USE IN HIGH
RISK ENVIRONMENTS INCLUDING, WITHOUT LIMITATION, ON-LINE CONTROL OF AIR
TRAFFIC OR AIRCRAFT NAVIGATION; OR IN THE DESIGN, CONSTRUCTION,
OPERATION OR MAINTENANCE OF ANY NUCLEAR FACILITY; OR LIFE SUPPORT
SYSTEMS OR WEAPONS. EXCEPT AS PROVIDED IN THIS SECTION 9, THE LICENSED
SOFTWARE AND SERVICES ARE BEING PROVIDED "AS-IS" WITHOUT WARRANTY OF
ANY KIND. SPYGLASS, AND ITS LICENSORS, EXPRESSLY HEREBY DISCLAIM ALL
WARRANTIES, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT
TO THE LICENSED SOFTWARE AND SERVICES INCLUDING, WITHOUT LIMITATION,
ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY SPYGLASS
SHALL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE OF THIS
WARRANTY. 10. Infringement Indemnification.
10.1 Except as provided below, Spyglass shall defend and indemnify
Licensee from and against any damages, liabilities, costs and expenses
(including reasonable attorneys' fees) arising out of any claim that
the Spyglass Software infringes a patent or copyright or
misappropriates a trade secret of a third party, provided that (i)
Licensee shall have promptly provided Spyglass written notice thereof
and reasonable cooperation, information, and assistance in connection
therewith, and (ii) Spyglass shall have sole control and authority with
respect to the defense, settlement, or compromise thereof. Should any
Spyglass Software become or, in Spyglass's opinion, be likely to become
the subject of an injunction preventing its use as contemplated herein,
Spyglass may, at its option, (1) procure for the Licensee the right to
continue using such Spyglass Software, (2) replace or modify such
Spyglass Software so that it becomes non-infringing, or, if (1) and (2)
are not reasonably available to Spyglass, then (3) terminate Licensee's
license to the allegedly infringing Spyglass Software and refund to
Licensee the amount which Licensee has paid to Spyglass for such
Spyglass Software, depreciated on a straight line basis over a five
year period.
10.2 Spyglass shall have no liability or obligation to Licensee
hereunder with respect to any patent, copyright or trade secret
infringement or claim thereof based upon (i) use of the Spyglass
Software by Licensee in combination with devices or products not
provided by Spyglass, (ii) use of the Spyglass Software in an
application or environment for which such Spyglass Software were not
designed or contemplated, (iii) modifications, alterations or
enhancements of the Spyglass Software not created by or for Spyglass,
(iv) Spyglass' compliance with Licensee's specifications, (v) a
patent, copyright or trade secret in which Licensee or any affiliate of
Licensee has an interest, (vi) use of a release which has been
superseded or an altered release of the Spyglass Software or portion
thereof, if such infringement would have been avoided by the use of the
superseded or unaltered release of the Spyglass Software, or (vii) use
of the Spyglass Software to cache or convert any third party
copyrighted material. Licensee shall indemnify and hold Spyglass
harmless from all costs, damages and expenses (including reasonable
attorneys' fees) arising from any claim enumerated in clauses (i)
through (vii) above.
10.3 The foregoing states the entire liability of Spyglass with respect
to infringement of Intellectual Property by the Spyglass Software or
any part thereof or by their operation.
11. Limitations on Liability.
11.1 Except for liability arising out of or relating to a breach of
Section 2 directly caused by Licensee's action or a breach of Section 8
by either party's direct actions, each party's maximum liability
arising out of or relating to the Licensed Software or any services
provided hereunder for any cause whatsoever, regardless of the form of
any claim or action, whether based in contract, tort or any other legal
theory shall not exceed the aggregate license fees paid (or payable) by
Licensee to Spyglass for the Licensed Software during the previous
twelve (12) months, not including Technical Support Services Fees.
Except for liability arising out of or relating to a breach of Section
2 directly caused by Licensee's action or a breach of Section 8 by
either party's direct actions, in no event shall either party be liable
for any incidental, consequential, special, indirect or punitive
damages or expenses arising out of or in connection with this
Agreement, including lost profits, lost opportunity costs, etc. even if
it has been advised of their possible existence. The allocations of
liability represent the agreed and bargained-for understanding of the
parties and Spyglass' compensation for the Licensed Software and
services reflects such allocations.
11.2 Each party will immediately inform the other as soon as such party
becomes aware of any threatened or actual liability claim by a third
party relating to the Licensed Software.
12. Compliance with Laws.
12.1 Export. Licensee shall not export, directly or indirectly,
Licensed Software, or other information or materials provided by
Spyglass hereunder, to any country for which the United States or any
other relevant jurisdiction requires any export license or other
governmental approval at the time of export without first obtaining
such license or approval. It shall be the Licensee's responsibility to
comply with the latest United States export regulations, and the
Licensee shall defend and indemnify Spyglass from and against any
damages, fines, penalties, assessments, liabilities, costs and expenses
(including reasonable attorneys' fees and court costs) arising out of
any claim that Licensed Software or other information or materials
provided by Spyglass hereunder were exported or otherwise shipped or
transported in violation of applicable laws and regulations.
12.2 Compliance with Laws of Other Jurisdictions. The Licensee shall
comply with all laws, legislation, rules, regulations, governmental
requirements and industry standards with respect to the Licensed
Software, and the performance by the Licensee of its obligations
hereunder, existing in any jurisdiction into which the Licensee
directly or indirectly distributes the Licensed Software. In the event
that this Agreement is required to be registered with any governmental
authority, the Licensee shall cause such registration to be made and
shall bear any expense or tax payable in respect thereof.
13. Notices.
Any notice or communication from one party to the other shall be in
writing and shall be effective, when personally delivered to the party
for whom intended, upon confirmation of receipt when sent via
facsimile, upon confirmation of receipt when sent by overnight courier,
signature requested or five (5) days following deposit of the same into
the United States mail (certified mail, postage prepaid and return
receipt requested) addressed, to such other party at the address
specified below or such other address as either party may from time to
time designate in writing to the other party.
If to Spyglass: Spyglass, Inc.
1240 East Diehl Road
Naperville, Illinois 60563
Attn.: Executive Vice President
Chief Financial Officer
with a copy to: Spyglass, Inc.
1240 East Diehl Road
Naperville, Illinois 60563
Attn: General Counsel
If to the Licensee: to Licensee's address set
forth on the cover page hereof
Attn.: Jackie Beauchamp
with a copy to: Motorola, Inc.
6501 William Cannon Drive West
Austin, Texas 78735
Attn: Intellectual Property Dept.
No change of address shall be binding upon the other party hereto until
written notice thereof is received by such party at the address show
herein. All notices shall be in English.
14. General Provisions.
14.1 Force Majeure. In the event that either party is prevented from
performing, or is unable to perform, any of its obligations (except for
Licensee's payment obligations) under this Agreement due to any cause
beyond the reasonable control of the party invoking this provision, the
affected party's performance shall be excused and the time for
performance shall be extended for the period of delay or inability to
perform due to such occurrence.
14.2 Publicity. Within thirty (30) days following the Agreement Date,
both parties shall, at a minimum, originate a press release relating to
this Agreement. Thereafter, neither party shall originate any
publicity, news release or other public announcement relating to this
Agreement or the existence of an arrangement between the parties
without the prior written approval of the other party, except as
otherwise required by law; provided, however, that both parties shall
have the right to list the other party as a customer or supplier in its
marketing or press materials.
14.3 Cooperation. Licensee hereby authorizes Spyglass to release
Licensee's name, address and telephone number to the University. At
Spyglass's request, Licensee will interact with the University (to the
extent commercially reasonable) with respect to University projects
relating to the Licensed Software.
14.4 Waiver. The waiver by either party of a breach or a default of
any provision of this Agreement by the other party shall not be
construed as a waiver of any succeeding breach of the same or any other
provision, nor shall any delay or omission on the part of either party
to exercise or avail itself of any right, power or privilege that it
has, or may have hereunder, operate as a waiver of any right, power or
privilege by such party.
14.5 No Agency; Independent Contractors. Nothing contained in this
Agreement shall be deemed to imply or constitute either party as the
agent or representative of the other party, or both parties as joint
ventures or partners for any purpose.
14.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, except for the
conflict of laws provision and any litigation or disputes regarding
this Agreement will be resolved in the courts located in DuPage County,
Illinois or the U.S. District Court, Northern District of Illinois.
The parties consent to the personal jurisdiction of, and venue in, the
State and Federal courts as specified above. This Agreement shall not
be governed by the United Nations Convention of Contracts for the
International Sale of Goods, the application of which is hereby
expressly excluded.
14.7 Entire Agreement; Amendment. This Agreement and the Exhibits and
Cover Page attached hereto constitute the entire agreement between the
parties with regard to the subject matter hereof. No waiver, consent,
modification or change of terms of this Agreement shall bind either
party unless in writing signed by both parties, and then such waiver,
consent, modification or change shall be effective only in the specific
instance and for the specific purpose given.
14.8 Headings. Captions and headings contained in this Agreement have
been included for ease of reference and convenience and shall not be
considered in interpreting or construing this Agreement.
14.9 Costs, Expenses and Attorneys' Fees. If either party commences
any action or proceeding against the other party to enforce or
interpret this Agreement, the prevailing party in such action or
proceeding shall be entitled to recover from the other party the actual
costs, expenses and reasonable attorneys' fees (including all related
costs and expenses), incurred by such prevailing party in connection
with such action or proceeding and in connection with obtaining and
enforcing any judgment or order thereby obtained.
14.10 Assignment. This Agreement, and the rights and obligations
hereunder, may not be assigned, in whole or in part by Licensee, except
to a successor to the whole of Licensee's business, without the prior
written consent of Spyglass. In the case of any permitted assignment
or transfer of or under this Agreement, this Agreement or the relevant
provisions shall be binding upon, and inure to the benefit of, the
successors, executors, heirs, representatives, administrators and
assigns of the parties hereto.
IN WITNESS WHEREOF, the parties, as of the latest of the dates set
forth below which date shall be the Agreement Date, have caused this
Agreement to be executed by their duly authorized representatives.
SPYGLASS, INC. Licensee: MOTOROLA, INC.
By: /s/ Gary Vilchick By: /s/ Ray Burgess
Name:Gary Vilchick Name:Ray Burgess
Title:Executive V.P., CFO Title:VP & Asst. General Manager, CSG
Date: June 25, 1998 Date: June 25, 1998
<PAGE>
EXHIBIT A
DELIVERABLES
This Exhibit A is incorporated in its entirety as part of the
Agreement.
Deliverables:
(a). Spyglass Device Mosaic Version 3.0 in Source Code Form for the
VX Works / RTGL / X86 operating environment.
(b). Spyglass ThinGUI Version 1.0 Libraries in Source Code Form for
the VX Works / RTGL / X86 operating environment.
(c) Spyglass MicroServer Version 2.0 in Source Code Form for the Unix
operating environment.
(d). Documentation for deliverables (a), (b), and (c).
Delivery Dates:
Within ten (10) business days after Agreement Date.
Licensed Spyglass Trademarks:
Spyglass Trademarks:
Spyglass[Registered Trademark]
Spyglass[Registered Trademark]Device Mosaic[Trademark]
Spyglass[Registered Trademark]ThinGUI
Spyglass[Registered Trademark]MicroServer
University Trademarks:
Mosaic[Trademark]
Spinning Globe[Trademark] progress indicator logo
NCSA Mosaic[Trademark]
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT B
LICENSE FEE SCHEDULE
This Exhibit B is incorporated in its entirety as part of the
Agreement.
A) Spyglass Device Mosaic V3.0, ThinGUI Libraries, and Spyglass
MicroServer
(1) Technology Access Fee: [**]
Initial Purchase Commitment: [**] Copies as follows:
# of Copies
[**]
*Includes a [**]
Initial Purchase Commitment: [**]
Due upon the Agreement Date pursuant
to the following payment terms (payment
terms are net 30 days):
Payment #1 [**]
Payment #2 [**]
Payment #3 [**]
Payment #4 [**]
Payment #5 [**]
Payment #1 is due [**]
Payment #2 is due as stated above [**] date on or before [**] pursuant to
the Professional Services Agreement attached hereto as Exhibit E.
Payment #3 is due as stated above [**] on or before [**] pursuant to
Exhibit E.
Payment #4 is due as stated above [**] (i) (identified in Section 3,
subsection 1(i) of Exhibit A-2, Statement of Work, of Exhibit E) [**]
Payment #5 is due as stated above.
Except as expressly stated above, payments due hereunder [**]
EXHIBIT B CONTINUED
(3) Per Copy Fee for Additional License Fees:
# of Copies Per Copy Fee Payment
[**]
(Technology Access Fees, Initial Purchase Commitment and Per Copy Fees
are due on a Per Licensee Product basis, excluding revisions and
modifications to an existing Licensee Product, and are subject to the
then-current Spyglass pricing for each additional Licensee Product
added to Exhibit D.)
<PAGE>
EXHIBIT C
TECHNICAL SUPPORT SERVICES
This Exhibit C is incorporated in its entirety as part of the
Agreement.
1. Spyglass' Obligations
1.1 Technical Support Services. Subject to payment of the Technical
Support Services Fee identified herein, Spyglass shall provide the
following Technical Support Services for the non-customized Licensed
Software set forth as the Deliverables in Exhibit A:
(i) Problem reporting, tracking and monitoring by electronic mail via
the Internet for the Licensed Software;
(ii) Reasonable telephone support for problem determination and
verification on a call-back basis during Spyglass' normal business
hours of 9 a.m. to 5 p.m. Central Standard Time for the Licensed
Software; and
(iii) Diligently work on defects and errors in the Licensed
Software in accordance with the following schedule:
ERROR PRIORITY (1) RESPONSE (2)
Emergency (a) 48 hours
Critical (b) 5 days
Non-Critical (c) 30 days
(1) Priority:
a) Catastrophic product or module failures that do not have a viable
detour or work around available.
b) Problems that have been substantiated as a serious inconvenience to
users. This includes any Priority (a) failure for which a viable detour
or work around is available.
c) All other problems which the user can easily avoid or detour for
which there is no urgency for a resolution.
(2) Response: Response consists of providing, as Spyglass deems
appropriate, one of the following to Licensee: an existing correction;
a new correction; a viable detour or work around; a request for more
information to complete analysis of the problem, or a plan on how the
problem will be corrected.
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(iv) When Spyglass makes available the first Upgrade to Device Mosaic
V3.0 (expected to be named V3.1), Spyglass shall provide Licensee,
[**], such Upgrade in Source Code Form and ported to Licensee's [**]
operating environment. In the event such Upgrade contains third party
software, the third party software shall be provided to Licensee in
Object Code Form only. In the event such Upgrade contains Secure
Socket Layer (SSL) technology, it shall be Licensee's sole
responsibility, and not Spyglass', to acquire any encryption technology
licenses that Licensee may desire and governmental approvals, if any
are required, for such encryption technology. This subsection (iv)
sets forth Spyglass' sole and exclusive obligation to provide Upgrades
to the Licensed Software hereunder; and
(v) Spyglass shall provide Licensee with Updates (if any) to the non-
customized Licensed Software which Spyglass otherwise makes available
to similarly situated licensees under the same terms, conditions and
pricing as the Licensed Software. Such Updates shall be provided to
Licensee in Source Code Form, except in the event of third party
software, in which case, in Object Code Form only. Spyglass shall have
no obligation hereunder to port or modify such Updates for Licensee'
operating environment.
2. Licensee Obligations
2.1 Licensee agrees:
(a) that the Designated Contact person(s) identified below (or such
other replacement individual as Licensee may designate) shall be the
sole contact for the coordination and receipt of the Technical Support
Services, which person shall be knowledgeable and trained on the
Licensed Software:
Licensee Designated Contacts:
Primary Contact: Secondary Contact:
Phone number: Phone number:
E-Mail address: E-Mail address:
(b) to maintain an electronic mail link-up with Spyglass via the
Internet; and
(c) to provide reasonable supporting data to and aid in the
identification of reported problems.
(d) to provide and maintain at Spyglass' site, at no cost to Spyglass,
Licensee's [**] operating environment for Spyglass use in the
performance of the services hereunder.
3. Technical Support Services, Term and Termination.
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
3.1 Subject to Licensee's payment of the Technical Support Services
Fee, Spyglass' obligation to provide Technical Support Services shall
begin on the Agreement Date and will apply to the Licensed Software set
forth in Exhibit A for the term of twelve months, unless otherwise
renewed in writing upon mutual agreement of the parties at least thirty
(30) days prior to the expiration of the initial term.
3.2 If either party is in default of its obligations hereunder and
such default continues for thirty (30) days following the receipt of
written notice from the other party, the non-breaching party, in
addition to any other remedies it may have, may terminate the Technical
Support Services. In such case, the non-prevailing party will pay the
prevailing party in exercising any of its rights or remedies.
<PAGE>
4. Charges, Taxes and Payments
4.1 Technical Support Services Fee. Upon the Agreement Date,
Licensee shall pay Spyglass a fee of [**] in U.S. currency for the
Technical Support Services for the non-customized Licensed Software.
During any renewal terms, the Technical Support Services Fee shall be
due and payable prior to the commencement of such term. Additional
Technical Support Services Fees shall become due upon any amendment to
Agreement for additional Licensee Products.
4.2 Spyglass may increase the Technical Support Services Fee no
earlier than the first one-year anniversary of the Agreement and not
more than once per year. Each such increase shall be effective sixty
(60) following Spyglass' written notice to Licensee.
4.3 Technical Support Services for customized Licensed Software (if
any) shall be subject to the terms and conditions of a separate written
agreement executed by the parties, at Spyglass' then current fees for
support of such customized software.
4.4 Licensee agrees that Spyglass will have the right to charge in
accordance with Spyglass' then current policies for any Technical
Support Services or services resulting from Licensee's modification of
the Licensed Software or Licensee's failure to utilize the most current
Update or Upgrade if provided hereunder.
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT D
Licensee Products
This Exhibit D is incorporated in its entirety as part of the
Agreement.
Licensee Product: 1) Motorola [**] Products, which are known as the
[**], currently being: [**], all of which share the [**]. Products
that represent substantial deviations from this common architecture and
its future generation enhancements shall be considered additional
Licensee Products.
License has the right to add additional Licensee Products to this
Agreement by written notice to Spyglass, and subject to Licensee's
payment to Spyglass of the Technology Access Fee applicable for
Licensee's use of the Source Code or Object Code Form of the Licensed
Software in each additional Licensee Products and subject to Spyglass'
then current terms.
<PAGE>
Exhibit E
Spyglass, Inc.
Professional Services Agreement
This Professional Services Agreement ("Agreement") is entered into as
of June 25, 1998 by and between Spyglass, Inc. a Delaware corporation
with a place of business at 1240 East Diehl Road, Naperville, Illinois
60563 ("Spyglass") and Motorola, Inc., a Delaware corporation with a
place of business at 6501 William Cannon Drive West, Austin, TX 78735
("Client").
WHEREAS, Client desires to procure certain professional services from
Spyglass from time to time which services are associated with custom
development of and modifications to Spyglass products; and
WHEREAS, Spyglass desires to provide such services to Client on the
terms set forth below.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, Spyglass and Client agree as follows:
1. Spyglass Services.
1.1 Spyglass shall perform for Client the professional services
("Services) specified in one or more Statements of Work attached hereto
and made a part hereof as Exhibit A. If there is more than one
Statement of Work, the first Statement of Work shall be attached hereto
as Exhibit A-1. Each subsequent Statement of Work shall be referred to
as Exhibit A-__, completing the blank for each new Statement of Work
with a number, in ascending numerical order. In the event of a
conflict between any term of this Agreement and any Statement of Work,
the terms of the Statement of Work shall control.
1.2 Each Statement of Work shall also contain assumptions related to
the Services. To the extent that the assumptions described in the
Statement of Work are not met or turn out to be inaccurate, the cost
and schedule of the Services will be impacted. Client agrees to
negotiate in good faith to mutually develop a plan and revised schedule
and fees to address such issues.
1.3 Changes within the scope of the Services, as identified in a
Statement of Work, shall be made only in writing executed by both
parties. Spyglass shall have no obligation to commence work in
connection with any change until the fee and/or schedule impact of the
change is agreed upon by the parties in writing.
1.4 The Services performed by Spyglass will result in the creation of
deliverables. "Deliverables" shall, for the purposes of this Agreement,
mean those items to be provided by Spyglass to Client as identified in
a Statement of Work; provided, however, that any third party product
that Client may request and Spyglass may supply to Client hereunder
shall be specifically excluded from this definition.
1.5 Spyglass agrees to provide Client with ongoing support services
for the Deliverables prepared by Spyglass hereunder under the same
terms for its standard support program in the License and Distribution
Agreement (Exhibit C), based upon the costs provided in the attached
Statement of Work and as stated in such exhibit.
1.6 For a period of six (6) months after the termination of this
Agreement, each party agrees not to solicit the employment of any of
the other party's personnel; however, such employment shall not be a
violation of this Section 1.6 in the event of such personnel
independently submitting an application, or responding to local
employment advertisements.
1.7 Client expressly consents to Spyglass' use of subcontractors in
connection with the performance of the Services.
1.8 Spyglass shall utilize records, procedures, and/or systems to
document, record, and account for the performance of the Statement of
Work. Spyglass agrees to permit an independent auditor (acceptable to
both parties) to inspect and audit such books, records, and/or
documentation in Spyglass' possession or control, upon reasonable
advance written notice by Client to Spyglass. Any such inspection
shall be at Client's sole expense and shall be conducted in a manner
which is not unreasonably disruptive of Spyglass' normal business
operations.
2. Client Obligations.
2.1 In connection with Spyglass' performance of the Services, Client
shall have certain responsibilities which are identified in each
applicable Statement of Work ("Client Obligations").
2.2 Client acknowledges and agrees that Spyglass' performance of the
Services is dependent upon Client's timely and effective satisfaction
of Client Obligations and timely decisions and approvals by Client.
Spyglass shall be entitled to rely upon all such Client decisions and
approvals. Further, Client acknowledges and agrees that Spyglass is
relying upon the information that Client provides and Client represents
that such information is true and accurate. Due to the importance of
such information to Spyglass' provision of the Services, Client agrees
to release Spyglass and its employees, directors and shareholders from
any liability and costs relating to Spyglass' Services which are
attributable to any materially false or inaccurate information provided
by Client.
3. Payment.
3.1 Client shall pay Spyglass for the Services as identified in
Exhibit B.
3.2 Client shall pay the amounts payable to Spyglass as identified
herein within thirty (30) days of receipt of invoices submitted by
Spyglass. Any invoice remaining unpaid for more than thirty (30)
days shall accrue interest at a rate of the lesser of one and one-half
percent (1.5%) per month or the highest rate allowed by law. In the
event of a dispute regarding a portion of an invoice, the undisputed
portion of the invoice shall be paid as provided herein.
3.3 Unless otherwise stated in the Statements of Work, Spyglass shall
be reimbursed by Client for all reasonable expenses incurred, which
have been pre-approved in writing by Client, in the performance of the
Services including, without limitation, travel and lodging expenses,
communications charges and supplies.
3.4 Client shall be responsible for the payment hereunder, however
designated or incurred as a result of this Agreement or the Services,
of any taxes, including, without limitation, state and local privilege,
excise, sales, and use taxes and any taxes or amounts in lieu thereof
paid or payable by Spyglass, and all prices stated herein shall be
exclusive of such taxes.
4. Ownership and Intellectual Property Rights.
4.1 Spyglass shall grant to Client license and distribution rights to
the Deliverables set forth in Exhibits A-1 and A-2, Statements of Works
(attached hereto) subject to the terms and conditions contained in the
Source Code License and Distribution Agreement between the parties
executed of even date herewith. All other rights in the Deliverable(s)
and related intellectual property rights remain in and/or are assigned
to Spyglass and its licensors, as appropriate. The parties will
cooperate with each other and execute such other documents as may be
appropriate to achieve the objectives of this Section.
4.2 Nothing in this Agreement shall preclude either party from
developing or having developed or acquiring for itself, or for others,
materials which are competitive with those produced as a result of the
Services provided hereunder subject to the terms, conditions and
restrictions set forth herein and in subsequent License and/or
Distribution Agreements entered into between the parties. Such
parties may retain and use any residuals resulting from the Services
hereunder. For purposes of this Agreement, the term "residuals" means
any information in purely non-tangible form, including ideas, concepts,
techniques or know-how which may be retained in the minds of persons
who have had access to the other party's information or trade secrets,
and who have not refreshed their recollection in anticipation of, or in
conjunction with the use of said residuals. No licenses under either
Party's patents or copyrights are herein granted, either expressly or
by implication, in connection with any such residuals use. Neither
party shall have any obligation to limit or restrict the assignment of
such persons or to pay any royalties for any work resulting from the
use of residuals.
4.3 Client shall not alter or delete any printed or on-screen
copyright, trademark, proprietary and/or other legal notices contained
on or in copies of the Deliverables, and shall ensure that
identification of Spyglass or its licensors shall be displayed in a
similar fashion and location by Client.
5. Confidentiality.
5.1 During the course of Spyglass providing the Services for Client,
each party may be given access to information that (i) relates to the
other's past, present and future research development, business
activities, products, services, and technical knowledge, and (ii) has
been identified in writing as confidential ("Confidential
Information"). In connection therewith, the following sections shall
apply:
5.2 For a period of ten (10) years after each receipt of Confidential
Information, the recipient agrees to protect the confidentiality of the
disclosing party's Confidential Information with at least the same
degree of care that it utilizes with respect to its own similar
confidential information, including, without limitation, agreeing:
(a) Not to disclose or otherwise permit any other person or entity
access to, in any manner, the Confidential Information, or any part
thereof in any form whatsoever, except that such disclosure or access
shall be permitted to: (i) an employee of the recipient, requiring
access to the Confidential Information in the course of his or her
employment in connection with this Agreement and who has signed an
agreement obligating the employee to maintain the confidentiality of
the confidential information of third parties in the recipient's
possession, and (ii) contractor(s), working solely on behalf of the
recipient and who has signed an agreement obligating the contractor to
maintain the confidentiality of the confidential information of third
parties in the recipient's possession, and provided such contractor(s)
has agreed in writing to grant all rights, title and interest in and to
the work related to the Confidential Information to the recipient. For
purposes of this Agreement, any Spyglass Confidential Information
disclosed to Client's contractors (whether disclosed by Client or
disclosed by Spyglass on behalf of Client) shall be construed as a
disclosure to Client and Client shall be obligated to protect such
information in accordance with this Section 5;
(b) To notify the disclosing party promptly and in writing of the
circumstances surrounding any suspected possession, use or knowledge of
the Confidential Information or any part thereof at any location or by
any person or entity other than those authorized by this Agreement; and
(c) Not to use the Confidential Information for any purpose other than
as explicitly set forth herein.
5.3 All Confidential Information made available hereunder, including
copies thereof, shall be returned or destroyed upon termination of this
Agreement.
5.4 Nothing in this Section_5 shall restrict the recipient with
respect to information or data, whether or not identical or similar to
that contained in the Confidential Information, if such information or
data: (a) was rightfully possessed by the recipient before it was
received from the disclosing party; (b) is independently developed by
the recipient without reference to the disclosing party's information
or data; (c) is subsequently furnished to the recipient by a third
party not under any obligation of confidentiality with respect to such
information or data, and without restrictions on use or disclosure; (d)
is or becomes public or available to the general public otherwise than
through any act or default of the recipient; or (e) is inherently
disclosed by the exercise of rights granted in the OEM License
Agreement referenced in Section 4.1.
5.5 In the event the recipient receives a subpoena or other validly
issued administrative or judicial process requesting Confidential
Information of the disclosing party, the recipient shall provide prompt
notice to the disclosing party of such receipt. Thereafter, the
recipient shall be entitled to comply with such subpoena or other
process to the extent required by law.
5.6 Because the unauthorized use, transfer or dissemination of any
Confidential Information by the recipient may diminish substantially
the value of such materials and may irreparably harm the disclosing
party, if the recipient breaches the provisions of this Section_5, the
disclosing party shall, without limiting its other rights or remedies,
be entitled to seek equitable relief, including but not limited to
injunctive relief.
6. Warranty.
6.1 Spyglass warrants that its Services will be performed in a
professional and workmanlike manner in accordance with applicable
professional standards, such Services shall be performed in accordance
with the Statement of Work, the Deliverables shall, at the time of
delivery to Client, substantially meet the requirements in the
Statement of Work. Spyglass shall reperform any work not in compliance
with this warranty brought to its attention within thirty (30) days
after that work is performed. Spyglass does not warrant, nor will
Spyglass be responsible for the performance of any third party product.
Client's sole and exclusive rights and remedies with respect to any
third party product, including rights and remedies in the event a third
party product gives rise to an infringement claim, will be against the
third party vendor and not against Spyglass. If Spyglass is asked to
reperform any work and it is determined that Spyglass has already met
its obligations under this Section 6, Client agrees to pay Spyglass on
a time and materials basis at Spyglass' standard rates for time spent
on such additional work.
6.2 To the extent this Agreement includes some form of information
technology, including anything that processes, provides and/or receives
date data, Spyglass represents and warrants, in addition to all other
representations and warranties, that until July 31, 2001, the
Deliverables supplied will be free from any error(s) or defect(s) in
date data relating to the change in the twentieth century to the
twenty-first century (including leap year calculations), will not
generate any invalid and/or incorrect date-related results (including
leap year calculations); provided all associated products (hardware and
software) used with the Deliverables properly exchange accurate date
data with it.
THE PRECEDING IS SPYGLASS' ONLY WARRANTY CONCERNING THE SERVICES AND
DELIVERABLE(S), AND IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES
AND REPRESENTATIONS, EXPRESS OR IMPLIED, AND ANY IMPLIED WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR OTHERWISE.
7. Termination.
7.1 Either party may, upon giving thirty (30) days written notice
identifying specifically the basis for such notice, terminate this
Agreement or any Statement of Work for breach of a material term or
condition of this Agreement or the applicable Statement of Work as the
case may be, provided that the breaching party shall not have cured
such breach within the thirty (30) day period. In the event of such
termination, Client shall pay Spyglass for all Services rendered and
expenses incurred by Spyglass prior to the date of termination.
7.2 Either party may terminate the Agreement immediately in the event
any assignment is made by the other party for the benefit of creditors,
or if a receiver, trustee in bankruptcy or similar officer shall be
appointed to take charge of any or all of the other party's property,
or if the other party files a voluntary petition under federal
bankruptcy laws or similar state statutes or such a petition is filed
against the other party and is not dismissed within sixty (60) days.
7.3 Client may at any time and without cause terminate this Agreement
and/or any Statement of Work by giving Spyglass thirty (30) days
advance written notice of termination. In the event of such
termination, Client shall pay Spyglass for all Services rendered and
expenses incurred by Spyglass included in Payments #2, #3 and #4 of
Exhibit B of the Source Code License and Distribution Agreement between
the parties executed of even date herewith as of the date of
termination.
7.4 The parties agree that, in the event of a dispute or alleged
breach subject to Section 7.1, they will work together in good faith to
first resolve the matter internally.
7.5 The terms of Sections 4, 5, 7, 8 and 9 shall survive termination
or expiration of this Agreement or completion of any Statement of Work.
8. Indemnification
8.1 Except as provided in Section 8.2 below, Spyglass agrees that it
will defend, at its expense, any suit or proceeding brought against
Client and will pay all damages and costs finally awarded in such suit
or proceeding, insofar as such suit or proceeding is based on a claim
that the Deliverables infringes any patent, copyright, trade secret, or
other proprietary right, provided Spyglass is promptly notified in
writing of any such claim and is given reasonable assistance by Client
for such defense. In the event that the Deliverables are held in such
suit or proceeding to infringe such patent, copyright, trade secret,
trademark, or other proprietary right or its use is permanently
enjoined, Spyglass shall, at its own expense, either (a) procure for
Client the right to continue using the Deliverables, or (b) modify the
Deliverables so that they become non-infringing while giving
substantially equivalent performance, or (c) in the event that options
(a) and (b) above are not reasonably available to Spyglass, Spyglass
may terminate this Agreement and shall refund to Client all
consideration paid to Spyglass regarding the affected Deliverables
8.2 Spyglass shall have no liability or obligation to Client
hereunder with respect to any patent, copyright or trade secret
infringement or claim thereof based upon (i) use of the Deliverable(s)
by Client in combination with devices or products not provided by
Spyglass, but only if the use of such Deliverable(s) alone would not
have caused such infringement and only if the infringement or claim is
solely caused by such use, and would not have otherwise arisen absent
such use, (ii) misuse of the Deliverables or use of the Deliverable(s)
in an application or environment for which such Deliverable(s) were not
designed or contemplated, (iii) modifications, alterations or
enhancements of the Deliverable(s) not created by or for Spyglass, (iv)
Client's failure to use a replaced or modified version of such
Deliverable(s) if such replacement of modified version of the
Deliverable(s) was provided by Spyglass to Client free of charge, (v)
any claims of infringement of a patent, copyright or trade secret in
which Client or any affiliate of Client has an interest, or (vi)
information, direction, specification or materials provided by client
or any third party. The foregoing states the entire liability of
Spyglass with respect to infringement of Intellectual Property by the
Deliverable(s) or any part thereof or by their operation.
8.3 To receive the foregoing indemnities, the party seeking
indemnification must notify the other in writing of a claim or suit
promptly and provide reasonable cooperation (at the indemnifying
party's expense) and full authority to defend, settle the claim or
suit. Neither party shall have any obligation to indemnify the other
under any settlement made without its written consent.
9. Limitation of Liability. Except for liability arising from or
relating to a breach by Client of Section 4 of this Agreement or a
breach by either party of Section 5 of this Agreement, each party's
maximum liability relating to the Services rendered and or
Deliverable(s) provided under this Agreement (regardless of form of
action, whether in contract, negligence or otherwise) shall be limited
to the charges paid to (or payable to) Spyglass for the portion of its
Services or Deliverables giving rise to such liability. Except for
liability arising from or relating to a breach by Client of Section 4
of this Agreement or a breach by either party of Section 5 of this
Agreement, in no event shall either party be liable for consequential,
special, incidental or punitive loss, damage or expense (including
without limitation, lost profits, lost data, opportunity costs, etc.)
even if it has been advised of their possible existence. The
allocations of liability in this Section 9 represent the agreed and
bargained-for understanding of the parties and Spyglass' compensation
for the Services reflects such allocations.
10. Compliance with Laws.
10.1 Export. Client shall not export, directly or indirectly, the
Deliverables, or other information or materials provided by Spyglass
hereunder, to any country for which the United States or any other
relevant jurisdiction requires any export license or other governmental
approval at the time of export without first obtaining such license or
approval. It shall be Client's responsibility to comply with the
latest United States export regulations, and Client shall defend and
indemnify Spyglass from and against any damages, fines, penalties,
assessments, liabilities, costs and expenses (including reasonable
attorneys' fees and court costs) arising out of any claim that the
Deliverables or other information or materials provided by Spyglass
hereunder were exported or otherwise shipped or transported in
violation of applicable laws and regulations.
10.2 Compliance with Laws of Other Jurisdictions. Client shall comply
with all laws, legislation, rules, regulations, governmental
requirements and industry standards with respect to the Deliverables,
and the performance by Client of its obligations hereunder, existing in
any jurisdiction into which Client directly or indirectly uses the
Deliverables. In the event that this Agreement is required to be
registered with any governmental authority, Client shall cause such
registration to be made and shall bear any expense or tax payable in
respect thereof.
11. Notices. Any notice or communication from one party to the other
shall be in writing and shall be effective, when personally delivered
to the party for whom intended, upon confirmation of receipt when sent
via facsimile, upon confirmation of receipt when sent by overnight
courier, signature requested or five (5) days following deposit of the
same into the United States mail (certified mail, postage prepaid and
return receipt requested) addressed, to such other party at the address
specified below or such other address as either party may from time to
time designate in writing to the other party.
If to Spyglass: Spyglass, Inc.
1240 East Diehl Road
Naperville, Illinois 60563
Attn.: Executive Vice President and
Chief Financial Officer
with a copy to: Spyglass, Inc.
1240 East Diehl Road
Naperville, Illinois 60563
Attn.: General Counsel
If to Client: Motorola, Inc.
6501 William Cannon Drive West
Austin, TX 78735
Attn.: Jackie Beauchamp
with a copy to: Motorola, Inc.
6501 William Cannon Drive West
Austin, TX 78735
Attn.: Intellectual Property Department
No change of address shall be binding upon the other party hereto until
written notice thereof is received by such party at the address show
herein. All notices shall be in English and shall be effective upon
receipt.
12. General Provisions.
12.1 Force Majeure. In the event that either party is prevented from
performing, or is unable to perform, any of its obligations under this
Agreement due to any cause beyond the reasonable control of the party
invoking this provision, the affected party's performance shall be
excused and the time for performance shall be extended for the period
of delay or inability to perform due to such occurrence.
12.2 Publicity. Both parties shall, at a minimum, originate at least
one press release or announcement regarding this Agreement subject to
review by and the prior written approval of the other party, such
approval not to be unreasonably withheld. This initial press release
or announcement must be prepared and provided to the other party for
review and approval promptly after execution of this Agreement.
Thereafter, neither party shall make any publicity, news release or
other public announcement relating to this Agreement or the existence
of an arrangement between the parties without the prior written
approval of the other party, except as otherwise required by law;
provided, however, that both parties shall have the right to list the
other party as a customer or supplier in its marketing or press
materials.
12.3 Waiver. The waiver by either party of a breach or a default of
any provision of this Agreement by the other party shall not be
construed as a waiver of any succeeding breach of the same or any other
provision, nor shall any delay or omission on the part of either party
to exercise or avail itself of any right, power or privilege that it
has, or may have hereunder, operate as a waiver of any right, power or
privilege by such party.
12.4 No Agency; Independent Contractors. Nothing contained in this
Agreement shall be deemed to imply or constitute either party as the
agent or representative of the other party, or both parties as joint
ventures or partners for any purpose and as such neither party will
have any authority to bind or commit the other.
12.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, except for the
conflict of laws provision and any litigation or disputes regarding
this Agreement will be resolved in the courts located in DuPage County,
Illinois or the U.S. District Court, Northern District of Illinois.
The parties consent to the personal jurisdiction of, and venue in, the
State and Federal courts as specified, above.
12.6 Entire Agreement; Amendment. This Agreement and the Exhibits
attached hereto constitute the entire agreement between the parties
with regard to the subject matter hereof. No waiver, consent,
modification or change of terms of this Agreement shall bind either
party unless in writing signed by both parties, and then such waiver,
consent, modification or change shall be effective only in the specific
instance and for the specific purpose given. Each party acknowledges
that it is entering into this Agreement solely on the basis of the
agreements and representations contained herein, and for its own
purposes and not for the benefit of any third party.
12.7 Headings. Captions and headings contained in this Agreement have
been included for ease of reference and convenience and shall not be
considered in interpreting or construing this Agreement.
12.8 Severability. If any term or provision of this Agreement shall be
found by a court of competent jurisdiction to be invalid, illegal or
otherwise unenforceable, the same shall not effect the other terms or
provisions hereof or the whole of this Agreement, but such provision
shall be deemed modified to the extent necessary in the court's opinion
to render such term or provision enforceable, and the rights and
obligations of the parties shall be construed and enforced accordingly,
preserving to the fullest extent possible the intent and agreements of
the parties set forth herein.
12.9 Costs, Expenses and Attorneys' Fees. If either party commences
any action or proceeding against the other party to enforce or
interpret this Agreement, the prevailing party in such action or
proceeding shall be entitled to recover from the other party the actual
costs, expenses and reasonable attorneys' fees (including all related
costs and expenses), incurred by such prevailing party in connection
with such action or proceeding and in connection with obtaining and
enforcing any judgment or order thereby obtained.
12.10 Assignment. This Agreement, and the rights and obligations
hereunder, may not be assigned, in whole or in part by Client, except
to a successor to the whole of Client's business, without the prior
written consent of Spyglass. In the case of any permitted assignment
or transfer of or under this Agreement, this Agreement or the relevant
provisions shall be binding upon, and inure to the benefit of, the
successors, executors, heirs, representatives, administrators and
assigns of the parties hereto.
12.11 Order of Precedence. This Agreement, along with the Source
License Agreement executed concurrently herewith, shall govern the
entire development and license agreement between Spyglass and Client.
In the event of a conflict between the terms of this Agreement and the
Source License Agreement, the terms of the Source License Agreement
will control.
IN WITNESS WHEREOF, the parties, as of the date first set forth above,
have caused this Agreement to be executed by their duly authorized
representatives.
SPYGLASS, INC. CLIENT: MOTOROLA, INC.
By: /s/ Gary Vilchick By: /s/ Ray Burgess
Name: Gary Vilchick Name: Ray Burgess
Title:Executive V.P., CFO Title:VP & Asst. General Manager, CSG
Date: June 25, 1998 Date: June 25, 1998
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT A-1
STATEMENT OF WORK
to the Professional Services Agreement between
Spyglass, Inc. and Motorola, Inc.
WHEREAS, Client and Spyglass executed a Professional Services Agreement
of even date herewith (the "Agreement") under which Client can procure
certain professional services from Spyglass;
WHEREAS, Client has requested and Spyglass has agreed to provide
certain services toward the modification of Spyglass' products for
Client's environment; and
WHEREAS, Spyglass desires to provide such services to Client on the
terms set forth in the Agreement and as set forth below.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, Spyglass and Client agree as follows:
1. Conflicts/Terms. The terms and conditions of this Statement of
Work are subject to and governed by the terms and conditions of the
Agreement. In the event of a conflict between any term of this
Statement of Work and the Agreement, the terms of this Statement of
Work shall control. Capitalized terms shall have the meanings
identified in the Agreement unless otherwise defined in this Statement
of Work.
2. Spyglass Services.
Spyglass will port Device Mosaic V3.0 and the ThinGUI graphics library
from Spyglass' initial target platform of VxWorks / RTGL / X86 source
code base to the [**] operating system, [**], for Client's [**]
platform.
Spyglass will perform quality assurance testing on the ported Device
Mosaic V3.0 and the ThinGUI graphics library.
Spyglass will port MicroServer V2.0 from Spyglass' Unix target platform
source code base to the [**] operating system, [**] , for Client's [**]
platform.
Spyglass will perform quality assurance testing on the ported
MicroServer V2.0.
Spyglass will port [**] from Spyglass' initial target platform of
VxWorks / RTGL / X86 source code base to the [**] operating system,
[**], for Client's [**] platform.
Spyglass will perform quality assurance testing on the ported [**].
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
3. Deliverables:
a) A source code version of Spyglass' Device Mosaic V3.0 and ThinGUI
libraries on the following platform:
[**]
A source code version of Spyglass' MicroServer V2.0 on the following
platform:
[**]
c) A source code version of Spyglass' [**] on the following platform:
[**]
Requirements:
a) Spyglass' Device Mosaic V3.0 browser (ported) will support the
following features:
[**]
b) Spyglass' MicroServer V2.0 (ported) will support the following
features:
[**]
c) Spyglass' [**] (ported) will support the following features:
[**]
5. Client Obligations:
It is Client's obligation to acquire and provide Spyglass with:
The necessary target platform [**] hardware and software.
[**]
[**] Board Support Packages configured for [**] .
Client represents and warrants that it has obtained the required
license rights to the hardware/software for Spyglass to perform the
Services hereunder at Spyglass' facility(ies).
Client shall be responsible for all shipment/insurance costs of such
items to the Spyglass facility and for the costs to deinstall and
retrieve such items.
6. Assumptions: Client will provide Spyglass with the target
hardware and software for four users. Client will provide on Spyglass'
site support for successful installation and configuration of the
hardware and software.
7. Technical Support: Promptly following Client's request, Spyglass
shall provide a proposal for Technical Support Services for the
Deliverables identified herein.
<PAGE>
EXHIBIT B
PROFESSIONAL SERVICES FEES
TO
EXHIBIT A-1
STATEMENT OF WORK
The fees due hereunder are included in the Initial Purchase Commitment
set forth in Exhibit B of the Source License and Distribution Agreement
between the parties executed of even date herewith. Such fees are
inclusive of any expenses incurred by Spyglass while performing the
Services identified in this Statement of Work, and such fees are in
addition to the fees due under the Interim Agreement between the
parties dated April 20, 1998, as extended and amended on June 1, 1998.
IN WITNESS WHEREOF, the parties, as of the date first set forth above,
have caused this Statement of Work to be executed by their duly
authorized representatives.
SPYGLASS, INC. CLIENT: MOTOROLA, INC.
By: /s/ Gary Vilchick By:/s/ Ray Burgess
Name: Gary Vilchick Name: Ray Burgess
Title:Executive V.P., CFO Title:VP & Asst. General Manager, CS0G
Date: June 25, 1998 Date:June 25, 1998
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT A-2
STATEMENT OF WORK
to the Professional Services Agreement between
Spyglass, Inc. and Motorola, Inc.
WHEREAS, Client and Spyglass executed a Professional Services Agreement
of even date herewith (the "Agreement") under which Client can procure
certain professional services from Spyglass;
WHEREAS, Client has requested and Spyglass has agreed to provide
certain services toward the modification of Spyglass' products for
Client's environment; and
WHEREAS, Spyglass desires to provide such services to Client on the
terms set forth in the Agreement and as set forth below.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, Spyglass and Client agree as follows:
1. Conflicts/Terms. The terms and conditions of this Statement of
Work are subject to and governed by the terms and conditions of the
Agreement. In the event of a conflict between any term of this
Statement of Work and the Agreement, the terms of this Statement of
Work shall control. Capitalized terms shall have the meanings
identified in the Agreement unless otherwise defined in this Statement
of Work.
2. Spyglass Services and Client Requirements.
Spyglass will make modifications to Device Mosaic V3.0 and the ThinGUI
graphics library (ported to Client's [**] platform as outlined in
Exhibit A-1, Statement of Work, between the parties) to support the
following features/Client requirements:
[**]
Spyglass will perform quality assurance testing on the modified Device
Mosaic V3.0 and the ThinGUI graphics library.
Spyglass will perform a requirements study to [**]. During the
requirements study, Spyglass will work with the Client to define the
[**] required by Client for Client's [**] target platform.
Spyglass will perform a requirements study to [**]. During the
requirements study, Spyglass will work with the Client to define the
[**] required by Client for Client's [**] target platform.
3. Deliverables:
1) The Spyglass Services outlined under Section 2 will result in the
following deliverables:
(i) A source code version of Spyglass' Device Mosaic V3.0 and ThinGUI
libraries with the modifications defined in item 2a.
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(ii) A requirements document detailing Spyglass Device Mosaic V3.0
modifications required to [**].
(iii) A requirements document detailing Spyglass Device Mosaic V3.0
and MicoServer V2.0 modifications required to [**].
(iv) Within thirty (30) days following the Agreement Date, Spyglass
shall provide Client with a document outlining [**] to be used for
Client's [**] identified first above. [**] between the parties and the
parties shall use good faith efforts to reach agreement.
4. Client Obligations:
It is Client's obligation to acquire and provide Spyglass with:
The necessary target platform [**] hardware and software.
[**]
[**] Board Support Packages configured for [**].
Client represents and warrants that it has obtained the required
license rights to the hardware/software for Spyglass to perform the
Services hereunder at Spyglass' facility.
Client shall be responsible for all shipment/insurance costs of such
items to the Spyglass facility and for the costs to deinstall and
retrieve such items.
5. Assumptions:
Client will provide Spyglass with the target hardware and software for
four users. Client will provide on Spyglass' site support for
successful installation and configuration of the hardware and software.
Services identified in Section 2 are contingent upon completion of
porting efforts defined in the Exhibit A-1, Statement of Work, between
the parties.
For item 2(a)1:
Client will provide [**].
The functions [**].
The functions will [**].
For item 2(a)5:
This function will be developed for the Client's [**] operating
environment only. Client must provide the [**] target hardware and
software (if applicable) before the commencement of this Service.
6. Technical Support: Promptly following Client's request, Spyglass
shall provide a proposal for Technical Support Services for the
Deliverables identified herein.
<PAGE>
EXHIBIT B
PROFESSIONAL SERVICES FEES
TO
EXHIBIT A-2
STATEMENT OF WORK
Fees: The fees due hereunder are included in the Initial Purchase
Commitment set forth in Exhibit B of the Source License and
Distribution Agreement between the parties executed of even date
herewith. Such fees are inclusive of any expenses incurred by Spyglass
while performing the Services identified in this Statement of Work, and
such fees are in addition to the fees due under the Interim Agreement
between the parties dated April 20, 1998, as extended and amended on
June 1, 1998.
IN WITNESS WHEREOF, the parties, as of the date first set forth above,
have caused this Statement of Work to be executed by their duly
authorized representatives.
SPYGLASS, INC. CLIENT: MOTOROLA, INC.
By: /s/ Gary Vilchick By: /s/ Ray Burgess
Name: Gary Vilchick Name: Ray Burgess
Title: Executive V.P., CFO Title:VP & Asst. General Manager, CSG
Date: June 25, 1998 Date: June 25, 1998
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENT FOR THE PERIOD ENDED JUNE 30, 1998 AND
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
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<RECEIVABLES> 5,448
<ALLOWANCES> 416
<INVENTORY> 0
<CURRENT-ASSETS> 30,156
<PP&E> 3,990
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,724
<CURRENT-LIABILITIES> 4,451
<BONDS> 0
0
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<COMMON> 138
<OTHER-SE> 30,035
<TOTAL-LIABILITY-AND-EQUITY> 34,724
<SALES> 8,712
<TOTAL-REVENUES> 14,636
<CGS> 1,449
<TOTAL-COSTS> 3,422
<OTHER-EXPENSES> 19,564
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8,350)
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