-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BPWtSBCrpoETwiTKLR6Y/LPZZ9J5XRY8w52zt+MtQHClpMT0RxPQhJw2bwp9AUJj LPZS3Rt9L7UBc6/nlPyZkA== 0001012870-98-001389.txt : 19980521 0001012870-98-001389.hdr.sgml : 19980521 ACCESSION NUMBER: 0001012870-98-001389 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 19980520 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: POINTCAST INC CENTRAL INDEX KEY: 0001018729 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770315081 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-52663 FILM NUMBER: 98628980 BUSINESS ADDRESS: STREET 1: 501 MACARA AVE STREET 2: 4TH FL CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 4089907007 MAIL ADDRESS: STREET 1: 501 MACARA AVE STREET 2: 4TH FL CITY: SUNNYVALE STATE: CA ZIP: 94086 S-1/A 1 AMENDMENT #1 TO FORM S-1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1998 REGISTRATION STATEMENT NO. 333-52663 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- POINTCAST INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 7372 77-0315081 (STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
--------------- 501 MACARA AVENUE SUNNYVALE, CA 94086 (408) 990-7000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- DAVID W. DORMAN PRESIDENT AND CHIEF EXECUTIVE OFFICER CHAIRMAN OF THE BOARD POINTCAST INCORPORATED 501 MACARA AVENUE SUNNYVALE, CA 94086 (408) 990-7000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) --------------- COPIES TO: LARRY W. SONSINI, ESQ. SCOTT C. DETTMER, ESQ. JUDITH M. O'BRIEN, ESQ. BENNETT L. YEE, ESQ. DONNA M. PETKANICS, ESQ. JONATHAN J. NOBLE, ESQ. BRUCE M. MCNAMARA, ESQ. GUNDERSON DETTMER STOUGH WILSON SONSINI GOODRICH & ROSATI VILLENEUVE FRANKLIN & HACHIGIAN, LLP PROFESSIONAL CORPORATION 155 CONSTITUTION DRIVE 650 PAGE MILL ROAD MENLO PARK, CA 94025 PALO ALTO, CA 94304 (650) 321-2400 (650) 493-9300 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] --------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- EXPLANATORY NOTE This Amendment No. 1 to the Form S-1 Registration Statement is being filed for the sole purpose of filing additional exhibits. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by the Registrant in connection with the sale of Common Stock being registered. All amounts are estimates except the SEC registration fee, the NASD filing fee and the Nasdaq National Market listing fee.
AMOUNT TO BE PAID ---------- SEC registration fee........................................... $15,267 NASD filing fee................................................ 5,675 Nasdaq National Market listing fee............................. * Printing and shipping fees..................................... * Legal fees and expenses........................................ * Accounting fees and expenses................................... * Directors and officers liability insurance..................... * Blue Sky qualification fees and expenses....................... * Transfer agent and registrar fees.............................. * Miscellaneous fees............................................. * ------- Total........................................................ $ * =======
- -------- * To be filed by amendment. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS Reference is made to the following documents filed as exhibits to this Registration Statement regarding relevant indemnification provisions described above and elsewhere herein:
EXHIBIT DOCUMENT NUMBER -------- ------- Form of Underwriting Agreement................................... 1.1 Amended and Restated Certificate of Incorporation................ 3.2 Bylaws of Registrant............................................. 3.3 Amended and Restated Investors' Rights Agreement................. 4.1 Form of Indemnification Agreement entered into by the Registrant with each of its directors and executive officers............... 10.1
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES Since March 31, 1995, the Registrant has issued and sold the following securities: 1. Since March 31, 1995, the Registrant issued and sold 1,386,155 shares of Common Stock to directors, employees and consultants at prices ranging from $0.06 to $7.50 per share, upon exercise of stock options pursuant to the Registrant's 1994 Stock Plan and pursuant to Common Stock Purchase Agreements. 2. On December 7, 1995, the Registrant issued and sold an aggregate of 2,449,634 shares of Series B Preferred Stock to a total of seven investors at $2.11 per share, for an aggregate purchase price of $5,169,578.08. 3. On February 9, 1996, the Registrant issued and sold an aggregate of 971,038 shares of Series C Preferred Stock to a total of five investors at $3.00 per share, for an aggregate purchase price of $2,913,108.00. 4. From July 19, 1996 to July 31, 1996, the Registrant issued and sold an aggregate of 2,540,356 shares of Series D Preferred Stock to a total of 14 investors at $14.25 per share, for an aggregate purchase price of $36,200,006.50. II-1 5. From September 12, 1997 to January 13, 1998, the Registrant issued and sold an aggregate of 1,533,607 shares of Series E Preferred Stock to a total of nine investors at $14.25 per share, for an aggregate purchase price of $21,853,838.00. 6. On July 31, 1995, the Registrant granted warrants to purchase an aggregate of 26,280 shares of Series B Preferred Stock to one investor at $2.1104 per share. 7. On December 10, 1996, the Registrant granted a warrant to purchase an aggregate of 701,756 shares of Series D Preferred Stock to two investors at $14.25 per share. 8. On December 11, 1997, the Registrant granted warrants to purchase an aggregate of 208,334 shares of Common Stock to two investors at $7.50 per share. The sale of the above securities was deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or transactions pursuant to compensation benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates issued in such transactions. All recipients had adequate access, through their relationships with the Registrant, to information about the Registrant. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits
EXHIBIT NO. DESCRIPTION ----------- ----------- 1.1* Form of Underwriting Agreement. 3.1 Certificate of Incorporation of Registrant. 3.2* Amended and Restated Certificate of Incorporation. 3.3* Bylaws of Registrant. 4.1 Amended and Restated Investors' Rights Agreement dated September 12, 1997. 5.1* Opinion of Wilson Sonsini Goodrich & Rosati regarding legality of the securities being issued. 10.1** Form of Indemnification Agreement entered into by Registrant with each of its directors and executive officers. 10.2 Stock Option Agreement with Philip J. Koen dated as of May 28, 1997. 10.3** 1994 Stock Plan and related agreements, as amended. 10.4** 1998 Employee Stock Purchase Plan and related agreements. 10.5*** 1998 Director Option Plan and related agreements. 10.6 PointCast Japan, L.L.C. Limited Liability Company Agreement by and between the Registrant and TransCosmos, Incorporated dated as of May 30, 1997. 10.7 Assignment of Commercial Exploitation Rights Agreement by and among the Registrant, TransCosmos, Incorporated and PointCast Japan, L.L.C. effective as of May 30, 1997. 10.8 Assignment of Commercial Exploitation Rights by and between PointCast Japan, L.L.C. and PointCast K.K. effective as of July 25, 1997. 10.9 Commercial Exploitation Rights Agreement by and between TransCosmos, Incorporated and the Registrant effective as of May 30, 1997. 10.10+ Administrative Services and Management Agreement by and between PointCast K.K. and TransCosmos, Incorporated dated as of July 25, 1997. 10.11+ Sub-License of Technology and Trademark Rights by and between PointCast Japan, L.L.C. and PointCast K.K. effective as of July 25, 1997.
II-2
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.12+ Maintenance and Support Agreement by and between the Registrant and PointCast K.K. dated as of July 25, 1997. 10.13 Technology and Trademark License Agreement by and between the Registrant and PointCast Japan, L.L.C. effective as of May 30, 1997. 10.14** Employment Agreement by and between the Registrant and David Dorman dated as of November 1, 1997 and related agreements. 10.15** Lease Agreement by and between John Arrillaga, Trustee, UTA dated 7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated 7/20/77 as amended, and the Registrant dated as of January 22, 1997. 10.16** Sublease by and between the Registrant and Internet Shopping Network, Inc. dated as of August 29, 1997. 10.17** Lease Agreement by and between John Arrillaga, Trustee, UTA dated 7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated 7/30/77 as amended, and the Registrant dated as of May 21, 1996, and the amendment thereto. 10.18+ Services Agreement by and between Electronic Data Systems Corporation and the Registrant dated as of December 19, 1996. 10.19** Part-Time Employment and Non-Competition Agreement by and between the Registrant and Christopher R. Hassett. 10.20** Part-Time Employment and Non-Competition Agreement by and between the Registrant and Gregory P. Hassett. 10.21 Preferred Stock Purchase Warrant granted to Lighthouse Capital Partners, L.P. dated as of August 10, 1995. 10.22 Common Stock Purchase Warrant granted to Benchmark Capital Partners, L.P. dated as of December 11, 1997. 10.23 Common Stock Purchase Warrant granted to Benchmark Founders' Fund, L.P. dated as of December 11, 1997. 10.24 Series D Preferred Stock Purchase Warrant granted to Cable News Network, Inc. dated as of December 10, 1996. 10.25 Series D Preferred Stock Purchase Warrant granted to Time Inc. New Media dated as of December 10, 1996. 10.26 Loan and Security Agreement by and between MetLife Capital Corporation and the Registrant dated as of November 18, 1997. 10.27 Revolving Credit Loan & Security Agreement by and between Comerica Bank-California and the Registrant dated as of August 4, 1997. 16.1** Letter of Arthur Andersen LLP, Independent Auditors. 21.1** Subsidiaries. 23.1* Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 5.1). 23.2** Consent of Price Waterhouse LLP, Independent Accountants. 24.1** Power of Attorney. 27.1** Financial Data Schedule.
- -------- * To be filed by amendment. ** Previously filed. *** Corrected version of previously filed document. + Confidential treatment has been requested for certain portions which have been blacked out in the copy of the exhibit filed with the Securities and Exchange Commission. The omitted information has been filed separately with the Securities and Exchange Commission pursuant to the application for confidential treatment. II-3 (b) Financial Statement Schedule Schedule II--Valuation and Qualifying Accounts........................ S-1
Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto. ITEM 17. UNDERTAKINGS The undersigned Registrant hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the Delaware General Corporation Law, the Registrant's Restated Certificate of Incorporation, the Registrant's Bylaws, the Registrant's indemnification agreements or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of Prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to the Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California, on this 20th day of May 1998. PointCast Incorporated * By: _________________________________ DAVID W. DORMAN, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- * Chairman of the May 20, 1998 - ------------------------------------- Board, President (DAVID W. DORMAN) and Chief Executive Officer (Principal Executive Officer) /s/ Philip J. Koen Senior Vice - ------------------------------------- President, Finance May 20, 1998 (PHILIP J. KOEN) and Chief Financial Officer (Principal Financial and Accounting Officer) * Director May 20, 1998 - ------------------------------------- (SANFORD R. CLIMAN) * Director May 20, 1998 - ------------------------------------- (JONATHAN FEIBER) * Director May 20, 1998 - ------------------------------------- (CHARLES GESCHKE)
II-5
SIGNATURE TITLE DATE --------- ----- ---- * Director May 20, 1998 - ------------------------------- (KEVIN R. HARVEY) * Director May 20, 1998 - ------------------------------- (GREGORY P. HASSETT) * Director May 20, 1998 - ------------------------------- (STEVEN HEYER) * Director May 20, 1998 - ------------------------------- (ANDREW S. RACHLEFF) /s/ Philip J. Koen *By: __________________________ PHILIP J. KOEN Attorney-in-Fact
II-6 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 1.1* Form of Underwriting Agreement. 3.1 Certificate of Incorporation of Registrant. 3.2* Amended and Restated Certificate of Incorporation. 3.3* Bylaws of Registrant. 4.1 Amended and Restated Investors' Rights Agreement dated September 12, 1997. 5.1* Opinion of Wilson Sonsini Goodrich & Rosati regarding legality of the securities being issued. 10.1** Form of Indemnification Agreement entered into by Registrant with each of its directors and executive officers. 10.2 Stock Option Agreement with Philip J. Koen dated as of May 28, 1997. 10.3** 1994 Stock Plan and related agreements, as amended. 10.4** 1998 Employee Stock Purchase Plan and related agreements. 10.5*** 1998 Director Option Plan and related agreements. 10.6 PointCast Japan, L.L.C. Limited Liability Company Agreement by and between the Registrant and TransCosmos, Incorporated dated as of May 30, 1997. 10.7 Assignment of Commercial Exploitation Rights Agreement by and among the Registrant, TransCosmos, Incorporated and PointCast Japan, L.L.C. effective as of May 30, 1997. 10.8 Assignment of Commercial Exploitation Rights by and between PointCast Japan, L.L.C. and PointCast K.K. effective as of July 25, 1997. 10.9 Commercial Exploitation Rights Agreement by and between TransCosmos, Incorporated and the Registrant effective as of May 30, 1997. 10.10+ Administrative Services and Management Agreement by and between PointCast K.K. and TransCosmos, Incorporated dated as of July 25, 1997. 10.11+ Sub-License of Technology and Trademark Rights by and between PointCast Japan, L.L.C. and PointCast K.K. effective as of July 25, 1997. 10.12+ Maintenance and Support Agreement by and between the Registrant and PointCast K.K. dated as of July 25, 1997. 10.13 Technology and Trademark License Agreement by and between the Registrant and PointCast Japan, L.L.C. effective as of May 30, 1997. 10.14** Employment Agreement by and between the Registrant and David Dorman dated as of November 1, 1997 and related agreements. 10.15** Lease Agreement by and between John Arrillaga, Trustee, UTA dated 7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated 7/20/77 as amended, and the Registrant dated as of January 22, 1997. 10.16** Sublease by and between the Registrant and Internet Shopping Network, Inc. dated as of August 29, 1997. 10.17** Lease Agreement by and between John Arrillaga, Trustee, UTA dated 7/20/77 as amended, and Richard T. Peery, Trustee, UTA dated 7/30/77 as amended, and the Registrant dated as of May 21, 1996, and the amendment thereto. 10.18+ Services Agreement by and between Electronic Data Systems Corporation and the Registrant dated as of December 19, 1996. 10.19** Part-Time Employment and Non-Competition Agreement by and between the Registrant and Christopher R. Hassett.
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.20** Part-Time Employment and Non-Competition Agreement by and between the Registrant and Gregory P. Hassett. 10.21 Preferred Stock Purchase Warrant granted to Lighthouse Capital Partners, L.P. dated as of August 10, 1995. 10.22 Common Stock Purchase Warrant granted to Benchmark Capital Partners, L.P. dated as of December 11, 1997. 10.23 Common Stock Purchase Warrant granted to Benchmark Founders' Fund, L.P. dated as of December 11, 1997. 10.24 Series D Preferred Stock Purchase Warrant granted to Cable News Network, Inc. dated as of December 10, 1996. 10.25 Series D Preferred Stock Purchase Warrant granted to Time Inc. New Media dated as of December 10, 1996. 10.26 Loan and Security Agreement by and between MetLife Capital Corporation and the Registrant dated as of November 18, 1997. 10.27 Revolving Credit Loan & Security Agreement by and between Comerica Bank-California and the Registrant dated as of August 4, 1997. 16.1** Letter of Arthur Andersen LLP, Independent Auditors. 21.1** Subsidiaries. 23.1* Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 5.1). 23.2** Consent of Price Waterhouse LLP, Independent Accountants. 24.1** Power of Attorney. 27.1** Financial Data Schedule.
- -------- * To be filed by amendment. ** Previously filed. *** Corrected version of previously filed document. + Confidential treatment has been requested for certain portions which have been blacked out in the copy of the exhibit filed with the Securities and Exchange Commission. The omitted information has been filed separately with the Securities and Exchange Commission pursuant to the application for confidential treatment. EX-3.1 2 CERTIFICATE OF INCORPORATION EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF POINTCAST INCORPORATED FIRST. The name of the corporation is PointCast Incorporated. SECOND. The address of the corporation's registered office in the State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. The total number of shares which the corporation shall have authority to issue is 1,000 shares of capital stock, and the par value of each such share is $.001 per share. FIFTH. The name and mailing address of the incorporator are: Naomi Kuhn Corporate Paralegal Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304 SIXTH. The Board of Directors of the corporation is expressly authorized to adopt, amend or repeal the by-laws of the corporation, but the stockholders may make additional by-laws and may alter or repeal any by-law whether adopted by them or otherwise. SEVENTH. Elections of directors need not be by written ballot except and to the extent provided in the by-laws of the corporation. EIGHTH. A director of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of this Article EIGHTH shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. The undersigned incorporator hereby acknowledges that the foregoing Certificate of Incorporation is the act and deed of such incorporator and that the facts stated therein are true. /s/ Naomi Kuhn ---------------------------- Incorporator EX-4.1 3 AMENDED & RESTATED INVESTOR'S RIGHTS AGREEMENT EXHIBIT 4.1 POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SEPTEMBER 12, 1997 TABLE OF CONTENTS
PAGE ---- SECTION 1. Restrictions on Transferability; Registration Rights................................... 2 1.1 Certain Definitions.......................................................... 2 1.2 Restrictions on Transfer..................................................... 3 1.3 Restrictive Legend........................................................... 4 1.4 Notice of Proposed Transfers................................................. 4 1.5 Requested Registration....................................................... 5 1.6 Company Registration......................................................... 7 1.7 Registration on Form S-3..................................................... 8 1.8 Limitations on Subsequent Registration Rights................................ 9 1.9 Expenses of Registration..................................................... 9 1.10 Registration Procedures...................................................... 10 1.11 Indemnification.............................................................. 11 1.12 Information by Holder........................................................ 12 1.13 Rule 144 Reporting........................................................... 13 1.14 Transfer of Registration Rights.............................................. 13 1.15 Standoff Agreement........................................................... 13 1.16 Termination of Rights........................................................ 14 SECTION 2. Affirmative Covenants of the Company and Holders....................................... 14 2.1 Financial Information........................................................ 14 2.2 Additional Financial Information............................................. 14 2.3 Inspection................................................................... 15 2.4 Assignment of Rights to Financial Information................................ 15 2.5 Proprietary Information Agreement............................................ 15 2.6 Termination of Covenants...................................................... 15 2.7 Right of First Offer.......................................................... 15 2.8 Voting Agreement and Grant of Proxy with Respect to Reorganization or Sale of Assets Transaction................................................. 17 SECTION 3. Miscellaneous........................................................................... 18 3.1 Assignment.................................................................... 18 3.2 Third Parties................................................................. 18 3.3 Governing Law................................................................. 18 3.4 Counterparts.................................................................. 18 3.5 Notices....................................................................... 18 3.6 Severability.................................................................. 18 3.7 Amendment and Waiver.......................................................... 18
-i- TABLE OF CONTENTS (CONTINUED)
PAGE ---- 3.8 Effect of Amendment or Waiver................................................ 19 3.9 Rights of Holders............................................................ 19 3.10 Delays or Omissions.......................................................... 19
EXHIBIT A Schedule of Investors EXHIBIT B Irrevocable Proxy -ii- AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT ---------------------------------------------- THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of the 12th day of September, 1997, by and among PointCast Incorporated, a California corporation (the "Company"), the persons set forth on the Schedule of Investors attached hereto as Exhibit A (the "Investors") and, --------- with respect to Sections 1.2, 1.6 and 2.8, Christopher R. Hassett and Gregory P. Hassett (the "Founders") and Lighthouse Capital Partners, L.P. ("Lighthouse"). RECITALS A. The Company sold and issued to certain of the Investors (the "Series A Holders") 6,421,385 shares of the Series A Preferred Stock of the Company pursuant to that certain Series A Preferred Stock Purchase Agreement between the Company and the Series A Holders dated as of June 3, 1994 (the "Series A Agreement"); the Company sold and issued to certain of the Investors (the "Series B Holders") 3,674,446 shares of the Series B Preferred Stock of the Company pursuant to that certain Series B Preferred Stock Purchase Agreement between the Company and the Series B Holders dated as of December 7, 1995 (the "Series B Agreement"); the Company sold and issued to certain investors (the "Series C Holders") 1,456,554 shares of Series C Preferred Stock of the Company pursuant to that certain Series C Preferred Stock Purchase Agreement between the Company and the Series C Holders dated as of February 9, 1996 (the "Series C Agreement"); the Company sold and issued to certain investors (the "Series D Holders") 3,810,527 shares of Series D Preferred Stock of the Company pursuant to that certain Series D Preferred Stock Purchase Agreement between the Company and the Series D Holders dated as of July 19, 1996 (the "Series D Agreement"); and the Company has issued warrants to purchase an aggregate of 1,052,632 shares of Series D Preferred Stock (the "Series D Warrants"). Pursuant to that certain Amended and Restated Investor Rights Agreement dated as of July 19, 1996 (the "Prior Agreement") the Company granted to such Series A Holders, Series B Holders, Series C Holders, Series D Holders and Lighthouse certain rights. B. Pursuant to that certain Series E Preferred Stock Purchase Agreement of even date herewith (the "Series E Agreement"), the Company has agreed to sell to certain of the Investors (the "Series E Holders") a total of 2,200,000 shares of Series E Preferred Stock of the Company and, as an inducement for such Series E Holders to purchase such shares, the Company, the Series A Holders, the Series B Holders, the Series C Holders, the Series D Holders and Lighthouse have agreed to enter into this Agreement to supersede, amend and restate the rights granted to the Series A Holders, Series B Holders, Series C Holders, Series D Holders and Lighthouse in the Prior Agreement (all rights of first refusal under Section 2.8 of such Prior Agreement in respect of the Series E Preferred Stock hereby being expressly waived). NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties agree as follows: SECTION 1. Restrictions on Transferability; -------------------------------- Registration Rights ------------------- 1.1 Certain Definitions. As used in this Agreement, the following terms ------------------- shall have the following respective meanings: "Commission" shall mean the Securities and Exchange Commission or any ---------- other federal agency at the time administering the Securities Act. "Common Stock" means shares of the Company's common stock. ------------ "Conversion Shares" means the Common Stock issued or issuable upon ----------------- conversion of the Shares. "Exchange Act" shall mean the Securities Exchange Act of 1934, as ------------ amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Holder" shall mean any Investor holding Registrable Securities and ------ any person holding Registrable Securities to whom the rights under this Agreement have been transferred in accordance with Section 1.14 hereof and Lighthouse. Christopher R. Hassett and Gregory P. Hassett shall be deemed to be Holders, but only with respect to Sections 1.2, 1.6 and 2.8. "Initiating Holders" shall mean any Investors, transferees of ------------------ Investors under Section 1.14 hereof or Lighthouse who in the aggregate are Holders of not less than twenty-five percent (25%) of the Registrable Securities. The terms "register," "registered" and "registration" refer to a -------- ---------- ------------ registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean all expenses incurred by the --------------------- Company in complying with Sections 1.5, 1.6 and 1.7 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). "Registrable Securities" means the Shares or Conversion Shares or ---------------------- other securities issued or issuable with respect to the Shares or Conversion Shares upon any stock split, stock dividend, recapitalization, or similar event, or any Common Stock otherwise issued or issuable with -2- respect to the Shares or Conversion Shares; provided, however, that shares of -------- ------- Common Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale. The Common Stock held by Christopher R. Hassett and Gregory P. Hassett shall be deemed Registrable Securities, but only with respect to a registration effected pursuant to Section 1.6 below. "Restricted Securities" shall mean the securities of the Company --------------------- required to bear the legend set forth in Section 1.3 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended, or -------------- any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Selling Expenses" shall mean all underwriting discounts, selling ---------------- commissions and stock transfer taxes applicable to the securities registered by the Holders and all fees and disbursements of counsel for the Holders (as limited by Section 1.9). "Shares" shall mean the shares of Series E Preferred Stock sold to the ------ Investors pursuant to the Series E Agreement (whether at the initial closing or any subsequent closings), the shares of Series D Preferred Stock sold to the Series D Holders pursuant to the Series D Agreement, the shares of Series C Preferred Stock sold to the Series C Holders pursuant to the Series C Agreement, the shares of Series B Preferred Stock sold to the Series B Holders pursuant to the Series B Agreement, the shares of Series A Preferred Stock sold to the Series A Holders pursuant to the Series A Agreement, the shares of Series B Preferred Stock issuable upon exercise of the Lighthouse Warrants, and the shares of Series D Preferred Stock issuable upon exercise of the Series D Warrants. 1.2 Restrictions on Transfer. The Shares and the Conversion Shares shall ------------------------ not be sold, assigned, pledged or otherwise transferred (collectively, "Transfer") except upon the conditions specified in this Agreement. Any permitted purchaser, assignee, transferee or pledgee (collectively , a "Transferee") shall, in any and all events, agree in writing to be bound by all of the conditions of this Agreement as a prior condition to receiving any Shares or Conversion Shares. Any party to this Agreement proposing to Transfer Shares or Conversion Shares shall cause any proposed Transferee of the Shares and the Conversion Shares to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. 1.3 Restrictive Legend. Each certificate representing (i) the Shares, ------------------ (ii) the Conversion Shares, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii) upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of Section 1.4 below) be stamped or otherwise -3- imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws): "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT." "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. THIS CONDITION TO TRANSFER SHALL TERMINATE ON THE EFFECTIVE DATE OF THE COMPANY'S INITIAL PUBLIC OFFERING." Each Investor and Holder consents to the Company making a notation on its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer established in this Section 1. 1.4 Notice of Proposed Transfers. The holder of each certificate ---------------------------- representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 1. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied at such holder's expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall be, reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act, or (ii) a "no action" letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, or (iii) any other evidence reasonably satisfactory to counsel to the Company, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company. The Company will not require such a legal opinion or "no action" letter (a) in any transaction in compliance with Rule 144, (b) in any transaction in which an Investor which is a corporation distributes Restricted Securities after six (6) months after the purchase thereof solely to its majority owned subsidiaries or affiliates for no consideration, or (c) in any transaction in which -4- an Investor which is a partnership distributes Restricted Securities after six (6) months after the purchase thereof solely to partners thereof for no consideration; provided that each transferee agrees in writing to be subject to -------- the terms of this Section 1.4. Each certificate evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 1.3 above, except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act. 1.5 Requested Registration. ---------------------- (a) Request for Registration. In case the Company shall receive from ------------------------ Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to the Registrable Securities, the Company will: (i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and (ii) as soon as practicable, use its best efforts to effect such registration, qualification or compliance (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within thirty (30) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to take -------- ------- any action to effect any such registration, qualification or compliance pursuant to this Section 1.5: (1) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (2) Prior to the earlier of (a) six (6) months following the effective date of the first public offering of the Common Stock of the Company to the general public which is effected pursuant to a registration statement filed with, and declared effective by, the Commission under the Securities Act (the "Initial Public Offering") or (b) July 19, 2001; (3) During the period starting with the date sixty (60) days prior to the Company's estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee -5- benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective and that the Company's estimate of the date of filing such registration statement is made in good faith; (4) After the Company has effected two (2) such registrations pursuant to this subparagraph 1.5(a), each such registration has been declared or ordered effective and the securities offered pursuant to each such registration have been sold; or (5) If the Company shall furnish to such Holders a certificate, signed by the President of the Company, stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to register, qualify or comply under this Section 1.5 shall be deferred for a period not to exceed ninety (90) days from the date of receipt of written request from the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period. Subject to the foregoing clauses (1) through (5), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders. (b) Underwriting. In the event that a registration pursuant to ------------ Section 1.5 is for a registered public offering involving an underwriting, the Company shall so advise the Holders as part of the notice given pursuant to Section 1.5(a)(i). The right of any Holder to registration pursuant to Section 1.5 shall be conditioned upon such Holder's participation in the underwriting arrangements required by this Section 1.5 and the inclusion of such Holder's Registrable Securities in the under writing, to the extent requested, to the extent provided herein. The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by a majority in interest of the Initiating Holders (which managing underwriter shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 1.5, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement, provided, however, that the number of shares of -------- ------- Registrable Securities to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. -6- If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be transferred in a public distribution prior to ninety (90) days after the effective date of such registration. 1.6 Company Registration. -------------------- (a) Notice of Registration. If at any time or from time to time, the ---------------------- Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders other than (i) a registration relating solely to employee benefit plans, or (ii) a registration relating solely to a Commission Rule 145 transaction, the Company will: (i) promptly give to each Holder written notice thereof; and (ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made within thirty (30) days after receipt of such written notice from the Company by any Holder, but only to the extent that such inclusion will not diminish the number of securities included by holders of the Company's securities who have demanded such registration pursuant to Section 1.5 hereof. (b) Underwriting. If the registration of which the Company gives ------------ notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 1.6(a)(i). In such event, the right of any Holder to registration pursuant to Section 1.6 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company (or by the holders who have demanded such registration). Notwithstanding any other provision of this Section 1.6, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the number of Registrable Securities to be included in the registration and underwriting (up to the exclusion of all Registrable Securities in the event of the Company's Initial Public Offering), on a pro rata basis based on the total number of securities --- ---- (including, without limitation, Registrable Securities) entitled to registration pursuant to registration rights granted to the participating Holders by the Company; provided, however, that if such offering is not the Initial Public Offering, no such reduction may reduce the number of securities being sold by the Holders to less than thirty percent (30%) of the shares being sold in such offering. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder or other holder to the nearest 100 shares. If any Holder or other holder disapproves of the terms of any such underwriting, he or she may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded -7- or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to ninety (90) days after the effective date of the registration statement relating thereto. (c) Right to Terminate Registration. The Company shall have the right ------------------------------- to terminate or withdraw any registration initiated by it under this Section 1.6 prior to the effectiveness of such registration, whether or not any Holder has elected to include securities in such registration. 1.7 Registration on Form S-3. ------------------------ (a) Following the Initial Public Offering, the Company shall use its best efforts to become eligible to use the Form S-3 registration statement for public offerings of its capital stock. If any Holder or Holders of Registrable Securities requests that the Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities, the reasonably anticipated aggregate price to the public of which, net of underwriting discounts and commissions, would exceed $500,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use its best efforts to cause such Registrable Securities to be registered for the offering on such form. The Company will (i) promptly give written notice of the proposed registration to all other Holders, and (ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within thirty (30) days after receipt of such written notice from the Company. The substantive provisions of Section 1.5(b) shall be applicable to each registration initiated under this Section 1.7. (b) Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 1.7: (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) during the period starting with the date sixty (60) days prior to the Company's estimated date of filing of, and ending on the date four (4) months immediately following the effective date of, a registration statement (other than with respect to a registration statement relating to a Rule 145 transaction, an offering solely to employees or any other registration which is not appropriate for the registration of Registrable Securities), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; (iii) during any 12-month period in which the Company has effected at least three (3) such registrations pursuant to this Section 1.6 or Section 1.7 of the Prior Agreement; or (iv) if the Company shall furnish to such Holder a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the -8- Company or its shareholders for registration statements to be filed in the near future, then the Company's obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed ninety (90) days from the receipt of the request to file such registration by such Holder or Holders; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period. 1.8 Limitations on Subsequent Registration Rights. From and after the --------------------------------------------- date hereof, the Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights with respect to such securities unless such new registration rights are subordinate to the registration rights granted Holders hereunder, including, without limitation, provision for a standoff obligation no shorter than that provided for in this Agreement. 1.9 Expenses of Registration. All Registration Expenses incurred in ------------------------ connection with any registration pursuant to Sections 1.5, 1.6 and 1.7 and the reasonable cost of one special legal counsel to represent all of the Holders together in any such registration shall be borne by the Company. If a registration proceeding is begun upon the request of Initiating Holders pursuant to Section 1.5, but such request is subsequently withdrawn, then the Holders of Registrable Securities to have been registered may either: (i) bear all Registration Expenses of such proceeding, pro rata on the basis of the number of shares to have been registered, in which case the Company shall be deemed not to have effected a registration pursuant to subparagraph 1.5(a) of this Agreement; or (ii) require the Company to bear all Registration Expenses of such proceeding, in which case the Company shall be deemed to have effected a registration pursuant to subparagraph 1.5(a) of this Agreement. Notwith standing the foregoing, however, if at the time of the withdrawal, the Holders have learned of a material adverse change in the condition, business or prospects of the Company from that known to the Holders at the time of their request, then the Holders shall not be required to pay any of said Registration Expenses. In such case, the Company shall be deemed not to have effected a registration pursuant to subparagraph 1.5(a) of this Agreement. Unless otherwise stated, all other Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of the registered securities included in such registration pro rata on the basis of the number of shares so registered. 1.10 Registration Procedures. In the case of each registration, ----------------------- qualification or compliance effected by the Company pursuant to this Section 1, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense the Company will: (a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for at least one hundred eighty (180) days or until the distribution described in the registration statement has been completed; and (b) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as -9- may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Holders participating in such registration and to the under writers of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities. (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed. (h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. (i) Use its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent -10- certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. 1.11 Indemnification. --------------- (a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Section 1, and each underwriter, if any, and each person who controls any under writer within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, preliminary prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation or any alleged violation by the Company of any rule or regulation promulgated under the Securities Act or the Exchange Act or any state securities law applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, as such expenses are incurred, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder, controlling person or underwriter and stated to be specifically for use therein. (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as such expenses are incurred, in each case to the extent, but only to the -11- extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. (c) Each party entitled to indemnification under this Section 1.11 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense; provided, however, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 1.11 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. 1.12 Information by Holder. The Holder or Holders of Registrable --------------------- Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 1. 1.13 Rule 144 Reporting. With a view to making available the benefits of ------------------ certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act; (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and -12- (c) So long as an Investor owns any Restricted Securities, to furnish to the Investor forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the Initial Public Offering), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as an Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing an Investor to sell any such securities without registration. 1.14 Transfer of Registration Rights. The rights to cause the Company to ------------------------------- register securities granted Investors under Sections 1.5, 1.6 and 1.7 may be assigned to a transferee or assignee reasonably acceptable to the Company in connection with any transfer or assignment of Registrable Securities by an Investor (together with any affiliate); provided that (a) such transfer may -------- otherwise be effected in accordance with applicable securities laws, (b) notice of such assignment is given to the Company, and (c) such transferee or assignee (i) is a wholly-owned subsidiary or constituent partner (including limited partners, retired partners, spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire Registrable Securities by gift, will or intestate succession) of such Investor, or (ii) acquires from such Investor at least 100,000 shares of Restricted Securities (as appropriately adjusted for stock splits and the like). 1.15 Standoff Agreement. Each Holder agrees in connection with any ------------------ registration of the Company's securities (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), upon request of the Company or the underwriters managing any under written offering of the Company's securities, not to sell, make any short sale of, loan, pledge (or otherwise encumber or hypothecate), grant any option for the purchase of, or otherwise directly or indirectly dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company and such managing underwriters for such period of time, not to exceed 180 days, as the Board of Directors establishes pursuant to its good faith negotiations with such managing underwriters; provided, however, -------- ------- that the Investors shall not be subject to such lockup unless the officers and directors of the Company who own stock of the Company shall also be bound by such restrictions. 1.16 Termination of Rights. The rights of any particular Holder to cause --------------------- the Company to register securities under Sections 1.5 and 1.6 shall terminate with respect to such Holder on the fifth anniversary of the effective date of the Company's Initial Public Offering. -13- SECTION 2. Affirmative Covenants of the Company and Holders ------------------------------------------------ The Company and Holders, as applicable, hereby covenant and agree as follows: 2.1 Financial Information. So long as an Investor is a holder of 90,000 --------------------- Shares and/or shares of Common Stock issued upon the conversion thereof (as adjusted for any stock splits, consolidations and the like), the Company will furnish to such Investor the following reports: (a) As soon as practicable after the end of each fiscal year, and in any event within ninety (90) days thereafter, audited consolidated balance sheets and statements of share holders' equity of the Company and its subsidiaries, if any, as of the end of such fiscal year, and consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and certified by independent public accountants of national standing selected by the Company; and (b) As soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited balance sheets of the Company and its subsidiaries, if any, as of the end of each such quarter, and consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for each such quarter, all prepared in accordance with generally accepted accounting principles. 2.2 Additional Financial Information. So long as an Investor is a holder -------------------------------- of 100,000 Shares and/or shares of Common Stock issued upon the conversion thereof (as adjusted for any stock splits, consolidations and the like), the Company will, in addition to the information furnished to such Investor pursuant to Section 2.1 above, furnish to such Investor the following reports: (a) As soon as practicable after the end of each calendar month, and in any event within 30 days thereafter, consolidated balance sheets of the Company and its subsidiaries, if any, as of the end of each calendar month, and consolidated statements of income and cash flows for such period and for the current fiscal year to date, together with a comparison of such statements to the Company's operating plan then in effect; and (b) As soon as practicable upon approval or adoption by the Company's Board of Directors, the Company will furnish such Investor with the Company's budget and operating plan (including projected balance sheets and profit and loss and cash flow statements) for such fiscal year. 2.3 Inspection. The Company shall permit each Investor and its ---------- representatives, at such Investor's expense, to visit and inspect the Company's properties, to examine its books of account and records and to discuss the Company's affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Investor; provided, however, that the Company shall not -14- be obligated pursuant to this Section 2.3 to provide access to any information which it reasonably considers to be a trade secret or similar confidential information. 2.4 Assignment of Rights to Financial Information. --------------------------------------------- (a) The rights granted pursuant to Section 2.1 may be assigned by an Investor to a third party who acquires at least 80,000 Shares and/or shares of Common Stock issued upon conversion thereof (as adjusted for any stock splits, consolidations and the like) from such Investor and who is not a competitor, or affiliated in any manner with a competitor, of the Company, provided that the Company receives notice twenty (20) days prior to such assignment; and (b) The rights granted pursuant to Section 2.2 may be assigned by an Investor to a third party who acquires at least 100,000 Shares and/or shares of Common Stock issued upon conversion thereof (as adjusted for any stock splits, consolidations and the like) from such Investor and who is not a competitor, or affiliated in any manner with a competitor, of the Company, provided that the Company receives notice twenty (20) days prior to such assignment. 2.5 Proprietary Information Agreement. The Company shall require each --------------------------------- person employed by, or who consults for, the Company to execute a proprietary information confidentiality and nondisclosure agreement in substantially the form provided to the Investors. 2.6 Termination of Covenants. The covenants set forth in Sections 2.1 ------------------------ through 2.5 shall terminate on, and be of no further force or effect after, the closing of the Company's Initial Public Offering. 2.7 Right of First Offer. Subject to the terms and conditions specified -------------------- in this Section 2.7, the Company hereby grants to each Investor a right of first offer with respect to future sales by the Company of its Securities (as hereinafter defined). Each time the Company proposes to offer subsequent to the offering under the Series E Agreement any shares of, or securities convertible into or exercisable for any shares of, any class of its capital stock ("Securities"), the Company shall first make an offering of such Securities to each Investor in accordance with the following provisions: (a) The Company shall deliver a notice by certified mail ("Notice") to each Investor stating (i) its bona fide intention to offer such Securities, (ii) the number of such Securities to be offered, (iii) the price, if any, for which it proposes to offer such Securities, and (iv) the terms of such offer. (b) Within fifteen (15) calendar days after receipt of the Notice, the Investor may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to an amount of such Securities equal to that portion of such Securities which equals the proportion that the number of shares of Common Stock then issued or issuable to the Investor upon conversion of the shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred -15- Stock and Series E Preferred Stock held by the Investor bears to the sum of the number of shares of Common Stock then issued plus the number of shares of Common Stock issuable upon conversion of all convertible securities of the Company then outstanding. For purposes of this Section 2.7, the term "Investor" includes any general partners or affiliates of an Investor. An Investor shall be entitled to apportion the right of first offer hereby granted among itself and its partners and affiliates in such proportions as it deems appropriate. (c) If all Securities which the Investors are entitled to purchase pursuant to this Section 2.7 are not elected to be obtained as provided in subsection 2.7(b) hereof, the Company may, during the thirty (30) day period following the expiration of the period provided in subsection 2.7(b) hereof, offer such unsubscribed Securities to any person or persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Notice. If the Company does not enter into an agreement for the sale of the Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived. (d) The right of first offer in this Section 2.7 shall not be applicable (i) to the issuance or sale of up to 6,000,000 shares of capital stock (or options therefor) after the date hereof to employees, officers, directors or consultants for the primary purpose of soliciting or retaining their services, provided that any such issuance or sale is approved by the Company's Board of Directors, (ii) to the issuance or sale of the Company's securities to leasing entities or financial institutions in connection with commercial leasing or borrowing transactions provided that any such issuance or sale is approved by the Company's Board of Directors, (iii) to or after consummation of a bona fide, underwritten firm commitment public offering of shares of Common Stock, registered under the Securities Act, at a price per share not less than $9.50 (subject to appropriate adjustment for stock splits, stock dividends, combinations and recapitalizations and the like) which results in aggregate proceeds to the Company of at least $20,000,000, (iv) conversions of convertible securities or (v) any issuances of any of the shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock authorized as of the date of this Agreement. 2.8 Voting Agreement and Grant of Proxy with Respect to Reorganization or --------------------------------------------------------------------- Sale of Assets Transaction. If a reorganization (as defined in Section 181 of - -------------------------- the California Corporations Code) or a transaction in which all or substantially all of the Company's assets are proposed to be sold (collectively, a "Reorganization") is proposed to be presented to the shareholders of the Company for approval, then the Holders agree as follows: (a) Agreement to Vote in Accordance with Preliminary Vote; Grant of --------------------------------------------------------------- Proxy. Not less than 12 business days prior to the date a vote is to be taken by - ----- (or written consent to be mailed to) the shareholders of the Company with respect to a Reorganization, the Secretary of the Company (the "Secretary") shall send via overnight courier or facsimile transmission to each Holder a complete description of such Reorganization and a questionnaire (the "Questionnaire"), to be completed by each Holder and returned to the Secretary, upon which each Holder shall indicate -16- whether such Holder would approve the Reorganization at a formal vote or written consent of the shareholders of the Company. Each Holder shall complete the Questionnaire and return it to the Secretary within 10 business days of the date the Questionnaire was deemed given in accordance with Section 3.5 hereof. Upon the earlier of (i) the date the Secretary receives all completed Questionnaires or (ii) 11 business days after the Questionnaires are deemed given to the Holders, the Secretary shall tabulate the responses to the Questionnaires. If the Holders of a majority of the shares of stock represented on the completed and returned Questionnaires (without regard to how many shares in the aggregate are held by all Holders) approve the Reorganization (without regard for any series, class or other voting rights, if any, contained in the Amended and Restated Articles of Incorporation of the Company from time to time), then each Holder agrees that, regardless of whether such Holder indicated on the Questionnaire that such Holder would vote to approve such Reorganization, such Holder will approve the proposed Reorganization at the time the proposed Reorganization is formally presented to the shareholders for their approval, and grants to the Secretary a limited, irrevocable proxy to so vote each Holder's shares, such proxy to be substantially in the form attached hereto as Exhibit B --------- and to be executed and delivered to the Secretary at the Closing (as defined in the Series E Agreement). (b) Covenant not to Impede Transaction. If a majority approval by the ---------------------------------- Holders who timely return Questionnaires of the proposed Reorganization is indicated pursuant to the procedure set forth in subsection 2.8(a) above, then each Holder further agrees not to in any way impede the consummation of the proposed Reorganization. This covenant shall include, without limitation, the obligation not to seek dissenters' appraisal rights or take any other action that would reasonably be taken (in the discretion of the Company's Board of Directors after consulting with the Company's counsel and independent public accountants) to prevent the proposed Reorganization from being eligible to be accounted for as a pooling of interests. (c) Termination of Voting Agreement. All agreements and covenants set ------------------------------- forth in this Section 2.8 shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of this Agreement and (ii) the closing of the Initial Public Offering. SECTION 3. Miscellaneous ------------- 3.1 Assignment. Except as otherwise provided herein, the terms and ---------- conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto. 3.2 Third Parties. Nothing in this Agreement, express or implied, is ------------- intended to confer upon any party, other than the parties hereto, and their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein. -17- 3.3 Governing Law. This Agreement shall be governed by and construed ------------- under the laws of the State of California in the United States of America. 3.4 Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 3.5 Notices. Any notice required or permitted by this Agreement shall ------- be in writing and shall be sent by either (a) prepaid registered or certified mail, return receipt requested, (b) overnight courier or (c) facsimile, addressed to the other party at the address shown on Exhibit A hereto or at such --------- other address for which such party gives notice hereunder. Such notice shall be deemed to have been given three (3) days after deposit in the mail, one (1) day after mailing via overnight courier or one (1) day after transmission via facsimile, provided that such facsimile was confirmed tele phonically on the date of transmission. 3.6 Severability. If one or more provisions of this Agreement are held ------------ to be unenforceable under applicable law, portions of such provisions, or such provisions in their entirety, to the extent necessary, shall be severed from this Agreement, and the balance of this Agreement shall be enforceable in accordance with its terms. 3.7 Amendment and Waiver. Any provision of this Agreement may be amended -------------------- with the written consent of the Company and the Holders (other than Messrs. Christopher R. Hassett and Gregory P. Hassett) of at least fifty-five percent (55%) of the outstanding shares of the Registrable Securities; provided, -------- however, that Messrs. Christopher R. Hassett and Gregory P. Hassett shall have - ------- the right to consent (or withhold consent) on any amendment to this Agreement that modifies their rights hereunder. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder of Registrable Securities and the Company. In addition, the Company may waive performance of any obligation owing to it, as to some or all of the Holders of Registrable Securities, or agree to accept alternatives to such performance, without obtaining the consent of any Holder of Registrable Securities. In the event that an underwriting agreement is entered into between the Company and any Holder, and such underwriting agreement contains terms differing from this Agreement, as to any such Holder the terms of such underwriting agreement shall govern. 3.8 Effect of Amendment or Waiver. The Investors and their successors ----------------------------- and assigns acknowledge that by the operation of Section 3.7 hereof the holders of fifty-five percent (55%) of the outstanding Registrable Securities, acting in conjunction with the Company, will have the right and power to diminish or eliminate any or all rights or increase any or all obligations pursuant to this Agreement. 3.9 Rights of Holders. Each holder of Registrable Securities shall have ----------------- the absolute right to exercise or refrain from exercising any right or rights that such holder may have by reason of this Agreement, including, without limitation, the right to consent to the waiver or modification of any obligation under this Agreement, and such holder shall not incur any liability to any other holder of -18- any securities of the Company as a result of exercising or refraining from exercising any such right or rights. 3.10 Delays or Omissions. No delay or omission to exercise any right, ------------------- power or remedy accruing to any party to this Agreement, upon any breach or default of the other party, shall impair any such right, power or remedy of such non-breaching party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative. [This space intentionally left blank] -19- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. POINTCAST INCORPORATED Signature: /s/ Philip J. Koen --------------------------- Name: Philip J. Koen -------------------------------- Senior Vice President Title: Chief Financial Officer ------------------------------- -20- FOUNDERS: /s/ Christopher R. Hassett ---------------------------------- Christopher R. Hassett ---------------------------------- Gregory P. Hassett LIGHTHOUSE CAPITAL PARTNERS L.P. By: ------------------------------- Title: ---------------------------- -21- FOUNDERS: ---------------------------------- Christopher R. Hassett /s/ Gregory P. Hassett ---------------------------------- Gregory P. Hassett LIGHTHOUSE CAPITAL PARTNERS L.P. By: ------------------------------- Title: ---------------------------- -22- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED FOUNDERS' CO-SALE AGREEMENT Dated as of , 1997 - -------------------------------- LIGHTHOUSE CAPITAL PARTNERS, L.P. By: LIGHTHOUSE MANAGEMENT PARTNERS, L.P., its general partner By: LIGHTHOUSE CAPITAL PARTNERS, INC., its general partner By: /s/ Richard D. Stubblefield ------------------------------------- Name: Richard D. Stubblefield ----------------------------------- Title: Managing Director ---------------------------------- -23- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: Encompass Group, Inc. Name: Mr. Yasuki Matsumoto --------------------------------------- (Please print or type) Signature: /s/ Yasuki Matsumoto ---------------------------------- Title: President -------------------------------------- -24- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: Name: Asahi Shimbun Publishing Co. --------------------------------------- (Please print or type) Signature: /s/ Asahi Shimbun Publishing Co. ---------------------------------- Title: President/CEO -------------------------------------- -25- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 16, 1997 - ------------------------------ INVESTOR: Name: Roger S. Siboni --------------------------------------- (Please print or type) Signature: /s/ Roger S. Siboni ---------------------------------- Title: Deputy Chairman -------------------------------------- -26- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 17, 1997 - ------------------------------ INVESTOR: Name: Shozo Okuda --------------------------------------- (Please print or type) Signature: /s/ Shozo Okuda ---------------------------------- Title: President, Trans Cosmos USA, Inc. -------------------------------------- -27- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of October 22, 1997 - ---------------------------- INVESTOR: Ambac Investments, Inc. Name: David L. Boyle --------------------------------------- (Please print or type) Signature: /s/ David L. Boyle ---------------------------------- Title: Chairman, President and Chief -------------------------------------- Executive Officer -------------------------------------- -28- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of October 22, 1997 - ---------------------------- INVESTOR: PCN Corp., LLC Name: W. Grant Gregory --------------------------------------- (Please print or type) Signature: /s/ W. Grant Gregory ---------------------------------- Title: Manager -------------------------------------- -29- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of December 31, 1997 - ----------------------------- INVESTOR: CPO HOLDINGS, INC. Name: Robert W. Stearns --------------------------------------- (Please print or type) Signature: /s/ Robert W. Stearns ---------------------------------- Title: President -------------------------------------- -30- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of December 31, 1997 - ----------------------------- INVESTOR: Name: David Dorman --------------------------------------- (Please print or type) Signature: /s/ David Dorman ---------------------------------- Title: President & CEO -------------------------------------- -31- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: BENCHMARK CAPITAL PARTNERS, L.P. By Benchmark Capital Management Co. L.L.C. Name: --------------------------------------- (Please print or type) Signature: /s/ Andrew Rachleff ---------------------------------- Title: Member -------------------------------------- -32- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: BENCHMARK FOUNDERS' FUND, L.P. By Benchmark Capital Management Co. L.L.C. Name: --------------------------------------- (Please print or type) Signature: /s/ Andrew Rachleff ---------------------------------- Title: Member -------------------------------------- -33- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September , 1997 - ----------------------------- INVESTOR: Mohr, Davidow Ventures III By: WLPJ Partners, General Partner Name: Jonathan D. Feiber --------------------------------------- (Please print or type) Signature: /s/ Jonathan D. Feiber ---------------------------------- Title: General Partner -------------------------------------- -34- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: Merrill, Pickard Anderson & Eyre V, L.P. By: MPAE V Management Co., L.P. Name: --------------------------------------- (Please print or type) Signature: /s/ Andrew Rachleff ---------------------------------- Title: General Partner -------------------------------------- -35- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: MPAE V Affiliates Fund, L.P. By: MPAE V Management Co., L.P. Name: --------------------------------------- (Please print or type) Signature: /s/ Andrew Rachleff ---------------------------------- Title: General Partner -------------------------------------- -36- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: WS Investment Company 95B Name: Mary Anne Pedroni --------------------------------------- (Please print or type) Signature: /s/ Mary Anne Pedroni ---------------------------------- Title: Acting Administrator -------------------------------------- -37- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: WS Investment Company 94A Name: Mary Anne Pedroni --------------------------------------- (Please print or type) Signature: /s/ Mary Anne Pedroni ---------------------------------- Title: Acting Administrator -------------------------------------- -38- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: Name: Allen Morgan --------------------------------------- (Please print or type) Signature: /s/ Allen Morgan ---------------------------------- Title: -------------------------------------- -39- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - --------------------------------------------- INVESTOR: CPO HOLDINGS, INC. Name: Robert W. Stearns --------------------------------------- (Please print or type) Signature: /s/ Robert W. Stearns ---------------------------------- Title: President -------------------------------------- -40- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: Gannet International Communications, Inc. Name: Evan A. Ray --------------------------------------- (Please print or type) Signature: /s/ Evan A. Ray ---------------------------------- Title: Vice President -------------------------------------- -41- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 8, 1997 - ----------------------------- INVESTOR: Name: Thomas Unterman --------------------------------------- (Please print or type) Signature: /s/ Thomas Unterman ---------------------------------- Title: Senior Vice Presidnet and -------------------------------------- Chief Financial Officer -------------------------------------- -42- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September , 1997 - ----------------------------- INVESTOR: Name: Carey P. Hendrickson --------------------------------------- (Please print or type) Signature: /s/ Carey P. Hendrickson ---------------------------------- Title: Vice President/Strategic and -------------------------------------- Financial Planning -------------------------------------- -43- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 8, 1997 - ----------------------------- INVESTOR: Name: Cowles Media Company --------------------------------------- (Please print or type) Signature: /s/ Jim Viera ---------------------------------- Title: V.P. -------------------------------------- -44- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: By: General Electric Capital Corporation Name: John A. McKinley, Jr. --------------------------------------- (Please print or type) Signature: /s/ John A. McKinley, Jr. ---------------------------------- Title: Chief Technology Officer -------------------------------------- -45- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: Name: CUC International, Inc. --------------------------------------- (Please print or type) Signature: /s/ Cosmo Corigliano ---------------------------------- Title: Senior Vice President & CFO -------------------------------------- -46- COUNTERPART SIGNATURE PAGE TO POINTCAST INCORPORATED AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT Dated as of September 12, 1997 - ------------------------------ INVESTOR: Freedom Communications, Inc. Name: David L. Kuykendell --------------------------------------- (Please print or type) Signature: /s/ David L. Kuykendell ---------------------------------- Title: SVP - CFO -------------------------------------- -47- EXHIBIT A --------- SCHEDULE OF INVESTORS --------------------- Benchmark Capital Partners, L.P. WS Investment Company 95B 2480 Sand Hill Road, Suite 200 c/o Wilson Sonsini Goodrich & Rosati, P.C. Menlo Park, CA 94025 650 Page Mill Road Attn: Andrew S. Rachleff Palo Alto, CA 94304-1050 Attn: Allen L. Morgan Benchmark Founders' Fund, L.P. WS Investment Company 94A 2480 Sand Hill Road, Suite 200 c/o Wilson Sonsini Goodrich & Rosati, P.C. Menlo Park, CA 94025 650 Page Mill Road Attn: Andrew S. Rachleff Palo Alto, CA 94304-1050 Attn: Allen L. Morgan Mohr, Davidow Ventures III 3000 Sand Hill Road Allen L. Morgan Building 1, Suite 240 c/o Latham & Watkins. Menlo Park, CA 94025 75 Willow Road Attn: Jon Feiber Menlo Park, CA 94025 Merrill, Pickard, Anderson & Eyre V, L.P. 2480 Sand Hill Road, Suite 200 Point Fund Menlo Park, CA 94025 c/o Kenneth D. Cron Attn: Andrew S. Rachleff CMP Publications, Inc. 600 Community Drive MPAE V Affiliates Fund, L.P. Manhasset, NY 11030 2480 Sand Hill Road, Suite 200 Menlo Park, CA 94025 SOFTBANK Holdings, Inc. Attn: Andrew S. Rachleff 10 Langley Road Suite 403 Adobe Systems Incorporated Newton Center, MA 02159 345 Park Avenue Attn: Charles R. Lax San Jose, CA 95110-2704 Attn: Jack Bell CPQ Holdings, Inc. c/o Compaq P.O. Box 692000 Houston, TX 77269-2000 Attn: Robert W. Stearns
EXHIBIT A --------- SCHEDULE OF INVESTORS --------------------- (continued) Gannett International Communications, Inc. General Electric Capital Corporation 1100 Wilson Boulevard 260 Longridge Road Arlington, VA 22234 Third Floor Attn: Carolyn Martin, Director, Gannett New Media Stamford, CT 06927 with a copy to: Thomas Chapple Attn: Thomas A. Crowley Senior Vice President, General Counsel & Secretary Gannett Co., Inc. 1100 Wilson Boulevard Arlington, VA 22234 The Times Mirror Company CUC International Inc. Times Mirror Square 707 Summer Street Los Angeles, CA 90053 Stamford, CT 06901 (For federal express: 220 West First Street Attn: Cosmo Corigliano Los Angeles, CA 90012) Attn: Thomas Unterman, Senior Vice President and Chief Financial Officer Knight-Ridder Investments, Inc. Pulitzer Publishing Company 50 W. San Fernando, 7th Floor 900 N. Tucker Boulevard San Jose, CA 95112 St. Louis, MO 63010 Attn: Robert Ingle Attn: Ron Ridgway McClatchy Newspapers, Inc. Central Newspapers, Inc 2100 Q Street 135 N. Pennsylvania Street, #1200 Sacramento, CA 95816 Indianapolis, IN 46204 Attn: Jim Smith Attn: Thomas MacGillivray A. H. Belo Corporation Freedom Communications, Inc. 400 S. Record Street 17666 Fitch 17th Floor Irvine, CA 92714 Dallas, TX 75202 Attn: David Kuykendall Attn: Michael Perry Cowles Media Company 329 Portland Avenue Minneapolis, MN 55415 Attn: Jim Viera
-2- EXHIBIT A --------- SCHEDULE OF INVESTORS --------------------- (continued) Asahi Shimbun Publishing KPMG Peat Marwick LLP 5-3-2 Tsukiji 345 Park Avenue Chuo-Ku, Tokyo 104-11 New York, NY 10010 JAPAN Attn: Mark Zuffante Attn: Jun-Ichi Ohmae Trans Cosmos Inc. Emcompass Group 4040 Lake Washington Boulevard, NE 4040 Lake Washington Boulevard, NE Suite 205 Suite 205 Kirkland, WA 98033 Kirkland, WA 98033 Attn: Mr. Yasuki Matsumoto Attn: Mr. Yasuki Matsumoto Ambac Financial Group, Inc. Gregory & Hoenemeyer, Inc. One State Street Plaza 660 Steamboat Road New York, NY 10004 Greenwich, CT 06830 Attn: Mr. David Boyle Attn: Mr. W. Grant Gregory, Jr. David Dorman c/o PointCast Incorporated 501 Macara Ave. Sunnyvale, CA 94086
-3- EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Andrew S. Rachleff 1,910,037 shares of Series B Preferred Stock - ----------------------------- (Signature) 223,920 shares of Series C Preferred Stock Andrew S. Rachleff - ----------------------------- 114,746 shares of Common Stock (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Andrew S. Rachleff 222,463 shares of Series B Preferred Stock - ----------------------------- (Signature) 26,080 shares of Series C Preferred Stock Andrew S. Rachleff - ----------------------------- 16,038 shares of Common Stock (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. Mohr, Davidow Ventures III 3,190,750 shares of Series A Preferred Stock By: WLPJ Partners, General Partner 710,834 shares of Series B Preferred Stock 1,000,000 shares of Series C Preferred Stock 269,066 shares of Common Stock By: /s/ Jonathan D. Feiber -------------------------- Jonathan D. Feiber, General Partner EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Andrew S. Rachleff 105,925 shares of Series A Preferred Stock - ----------------------------- (Signature) _____ shares of Series _ Preferred Stock Andrew S. Rachleff _____ shares of Series _ Preferred Stock - ----------------------------- (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Andrew S. Rachleff 3,084,825 shares of Series A Preferred Stock - ----------------------------- (Signature) 710,834 shares of Series B Preferred Stock Andrew S. Rachleff - ----------------------------- 200,000 shares of Series C Preferred Stock (Print or Type Name) 225,150 Shares of Common Stock EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. WS Investment Company 95B /s/ Mary Anne Petroni 35,500 shares of Series B Preferred Stock - ----------------------------- (Signature) ______ shares of Series _ Preferred Stock Mary Anne Petroni Acting Administrator ______ shares of Series _ Preferred Stock - ----------------------------- (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. WS Investment Company 95B /s/ Mary Anne Petroni 28,717 shares of Series A Preferred Stock - ----------------------------- (Signature) ______ shares of Series _ Preferred Stock Mary Anne Petroni Acting Administrator ______ shares of Series _ Preferred Stock - ----------------------------- (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Allen Morgan 11,168 shares of Series A Preferred Stock - ----------------------------- (Signature) 13,700 shares of Series B Preferred Stock Allen Morgan - ----------------------------- 6,554 shares of Series C Preferred Stock (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Evan A. Ray 315,790 shares of Series D Preferred Stock - ----------------------------- (Signature) _____ shares of Series _ Preferred Stock Evan A. Ray - ----------------------------- _____ shares of Series _ Preferred Stock (Print or Type Name) Vice President Gannet International Communications, Inc. EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 8, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Thomas Unterman 315,790 shares of Series D Preferred Stock - ----------------------------- (Signature) ______ shares of Series _ Preferred Stock Thomas Unterman - ----------------------------- ______ shares of Series _ Preferred Stock (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Carey P. Hendrickson 21,052 shares of Series D Preferred Stock - ----------------------------- (Signature) ______ shares of Series _ Preferred Stock Vice President Strategic and Financial Planning - ----------------------------- ______ shares of Series _ Preferred Stock (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 8, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ James J. Viera 21,052 shares of Series D Preferred Stock - ----------------------------- (Signature) ______ shares of Series _ Preferred Stock James J. Viera, VP Cowles Media Company - ----------------------------- ______ shares of Series _ Preferred Stock (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 5, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ John A. McKinley, Jr. 315,790 shares of Series D Preferred Stock - ----------------------------- (Signature) _____ shares of Series _ Preferred Stock John A. McKinley, Jr. Chief Technology Officer _____ shares of Series _ Preferred Stock - ----------------------------- (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. /s/ Cosmo Corigliano 210,527 shares of Series D Preferred Stock - ----------------------------- (Signature) _______ shares of Series _ Preferred Stock CUC International Inc. - ----------------------------- _______ shares of Series _ Preferred Stock (Print or Type Name) EXHIBIT B --------- IRREVOCABLE PROXY ----------------- 1. Subject to paragraph 3 below, the undersigned, as owner of shares of capital stock of PointCast Incorporated, a California corporation (the "Company"), the number and description of which shares are set forth below (the "Shares"), hereby revokes all previous proxies and appoints the Secretary of the Company (at the time this proxy is exercised) as proxyholder to attend and vote at any and all meetings of the shareholders of the Company, and any adjournments thereof, held on or after the date of the giving of this proxy and prior to the termination of this proxy, as well as to execute any and all written consents of shareholders of the Company executed on or after the date of the giving of this proxy and prior to the termination of this proxy, with the same effect as if the undersigned had personally attended the meeting or had personally voted the shares or had personally signed the written consent. 2. The undersigned authorizes the proxyholder to substitute another person as proxyholder and to file the substitution instrument with the Secretary of the Company. 3. This proxy is granted pursuant to Section 2.8 of that certain Investor Rights Agreement dated as of September 12, 1997 (the "Investor Rights Agreement"). The right of the proxyholder to vote the Shares shall be limited to the circumstances set forth in Section 2.8 of the Investor Rights Agreement. This proxy shall terminate on, and be of no further force and effect after, the earlier of (i) the first anniversary of the date of the Investor Rights Agreement and (ii) the closing of the Initial Public Offering (as such term is defined in the Investor Rights Agreement). 4. This proxy is irrevocable pursuant to paragraph (2) of subdivision (e) of Section 705 of the California Corporations Code. FREEDOM COMMUNICATIONS, INC. /s/ David L. Kuykendell 21,052 shares of Series D Preferred Stock - ----------------------------- (Signature) ______ shares of Series _ Preferred Stock David L. Kuykendell - ----------------------------- ______ shares of Series _ Preferred Stock (Print or Type Name) Senior Vice President and Chief Executive Officer EX-10.2 4 STOCK OPTION AGREEMENT EXHIBIT 10.2 POINTCAST INCORPORATED 1994 STOCK PLAN STOCK OPTION AGREEMENT -- EARLY EXERCISE Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Stock Option Agreement. I. NOTICE OF STOCK OPTION GRANT Name: Phil Koen ---------------------------------------- Address: ------------------------------------- You have been granted an option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Stock Option Agreement, as follows: Grant Number 81 ------------------------------- Date of Grant June 4, 1997 ------------------------------- Vesting Commencement Date May 28, 1997 ------------------------------- Exercise Price per Share $ $1.00 ------------------------------ Total Number of Shares Granted 509,187 ------------------------------- Total Exercise Price $ $509,187 ------------------------------ Type of Option: Incentive Stock Option ----- X Nonstatutory Stock Option ----- Term/Expiration Date: June 24, 2007 ------------------------------ Exercise and Vesting Schedule: ----------------------------- This Option is exercisable immediately, in whole or in part, conditioned upon Optionee entering into a Restricted Stock Purchase Agreement with respect to any unvested Option Shares. The Shares subject to this Option shall vest and be released from the Company's repurchase option, as set forth in the Restricted Stock Purchase Agreement, according to the following schedule: 25% of the Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter, subject to your remaining in Continuous Status as an Employee or Consultant as of such vesting dates. Notwithstanding the foregoing, in the event of a bona fide acquisition of the Company pursuant to a merger of the Company with or into another business entity (other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to the merger continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation) with or into another corporation or a sale of all or substantially all of the assets of the Company, One Hundred percent (100%) of the shares subject to the Option shall become fully vested and exercisable immediately prior to the effective time thereof. Termination Period: ------------------ This Option may be exercised, to the extent vested, for thirty (30) days after termination of Optionee's Continuous Status as an Employee or Consultant, or such longer period as may be applicable upon death or disability of Optionee as provided in the Plan, but in no event later than the Term/Expiration Date as provided above. II. AGREEMENT --------- 1. Grant of Option. PointCast Incorporated (the "Company"), hereby --------------- grants to the Optionee named in the Notice of Grant (the "Optionee"), an option (the "Option") to purchase the total number of shares of Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the "Exercise Price") subject to the terms, definitions and provisions of the 1994 Stock Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. If designated in the Notice of Grant as an Incentive Stock Option ("ISO"), this Option is intended to qualify as an ISO as defined in Section 422 of the Code. However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO"). 2. Exercise of Option. This Option shall be exercisable during its term ------------------ in accordance with the provisions of Section 9 of the Plan as follows: (i) Right to Exercise. ----------------- (a) Subject to subsections 2(i)(b) through 2(i)(e) below, this option may be exercised in whole or in part at any time. Vested Shares shall not be subject to the Company's -2- repurchase right (as set forth in the Restricted Stock Purchase Agreement, attached hereto as Exhibit C-1). (b) As a condition to exercising this Option for unvested Shares, the Optionee must execute the Restricted Stock Purchase Agreement. (c) This Option may not be exercised for a fraction of a Share. (d) In the event of Optionee's death, disability or other termination of the employment or consulting relationship, the exercisability of the Option is governed by Sections 6, 7 and 8 below, subject to the limitation contained in subsection 2(i)(e). (e) In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in the Notice of Grant. (ii) Method of Exercise. This Option shall be exercisable by written ------------------ notice (in the form attached as Exhibit A) which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements with respect to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by the Optionee and, together with an executed copy of the Restricted Stock Purchase Agreement, if applicable, shall be delivered in person or by certified mail to the Secretary of the Company. The written notice and Restricted Stock Purchase Agreement shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised upon receipt by the Company of such written notice and Restricted Stock Purchase Agreement accompanied by the Exercise Price. No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 3. Optionee's Representations. In the event the Shares purchasable -------------------------- pursuant to the exercise of this Option have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B, and shall read the applicable rules of the Commissioner of Corporations attached to such Investment Representation Statement. 4. Lock-Up Period. Optionee hereby agrees that if so requested by the -------------- Company or any representative of the underwriters (the "Managing Underwriter") in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or -3- otherwise transfer any Shares or other securities of the Company during the 180- day period (or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the "Market Standoff Period") following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. 5. Method of Payment. Payment of the Exercise Price shall be by any of ----------------- the following, or a combination thereof, at the election of the Optionee: (i) cash; or (ii) check; or (iii) surrender of other shares of Common Stock of the Company which (A) in the case of Shares acquired pursuant to the exercise of a Company option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised; or (iv) to the extent permitted by the Administrator, delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the Exercise Price; or (v) full recourse promissory note, in the form attached hereto as Exhibit C-6. 6. Restrictions on Exercise. This Option may not be exercised until such ------------------------ time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation, including any rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. 7. Termination of Relationship. In the event an Optionee's Continuous --------------------------- Status as an Employee or Consultant terminates, Optionee may, to the extent the Option was vested at the date of such termination (the "Termination Date"), exercise this Option during the Termination Period set out in the Notice of Grant. To the extent that Optionee was not vested in this Option at the date of such termination, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate. -4- 8. Disability of Optionee. Notwithstanding the provisions of Section 6 ---------------------- above, in the event of termination of an Optionee's Continuous Status as an Employee or Consultant as a result of his or her disability, Optionee may, but only within twelve (12) months from the date of such termination (and in no event later than the expiration date of the term of such Option as set forth in the Stock Option Agreement), exercise the Option to the extent the Option was vested at the date of such termination; provided, however, that if such disability is not a "disability" as such term is defined in Section 22(e)(3) of the Code, in the case of an ISO such ISO shall cease to be treated as an ISO and shall be treated for tax purposes as an NSO on the ninety-first (91st) day following such termination. To the extent that Optionee is not vested in the Option at the date of termination, or if Optionee does not exercise such Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 9. Death of Optionee. In the event of termination of Optionee's ----------------- Continuous Status as an Employee or Consultant as a result of the death of Optionee, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the date of expiration of the term of this Option as set forth in Section 10 below), by Optionee's estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent the Option was vested at the date of death. To the extent that Optionee is not vested in the Option at the date of death, or if the Option is not exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 10. Non-Transferability of Option. This Option may not be transferred in ----------------------------- any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 11. Term of Option. This Option may be exercised only within the term set -------------- out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option. 12. Tax Consequences. Set forth below is a brief summary as of the date ---------------- of this Option of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. (i) Exercise of ISO. If this Option qualifies as an ISO, there will --------------- be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise. -5- (ii) Exercise of ISO Following Disability. If the Optionee's ------------------------------------ Continuous Status as an Employee or Consultant terminates as a result of disability that is not total and permanent disability as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Optionee must exercise an ISO within three months of such termination for the ISO to be qualified as an ISO. (iii) Exercise of NSO. There may be a regular federal income tax --------------- liability upon the exercise of an NSO. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price. If Optionee is an Employee, the Company will be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise. If the Optionee is subject to Section 16 of the Exchange Act, then the date of income recognition may be deferred for up to six months. (iv) Disposition of Shares. In the case of an NSO, if Shares are --------------------- held for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an ISO, if Shares transferred pursuant to the Option are held for at least one year after exercise and are disposed of at least two years after the date of grant, any gain realized on disposition of the Shares will also be treated as long-term capital gain for federal income tax purposes. If Shares purchased under an ISO are disposed of within such one-year period or within two years after the date of grant, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (1) the fair market value of the Shares on the date of exercise, or (2) the sale price of the Shares. (v) Notice of Disqualifying Disposition of ISO Shares. If the ------------------------------------------------- Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the date of grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee. (vi) Section 83(b) Election for Unvested Shares Purchased Pursuant to ---------------------------------------------------------------- Nonqualified Stock Options. With respect to the exercise of a nonqualified - -------------------------- stock option for unvested Shares, an election may be filed by the Optionee with the Internal Revenue Service within 30 days of the purchase of the Shares, -------------- electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase. This will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the fair market value of the Shares, at the time the Option is exercised over the purchase price for the Shares. Absent such an election, taxable income will be measured and recognized by Optionee at the time or times on which the Company's Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and -6- the advisability of filing of the Election under Section 83(b) and similar tax provisions. A form of Election under Section 83(b) is attached hereto as Exhibit C-5 for reference. (vii) Section 83(b) Election for Unvested Shares Purchased Pursuant ------------------------------------------------------------- to Incentive Stock Options. With respect to the exercise of an incentive stock - -------------------------- option for unvested Shares, an election may be filed by the Optionee with the Internal Revenue Service within 30 days of the purchase of the Shares, electing -------------- pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase for alternative minimum tax purposes. This will result in a recognition of income to the Optionee on the date of exercise, for alternative minimum tax purposes, measured by the excess, if any, of the fair market value of the Shares, at the time the option is exercised, over the purchase price for the Shares. Absent such an election, alternative minimum taxable income will be measured and recognized by Optionee at the time or times on which the Company's Repurchase Option lapses. Optionee is strongly encouraged to seek the advice of his or her tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) and similar tax provisions. A form of Election under Section 83(b) for alternative minimum tax purposes is attached hereto as Exhibit C-5 for reference. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON OPTIONEE'S BEHALF. PointCast Incorporated /s/ David Dorman By:_______________________________ -7- OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE. Optionee acknowledges receipt of a copy of the Plan and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below. 12/30/97 /s/ Philip J. Koen Dated: _____________________ _____________________________________ Optionee Residence Address: _____________________________________ _____________________________________ _____________________________________ -8- EXHIBIT A --------- 1994 STOCK PLAN EXERCISE NOTICE PointCast Incorporated 501 Macara Ave. Sunnyvale, CA 94806 Attn: Secretary Exercise of Option. Effective as of today, October 30, 1997, the ------------------ undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase 200,000 shares of the Common Stock (the "Shares") of PointCast Incorporated (the "Company") under and pursuant to the 1994 Stock Plan, as amended (the "Plan") and the [_] Incentive [X] Nonstatutory Stock Option Agreement (the "Option Agreement") dated May 19, 1997. Representations of Optionee. Optionee acknowledges that Optionee has --------------------------- received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. Rights as Shareholder. Until the stock certificate evidencing such --------------------- Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 12 of the Plan. Optionee shall enjoy rights as a shareholder until such time as Optionee disposes of the Shares or the Company and/or its assignee(s) exercises the Right of First Refusal hereunder. Upon such exercise, Optionee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation. Company's Right of First Refusal. Before any Shares held by Optionee -------------------------------- or any transferee (either being sometimes referred to herein as the "Holder") may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the "Right of First Refusal"). Notice of Proposed Transfer. The Holder of the Shares shall --------------------------- deliver to the Company a written notice (the "Notice") stating: (i) the Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s). Exercise of Right of First Refusal. At any time within thirty ---------------------------------- (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below. Purchase Price. The purchase price ("Purchase Price") for the -------------- Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith. Payment. Payment of the Purchase Price shall be made, at the ------- option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice. Holder's Right to Transfer. If all of the Shares proposed in the -------------------------- Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred. Exception for Certain Family Transfers. Anything to the contrary -------------------------------------- contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee's lifetime or on the Optionee's death by will or intestacy to the Optionee's immediate family or a trust for the benefit of the Optionee's immediate family shall be exempt from the provisions of this Section. "Immediate Family" as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section. Termination of Right of First Refusal. The Right of First Refusal ------------------------------------- shall terminate as to any Shares 90 days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended. Tax Consultation. Optionee understands that Optionee may suffer ---------------- adverse tax consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. 2 Restrictive Legends and Stop-Transfer Orders. -------------------------------------------- Legends. Optionee understands and agrees that the Company shall ------- cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by state or federal securities laws: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES. IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES. Optionee understands that transfer of the Shares may be restricted by Section 260.141.11 of the Rules of the California Corporations Commissioner, a copy of which is attached to Exhibit B, the Investment Representation Statement. Stop-Transfer Notices. Optionee agrees that, in order to ensure --------------------- compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. Refusal to Transfer. The Company shall not be required (i) to ------------------- transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. Successors and Assigns. The Company may assign any of its rights ---------------------- under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the 3 Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns. Interpretation. Any dispute regarding the interpretation of this -------------- Agreement shall be submitted by Optionee or by the Company forthwith to the Company's Board of Directors or the committee thereof that administers the Plan, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board or committee shall be final and binding on the Company and on Optionee. Governing Law; Severability. This Agreement shall be governed by and --------------------------- construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable. Notices. Any notice required or permitted hereunder shall be given in ------- writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party. Further Instruments. The parties agree to execute such further ------------------- instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement. Delivery of Payment. Optionee herewith delivers to the Company the ------------------- full Exercise Price for the Shares. Entire Agreement. The Plan and Notice of Grant/Option Agreement are ---------------- incorporated herein by reference. This Agreement, the Plan, the Option Agreement, the Restricted Stock Purchase Agreement, and the Investment Representation Statement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. Submitted by: Accepted by: OPTIONEE: PointCast Incorporated /s/ Philip J. Koen /s/ David Dorman _______________________________ By:_________________________________ President Its:________________________________ Address: Address: - ------- ------- 22000 Dorsey Way 501 Macara Ave Saratoga, CA 95070 Sunnyvale, CA 94086 4 EXHIBIT B --------- INVESTMENT REPRESENTATION STATEMENT OPTIONEE : Philip J. Koen COMPANY : POINTCAST INCORPORATED SECURITY : COMMON STOCK AMOUNT : 200,000 SHARES DATE : October 30, 1997 In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following: (a) Optionee is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee's own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). (b) Optionee acknowledges and understands that the Securities constitute "restricted securities" under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee's investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee's representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company, a legend prohibiting their transfer without the consent of the Commissioner of Corporations of the State of California and any other legend required under applicable state securities laws. (c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable. In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than two years after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than three years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above. (d) Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event. (e) Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities without the consent of the Commissioner of Corporations of California. Optionee has read the applicable Commissioner's Rules with respect to such restriction, a copy of which is attached. Signature of Optionee: /s/ Philip J. Koen __________________________________ Date: 12/30, 1997 2 ATTACHMENT 1 STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE ---------------------------------------------------- Title 10. Investment - Chapter 3. Commissioner of Corporations 260.141.11: Restriction on Transfer. (a) The issuer of any security upon ---------- ----------------------- which a restriction on transfer has been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to be delivered to each issuee or transferee of such security at the time the certificate evidencing the security is delivered to the issuee or transferee. (b) It is unlawful for the holder of any such security to consummate a sale or transfer of such security, or any interest therein, without the prior written consent of the Commissioner (until this condition is removed pursuant to Section 260.141.12 of these rules), except: (1) to the issuer; (2) pursuant to the order or process of any court; (3) to any person described in Subdivision (i) of Section 25102 of the Code or Section 260.105.14 of these rules; (4) to the transferor's ancestors, descendants or spouse, or any custodian or trustee for the account of the transferor or the transferor's ancestors, descendants, or spouse; or to a transferee by a trustee or custodian for the account of the transferee or the transferee's ancestors, descendants or spouse; (5) to holders of securities of the same class of the same issuer; (6) by way of gift or donation inter vivos or on death; (7) by or through a broker-dealer licensed under the Code (either acting as such or as a finder) to a resident of a foreign state, territory or country who is neither domiciled in this state to the knowledge of the broker-dealer, nor actually present in this state if the sale of such securities is not in violation of any securities law of the foreign state, territory or country concerned; (8) to a broker-dealer licensed under the Code in a principal transaction, or as an underwriter or member of an underwriting syndicate or selling group; (9) if the interest sold or transferred is a pledge or other lien given by the purchaser to the seller upon a sale of the security for which the Commissioner's written consent is obtained or under this rule not required; (10) by way of a sale qualified under Sections 25111, 25112, 25113 or 25121 of the Code, of the securities to be transferred, provided that no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to such qualification; (11) by a corporation to a wholly owned subsidiary of such corporation, or by a wholly owned subsidiary of a corporation to such corporation; (12) by way of an exchange qualified under Section 25111, 25112 or 25113 of the Code, provided that no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to such qualification; (13) between residents of foreign states, territories or countries who are neither domiciled nor actually present in this state; (14) to the State Controller pursuant to the Unclaimed Property Law or to the administrator of the unclaimed property law of another state; or (15) by the State Controller pursuant to the Unclaimed Property Law or by the administrator of the unclaimed property law of another state if, in either such case, such person (i) discloses to potential purchasers at the sale that transfer of the securities is restricted under this rule, (ii) delivers to each purchaser a copy of this rule, and (iii) advises the Commissioner of the name of each purchaser; (16) by a trustee to a successor trustee when such transfer does not involve a change in the beneficial ownership of the securities; (17) by way of an offer and sale of outstanding securities in an issuer transaction that is subject to the qualification requirement of Section 25110 of the Code but exempt from that qualification requirement by subdivision (f) of Section 25102; provided that any such transfer is on the condition that any certificate evidencing the security issued to such transferee shall contain the legend required by this section. (c) The certificates representing all such securities subject to such a restriction on transfer, whether upon initial issuance or upon any transfer thereof, shall bear on their face a legend, prominently stamped or printed thereon in capital letters of not less than 10-point size, reading as follows: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES." 3 EXHIBIT C-1 ----------- 1994 STOCK PLAN RESTRICTED STOCK PURCHASE AGREEMENT THIS AGREEMENT is made between Philip J. Koen (the "Purchaser") and PointCast Incorporated (the "Company") as of May 19, 1997. RECITALS -------- (1) Pursuant to the exercise of the stock option granted to Purchaser under the Company's 1994 Stock Plan and pursuant to the Stock Option Agreement (the "Option Agreement") dated May 19, 1997 by and between the Company and Purchaser with respect to such grant, which Option Agreement is hereby incorporated by reference, Purchaser has elected to purchase Two Hundred Thousand (200,000) shares which have not become vested under the vesting schedule set forth in the Option Agreement ("Unvested Shares"). The Unvested Shares and the shares subject to the Option Agreement which have become vested are sometimes collectively referred to herein as the "Shares". (2) As required by the Option Agreement, as a condition to Purchaser's election to exercise the option, Purchaser must execute this Restricted Stock Purchase Agreement, which sets forth the rights and obligations of the parties with respect to Shares acquired upon exercise of the Option. 1. Repurchase Option. ----------------- (a) If Purchaser's Continuous Status as an Employee or Consultant is terminated for any reason, including for cause, death, and disability, the Company shall have the right and option to purchase from Purchaser, or Purchaser's personal representative, as the case may be, all of the Purchaser's Unvested Shares as of the date of such termination at the price paid by the Purchaser for such Shares (the "Repurchase Option"). (b) Upon the occurrence of such a termination, the Company may exercise its Repurchase Option by delivering personally or by registered mail, to Purchaser (or his transferee or legal representative, as the case may be), within ninety (90) days of the termination, a notice in writing indicating the Company's intention to exercise the Repurchase Option and setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company's office. At the closing, the holder of the certificates for the Unvested Shares being transferred shall deliver the stock certificate or certificates evidencing the Unvested Shares, and the Company shall deliver the purchase price therefor. (c) At its option, the Company may elect to make payment for the Unvested Shares to a bank selected by the Company. The Company shall avail itself of this option by a notice in writing to Purchaser stating the name and address of the bank, date of closing, and waiving the closing at the Company's office. (d) If the Company does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the termination, the Repurchase Option shall terminate. 2. Transferability of the Shares; Escrow. ------------------------------------- (a) Purchaser hereby authorizes and directs the secretary of the Company, or such other person designated by the Company, to transfer the Unvested Shares as to which the Repurchase Option has been exercised from Purchaser to the Company. (b) To insure the availability for delivery of Purchaser's Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Purchaser hereby appoints the secretary, or any other person designated by the Company as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon execution of this Agreement, deliver and deposit with the secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock assignment duly endorsed in blank, attached hereto as Exhibit C-2. The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser attached as Exhibit C-3 hereto, until the Company exercises its purchase right as provided in Section 1, until such Unvested Shares are vested, or until such time as this Agreement no longer is in effect. Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to the Purchaser the certificate or certificates representing such Shares in the escrow agent's possession belonging to the Purchaser, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement. (c) The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment. (d) Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Shares subject to all the provisions hereof and the Exercise Notice executed by the Purchaser with respect to any Unvested Shares purchased by Purchaser and shall acknowledge the same by signing a copy of this Agreement. -3- 3. Ownership, Voting Rights, Duties. This Agreement shall not affect in -------------------------------- any way the ownership, voting rights or other rights or duties of Purchaser, except as specifically provided herein. 4. Legends. The share certificate evidencing the Shares issued hereunder ------- shall be endorsed with the following legend (in addition to any legend required under applicable state securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. 5. Adjustment for Stock Split. All references to the number of Shares -------------------------- and the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company after the date of this Agreement. 6. Notices. Notices required hereunder shall be given in person or by ------- registered mail to the address of Purchaser shown on the records of the Company, and to the Company at their respective principal executive offices. 7. Survival of Terms. This Agreement shall apply to and bind Purchaser ----------------- and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors. 8. Section 83(b) Elections. ----------------------- (a) Election for Unvested Shares Purchased Pursuant to Nonqualified --------------------------------------------------------------- Stock Options. Purchaser hereby acknowledges that he or she has been informed - ------------- that, with respect to the exercise of a nonqualified stock option for Unvested Shares, that unless an election is filed by the Purchaser with the Internal Revenue Service and, if necessary, the proper state taxing authorities, within ------ 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the - ------- Code to be taxed currently on any difference between the purchase price of the Shares and their fair market value on the date of purchase, there will be a recognition of taxable income to the Optionee, measured by the excess, if any, of the fair market value of the Shares, at the time the Company's Repurchase Option lapses over the purchase price for the Shares. Optionee represents that Optionee has consulted any tax consultant(s) Optionee deems advisable in connection with the purchase of the Shares or the filing of the Election under Section 83(b). A form of Election under Section 83(b) is attached hereto as Exhibit C-4 for reference. (b) Election for Unvested Shares Purchased Pursuant to Incentive Stock ------------------------------------------------------------------ Options. Purchaser hereby acknowledges that he or she has been informed that, - ------- with respect to the exercise of an incentive stock option for Unvested Shares, that unless an election is filed by the Purchaser with -4- the Internal Revenue Service within 30 days of the purchase of the Shares, -------------- electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their fair market value on the date of purchase, there will be a recognition of income to the Optionee, for alternative minimum tax purposes, measured by the excess, if any, of the fair market value of the Shares, at the time the Company's Repurchase Option lapses over the purchase price for the Shares. Optionee represents that Optionee has consulted any tax consultant(s) Optionee deems advisable in connection with the purchase of the Shares or the filing of the Election under Section 83(b) and similar tax provisions. A form of Election under Section 83(b) for alternative minimum tax purposes is attached hereto as Exhibit C-5 for reference. PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S BEHALF. 9. Representations. Purchaser has reviewed with his own tax advisors the --------------- federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. Purchaser is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Purchaser understands that he (and not the Company) shall be responsible for his own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. 10. Governing Law. This Agreement shall be governed by and construed and ------------- enforced in accordance with California law. Purchaser represents that he has read this Agreement and is familiar with its terms and provisions. Purchaser hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under this Agreement. -5- IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth above. "COMPANY" PointCast Incorporated /s/ David Dorman By:______________________________________ President & CEO Title: ____________________________________ "PURCHASER" /s/ Philip J. Koen _________________________________________ Philip J. Koen Address: -6- EXHIBIT C-2 ----------- ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED I, __________________________, hereby sell, assign and transfer unto ________________________________________________________________________________ ________________ (__________) shares of the Common Stock of PointCast Incorporated standing in my name of the books of said corporation represented by Certificate No. _____ herewith and do hereby irrevocably constitute and appoint _____________________________________________ to transfer the said stock on the books of the within named corporation with full power of substitution in the premises. This Stock Assignment may be used only in accordance with the Restricted Stock Purchase Agreement between________________________ and the undersigned dated ______________, 199__. Dated: _______________, 199__ /s/ Philip J. Koen Signature:______________________________ Philip J. Koen INSTRUCTIONS: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its "repurchase option," as set forth in the Agreement, without requiring additional signatures on the part of the Purchaser. EXHIBIT C-3 ----------- JOINT ESCROW INSTRUCTIONS ------------------------- _____________, 199__ PointCast Incorporated Judith O'Brien Asst. Corporate Secretary c/o Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304-1050 Dear Assistant Corporate Secretary: As Escrow Agent for both PointCast Incorporated (the "Company"), and the undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement ("Agreement") between the Company and the undersigned, in accordance with the following instructions: 1. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the "Company") exercises the Company's repurchase option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice. 2. At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to you of the purchase price (by cash, a check, or some combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company's repurchase option. 3. Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as Purchaser's attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities. Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a shareholder of the Company while the stock is held by you. 4. Upon written request of the Purchaser, but no more than once per calendar year, unless the Company's repurchase option has been exercised, you will deliver to Purchaser a certificate or certificates representing so many shares of stock as are not then subject to the Company's repurchase option. Within 120 days after cessation of Purchaser's continuous employment by or services to the Company, or any parent or subsidiary of the Company, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Company's repurchase option. 5. If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Purchaser, you shall deliver all of the same to Purchaser and shall be discharged of all further obligations hereunder. 6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto. 7. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. 8. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 9. You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 10. You shall not be liable for the outlawing of any rights under the Statute of Limitations with respect to these Joint Escrow Instructions or any documents deposited with you. 11. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. 12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent. 13. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 14. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings. 15. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the following addresses or at such other addresses as a party may designate by ten days' advance written notice to each of the other parties hereto. COMPANY: PointCast Incorporated 501 Macara Ave. Sunnyvale, CA 94086 PURCHASER: Philip J. Koen __________________________________________ __________________________________________ __________________________________________ ESCROW AGENT: PointCast Incorporated Judith O'Brien Corporate Secretary c/o Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304-1050 16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement. 17. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns. -3- 18. These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California. PointCast Incorporated /s/ David Dorman By: ___________________________________ President Title: __________________________________ /s/ Philip J. Koen Purchaser: _____________________________ (Signature) /s/ Jacklyn Karceski _______________________________________ (Typed or Printed Name) -4- EXHIBIT C-4 ----------- ELECTION UNDER SECTION 83(b) ---------------------------- OF THE INTERNAL REVENUE CODE OF 1986 ------------------------------------ The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer's receipt of the property described below: 1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows: NAME: TAXPAYER: Phil Koen SPOUSE: ADDRESS: IDENTIFICATION NO.: TAXPAYER: SPOUSE: TAXABLE YEAR: 2. The property with respect to which the election is made is described as follows: ______________________________ shares (the "Shares") of the Common Stock of PointCast Incorporated (the "Company"). 3. The date on which the property was transferred is: ____________________________, 19 ____. 4. The property is subject to the following restrictions: The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement. 5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $______________________. 6. The amount (if any) paid for such property is: $______________________. The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property. The undersigned understands that the foregoing election may not be revoked - -------------------------------------------------------------------------- except with the consent of the Commissioner. - ------------------------------------------- Dated: ___________________, 199____ Phil Koen, Taxpayer The undersigned spouse of taxpayer joins in this election. Dated: ___________________, 199____ Spouse of Taxpayer EXHIBIT C-5 ----------- ELECTION UNDER SECTION 83(b) ---------------------------- OF THE INTERNAL REVENUE CODE OF 1986 ------------------------------------ The undersigned taxpayer hereby elects, pursuant to the provisions of Sections 55-56 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer's alternative minimum taxable income for the current taxable year, as compensation for services, the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property. 1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows: NAME: TAXPAYER: Phil Koen SPOUSE: ADDRESS: IDENTIFICATION NO.: TAXPAYER: SPOUSE: TAXABLE YEAR: 2. The property with respect to which the election is made is described as follows: ________________ shares (the "Shares") of the Common Stock of PointCast Incorporated (the "Company"). 3. The date on which the property was transferred is: ___________________. 4. The property is subject to the following restrictions: The Shares may be repurchased by the Company, or its assignee, at its original purchase price, on certain events. This right lapses with regard to a portion of the Shares over time. 5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $_______________ 6. The amount paid for such property is: $_______________ The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property. The undersigned understands that the foregoing election may not be revoked - -------------------------------------------------------------------------- except with the consent of the Commissioner. - ------------------------------------------- Dated: ___________________, 199____ Taxpayer The undersigned spouse of taxpayer joins in this election. Dated: ___________________, 199____ EXHIBIT C-6 ----------- PROMISSORY NOTE $200,000 October 30, 1997 FOR VALUE RECEIVED, Philip J. Koen promises to pay to PointCast Incorporated -------------- (the "Company"), or order, the principal sum of $200,000, together with interest on the unpaid principal hereof from the date hereof at the rate of six and one- one hundreth percent (6.01%) per annum, compounded semiannually. Principal and interest shall be due and payable on October 30, 2001 or ninety (90) days following the date upon which the Executive's employment with the Company terminates. Should the undersigned fail to make full payment of principal or interest for a period of 10 days or more after the due date thereof, the whole unpaid balance on this Note of principal and interest shall become immediately due at the option of the holder of this Note. Payments of principal and interest shall be made in lawful money of the United States of America. The undersigned may at any time prepay all or any portion of the principal or interest owing hereunder. This Note is subject to the terms of the Option, dated as of May 19, 1997. This Note is secured in part by a pledge of the Company's Common Stock under the terms of a Security Agreement of even date herewith and is subject to all the provisions thereof. The holder of this Note shall have full recourse against the undersigned, and shall not be required to proceed against the collateral securing this Note in the event of default. In the event the undersigned shall cease to be an employee or consultant of the Company for any reason, this Note shall, at the option of the Company, be accelerated, and the whole unpaid balance on this Note of principal and accrued interest shall be immediately due and payable. Should any action be instituted for the collection of this Note, the reasonable costs and attorneys' fees therein of the holder shall be paid by the undersigned. /s/ Philip J. Koen Signature ____________________________________ Print Name: Philip J. Koen 2 EXHIBIT C-7 ----------- SECURITY AGREEMENT This Security Agreement is made as of October 30, 1997 between PointCast Incorporated ("Pledgee"), and Phil Koen ("Pledgor"). Recitals -------- Pursuant to Pledgor's election to purchase Shares under the Option Agreement dated June 4, 1997 (the "Option"), between Pledgor and Pledgee under Pledgee's 1994 Stock Plan, and Pledgor's election under the terms of the Option to pay for such shares with his promissory note (the "Note"), Pledgor has purchased 200,000 shares of Pledgee's Common Stock (the "Shares") at a price of $1.00 per share, for a total purchase price of $200,000. The Note and the obligations thereunder are as set forth in Exhibit C-6 to the Option. NOW, THEREFORE, it is agreed as follows: I. Creation and Description of Security Interest. In consideration of the --------------------------------------------- transfer of the Shares to Pledgor under the Option Agreement, Pledgor, pursuant to the California Commercial Code, hereby pledges all of such Shares (herein sometimes referred to as the "Collateral") duly endorsed in blank or with executed stock powers, and herewith delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who shall hold said certificate subject to the terms and conditions of this Security Agreement. The pledged stock (together with an executed blank stock assignment for use in transferring all or a portion of the Shares to Pledgee if, as and when required pursuant to this Security Agreement) shall be held by the Pledgeholder as security for the repayment of the Note, and any extensions or renewals thereof, to be executed by Pledgor pursuant to the terms of the Option, and the Pledgeholder shall not encumber or dispose of such Shares except in accordance with the provisions of this Security Agreement. II. Pledgor's Representations and Covenants. To induce Pledgee to enter --------------------------------------- into this Security Agreement, Pledgor represents and covenants to Pledgee, its successors and assigns, as follows: A. Payment of Indebtedness. Pledgor will pay the principal sum of the ----------------------- Note secured hereby, together with interest thereon, at the time and in the manner provided in the Note. B. Encumbrances. The Shares are free of all other encumbrances, ------------ defenses and liens, and Pledgor will not further encumber the Shares without the prior written consent of Pledgee. 3 1. Margin Regulations. In the event that Pledgee's Common Stock is ------------------ now or later becomes margin-listed by the Federal Reserve Board and Pledgee is classified as a "lender" within the meaning of the regulations under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees to cooperate with Pledgee in making any amendments to the Note or providing any additional collateral as may be necessary to comply with such regulations. III. Voting Rights. During the term of this pledge and so long as all ------------- payments of principal and interest are made as they become due under the terms of the Note, Pledgor shall have the right to vote all of the Shares pledged hereunder. IV. Stock Adjustments. In the event that during the term of the pledge any ----------------- stock dividend, reclassification, readjustment or other changes are declared or made in the capital structure of Pledgee, all new, substituted and additional shares or other securities issued by reason of any such change shall be delivered to and held by the Pledgee under the terms of this Security Agreement in the same manner as the Shares originally pledged hereunder. In the event of substitution of such securities, Pledgor, Pledgee and Pledgeholder shall cooperate and execute such documents as are reasonable so as to provide for the substitution of such Collateral and, upon such substitution, references to "Shares" in this Security Agreement shall include the substituted shares of capital stock of Pledgor as a result thereof. V. Options and Rights. In the event that, during the term of this pledge, ------------------ subscription Options or other rights or options shall be issued in connection with the pledged Shares, such rights, Options and options shall be the property of Pledgor and, if exercised by Pledgor, all new stock or other securities so acquired by Pledgor as it relates to the pledged Shares then held by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under the terms of this Security Agreement in the same manner as the Shares pledged. VI. Default. Pledgor shall be deemed to be in default of the Note and of ------- this Security Agreement in the event: A. Payment of principal or interest on the Note shall be delinquent for a period of 10 days or more; or B. Pledgor fails to perform any of the covenants set forth in the Option or contained in this Security Agreement for a period of 10 days after written notice thereof from Pledgee. In the case of an event of Default, as set forth above, Pledgee shall have the right to accelerate payment of the Note upon notice to Pledgor, and Pledgee shall thereafter be entitled to pursue its remedies under the California Commercial Code. VII. Release of Collateral. Subject to any applicable contrary rules under --------------------- Regulation G, there shall be released from this pledge a portion of the pledged Shares held by Pledgeholder here under upon payments of the principal of the Note. The number of the pledged Shares which shall be 4 released shall be that number of full Shares which bears the same proportion to the initial number of Shares pledged hereunder as the payment of principal bears to the initial full principal amount of the Note. VIII. Withdrawal or Substitution of Collateral. Pledgor shall not sell, ---------------------------------------- withdraw, pledge, substitute or otherwise dispose of all or any part of the Collateral without the prior written consent of Pledgee. IX. Term. The within pledge of Shares shall continue until the payment of ---- all indebtedness secured hereby, at which time the remaining pledged stock shall be promptly delivered to Pledgor, subject to the provisions for prior release of a portion of the Collateral as provided in paragraph 7 above. X. Insolvency. Pledgor agrees that if a bankruptcy or insolvency ---------- proceeding is instituted by or against it, or if a receiver is appointed for the property of Pledgor, or if Pledgor makes an assignment for the benefit of creditors, the entire amount unpaid on the Note shall become immediately due and payable, and Pledgee may proceed as provided in the case of default. XI. Pledgeholder Liability. In the absence of willful or gross ---------------------- negligence, Pledgeholder shall not be liable to any party for any of his acts, or omissions to act, as Pledgeholder. XII. Invalidity of Particular Provisions. Pledgor and Pledgee agree that ----------------------------------- the enforceability or invalidity of any provision or provisions of this Security Agreement shall not render any other provision or provisions herein contained unenforceable or invalid. XIII. Successors or Assigns. Pledgor and Pledgee agree that all of the --------------------- terms of this Security Agreement shall be binding on their respective successors and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall be deemed to include, for all purposes, the respective designees, successors, assigns, heirs, executors and administrators. XIV. Governing Law. This Security Agreement shall be interpreted and ------------- governed under the laws of the State of California. 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. "PLEDGOR" By: /s/ Philip J. Koen ___________________________________ Philip J. Koen ______________________________________ Print Name 22000 Dorsey Way Address: ____________________________ Saratoga, CA 95070 ____________________________ "PLEDGEE" PointCast Incorporated By: /s/ David Dorman ___________________________________ Title: ______________________________ /s/ Jacklyn Karceski "PLEDGEHOLDER" ______________________________________ Stock Option Administrator of PointCast Incorporated POINTCAST INCORPORATED 1994 STOCK PLAN AMENDMENT TO STOCK OPTION AGREEMENT The Stock Option Agreement dated 1 by and between PointCast Incorporated and 2 (the "Agreement") is hereby amended as follows, effective as of the date set forth by the signatures below: Unless otherwise defined herein, initially capitalized terms shall have the same meanings as defined in the PointCast Incorporated 1994 Stock Plan (the "Plan"). 1. Vesting and Exercise Schedule. The Vesting Schedule set forth in the ----------------------------- Agreement's Notice of Grant is amended in its entirety and replaced with a new Exercise and Vesting Schedule as follows: "Exercise and Vesting Schedule: ----------------------------- This Option is exercisable immediately, in whole or in part, conditioned upon Optionee entering into a Restricted Stock Purchase Agreement with respect to any unvested Option Shares. The Shares subject to this Option shall vest and be released from the Company's repurchase option, as set forth in the Restricted Stock Purchase Agreement, according to the following schedule: 25% of the Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter, subject to your remaining in Continuous Status as an Employee or Consultant as of such vesting dates." 2. Option Agreement. To the extent not expressly amended hereby, the ---------------- Agreement remains in full force and effect. 3. Entire Agreement. This Amendment, taken together with the Agreement ---------------- (to the extent not expressly amended hereby), represents the entire agreement of the parties, supersedes any and all previous contracts, arrangements or understandings between the parties with respect to the stock option grant evidenced by the Agreement, and may be amended at any time only by mutual written agreement of the parties hereto. IN WITNESS WHEREOF, this instrument is executed as of 12/30, 1997. POINTCAST INCORPORATED OPTIONEE By: /s/ David Dorman By: /s/ Philip J. Koen ------------------------ -------------------------- APPROVED FOR SIGNATURE POINTCAST LEGAL DEPARTMENT GARY A. PARANZINO /s/ GAP EX-10.5 5 1998 DIRECTOR OPTION PLAN EXHIBIT 10.5 POINTCAST INCORPORATED 1998 DIRECTOR OPTION PLAN 1. Purposes of the Plan. The purposes of this 1998 Director Option Plan -------------------- are to attract and retain the best available personnel for service as Outside Directors (as defined herein) of the Company, to provide additional incentive to the Outside Directors of the Company to serve as Directors, and to encourage their continued service on the Board. All options granted hereunder shall be nonstatutory stock options. 2. Definitions. As used herein, the following definitions shall apply: ----------- (a) "BOARD" means the Board of Directors of the Company. (b) "CODE" means the Internal Revenue Code of 1986, as amended. (c) "COMMON STOCK" means the common stock of the Company. (d) "COMPANY" means PointCast Incorporated, a Delaware corporation. (e) "DIRECTOR" means a member of the Board. (f) "DISABILITY" means total and permanent disability as defined in Section 22(e)(3) of the Code. (g) "EMPLOYEE" means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a Director's fee by the Company shall not be sufficient in and of itself to constitute "employment" by the Company. (h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (i) "FAIR MARKET VALUE" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. (j) "INSIDE DIRECTOR" means a Director who is an Employee. (k) "OPTION" means a stock option granted pursuant to the Plan. (l) "OPTIONED STOCK" means the Common Stock subject to an Option. (m) "OPTIONEE" means a Director who holds an Option. (n) "OUTSIDE DIRECTOR" means a Director who is not an Employee. (o) "PARENT" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (p) "PLAN" means this 1998 Director Option Plan. (q) "SHARE" means a share of the Common Stock, as adjusted in accordance with Section 10 of the Plan. (r) "SUBSIDIARY" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of 1986. 3. Stock Subject to the Plan. Subject to the provisions of Section 10 of ------------------------- the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 200,000 Shares (the "POOL"), plus an annual increase to be added on the first day of the Company's fiscal year (beginning in 1999) equal to the lesser of (i) the number of Shares needed to restore the maximum aggregate number of Shares available for sale under the Plan to 200,000 Shares, or (ii) a lesser amount determined by the Board (the "Pool"). The Shares may be authorized, but unissued, or reacquired Common Stock. -2- If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan. 4. Administration and Grants of Options under the Plan. All grants of --------------------------------------------------- Options to Outside Directors under this Plan shall be automatic and nondiscretionary and shall be made strictly in accordance with the following provisions: (a) No person shall have any discretion to select which Outside Directors shall be granted Options or to determine the number of Shares to be covered by Options. (b) Each Outside Director shall be automatically granted an Option to purchase 20,000 Shares (the "First Option") on the date on which the later of the following events occurs: (i) the date the Company's shareholders approve the Plan, or (ii) the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director shall not receive a First Option. (c) Each Outside Director shall be automatically granted an Option to purchase 5,000 Shares (a "Subsequent Option") on the date of the annual meeting of the stockholders of each year provided he or she is then an Outside Director and if as of such date, he or she shall have served on the Board for at least the preceding six (6) months. (d) Notwithstanding the provisions of subsections (b) and (c) hereof, any exercise of an Option granted before the Company has obtained stockholder approval of the Plan in accordance with Section 16 hereof shall be conditioned upon obtaining such stockholder approval of the Plan in accordance with Section 16 hereof. (e) The terms of a First Option granted hereunder shall be as follows: (i) the term of the First Option shall be ten (10) years. (ii) the First Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof. (iii) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the First Option. (iv) subject to Section 10 hereof, the First Option shall become exercisable as to twenty-five percent (25%) of the Shares subject to the First Option on the first anniversary of -3- its date of grant, and 1/48 of the Shares subject to the First Option at the end of each full month thereafter, provided that the Optionee continues to serve as a Director on such dates. (f) The terms of a Subsequent Option granted hereunder shall be as follows: (i) the term of the Subsequent Option shall be ten (10) years. (ii) the Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof. (iii) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the Subsequent Option. (iv) subject to Section 10 hereof, the Subsequent Option shall become exercisable as to one hundred percent (100%) of the Shares subject to the Subsequent Option on the fourth anniversary of its date of grant, provided that the Optionee continues to serve as a Director on such date. (g) In the event that any Option granted under the Plan would cause the number of Shares subject to outstanding Options plus the number of Shares previously purchased under Options to exceed the Pool, then the remaining Shares available for Option grant shall be granted under Options to the Outside Directors on a pro rata basis. No further grants shall be made until such time, if any, as additional Shares become available for grant under the Plan through action of the Board or the stockholders to increase the number of Shares which may be issued under the Plan or through cancellation or expiration of Options previously granted hereunder. 5. Eligibility. Options may be granted only to Outside Directors. All ----------- Options shall be automatically granted in accordance with the terms set forth in Section 4 hereof. The Plan shall not confer upon any Optionee any right with respect to continuation of service as a Director or nomination to serve as a Director, nor shall it interfere in any way with any rights which the Director or the Company may have to terminate the Director's relationship with the Company at any time. 6. Term of Plan. The Plan shall become effective upon the approval by ------------ the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 11 hereof. 7. Form of Consideration. The consideration to be paid for the Shares to --------------------- be issued upon exercise of an Option, including the method of payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which -4- said Option shall be exercised, (iv) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (v) any combination of the foregoing methods of payment. 8. Exercise of Option. ------------------ (a) Procedure for Exercise; Rights as a Stockholder. Any Option ----------------------------------------------- granted hereunder shall be exercisable at such times as are set forth in Section 4 hereof; provided, however, that no Options shall be exercisable until stockholder approval of the Plan in accordance with Section 16 hereof has been obtained. An Option may not be exercised for a fraction of a Share. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may consist of any consideration and method of payment allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. A share certificate for the number of Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Termination of Continuous Status as a Director. Subject to ---------------------------------------------- Section 10 hereof, in the event an Optionee's status as a Director terminates (other than upon the Optionee's death or Disability), the Optionee may exercise his or her Option, but only within three (3) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of such termination, and to the extent that the Optionee does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. (c) Disability of Optionee. In the event Optionee's status as a ---------------------- Director terminates as a result of Disability, the Optionee may exercise his or her Option, but only within twelve (12) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) -5- year term). To the extent that the Optionee was not entitled to exercise an Option on the date of termination, or if he or she does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. (d) Death of Optionee. In the event of an Optionee's death, the ----------------- Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance may exercise the Option, but only within twelve (12) months following the date of death, and only to the extent that the Optionee was entitled to exercise it on the date of death (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of death, and to the extent that the Optionee's estate or a person who acquired the right to exercise such Option does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. 9. Non-Transferability of Options. Unless provided otherwise by the ------------------------------ Administrator, the Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate. 10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or ------------------------------------------------------------------ Asset Sale. - ---------- (a) Changes in Capitalization. Subject to any required action by the ------------------------- stockholders of the Company, the number of Shares covered by each outstanding Option, the number of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per Share covered by each such outstanding Option, and the number of Shares issuable pursuant to the automatic grant provisions of Section 4 hereof shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option. (b) Dissolution or Liquidation. In the event of the proposed -------------------------- dissolution or liquidation of the Company, to the extent that an Option has not been previously exercised, it shall terminate immediately prior to the consummation of such proposed action. (c) Merger or Asset Sale. In the event of a merger of the Company -------------------- with or into another corporation or the sale of substantially all of the assets of the Company, (i) outstanding Options shall have their vesting accelerated as to an additional twenty-five percent (25%) of the -6- Shares subject to such Option effective immediately prior to the consummation of such merger or asset sale, and (ii) outstanding Options may be assumed or equivalent options may be substituted by the successor corporation or a Parent or Subsidiary thereof (the "Successor Corporation"). If an Option is assumed or substituted for, the Option or equivalent option shall continue to be exercisable as provided in Section 4 hereof for so long as the Optionee serves as a Director or a director of the Successor Corporation. If the Successor Corporation does not assume an outstanding Option or substitute for it an equivalent option, the Option shall terminate as of the date of the closing of the merger or asset sale. For the purposes of this Section 10(c), an Option shall be considered assumed if, following the merger or sale of assets, the Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). If such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 11. Amendment and Termination of the Plan. ------------------------------------- (a) Amendment and Termination. The Board may at any time amend, ------------------------- alter, suspend, or discontinue the Plan, but no amendment, alteration, suspension, or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the extent necessary and desirable to comply with any applicable law, regulation or stock exchange rule, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required. (b) Effect of Amendment or Termination. Any such amendment or ---------------------------------- termination of the Plan shall not affect Options already granted and such Options shall remain in full force and effect as if this Plan had not been amended or terminated. 12. Time of Granting Options. The date of grant of an Option shall, for ------------------------ all purposes, be the date determined in accordance with Section 4 hereof. 13. Conditions Upon Issuance of Shares. Shares shall not be issued ---------------------------------- pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, state securities laws, and the requirements of any stock exchange upon -7- which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law. Inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 14. Reservation of Shares. The Company, during the term of this Plan, --------------------- will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 15. Option Agreement. Options shall be evidenced by written option ---------------- agreements in such form as the Board shall approve. 16. Stockholder Approval. The Plan shall be subject to approval by the -------------------- stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under applicable state and federal law and any stock exchange rules. -8- POINTCAST INCORPORATED 1998 DIRECTOR OPTION PLAN DIRECTOR OPTION AGREEMENT [FIRST OPTION] 1. Grant of Option. Effective as of today, _______________, 19__, --------------- PointCast Incorporated, a Delaware corporation (the "Company"), hereby grants to _______________________ (the "Optionee"), a nonstatutory stock option to purchase a total of twenty thousand (20,000) shares of the Company's Common Stock ("Common Stock"), at the price determined as provided herein, and in all respects subject to the terms, definitions and provisions of the Company's 1998 Director Option Plan (the "Plan") adopted by the Company which is incorporated herein by reference. The terms defined in the Plan shall have the same defined meanings herein. 2. Exercise Price. The exercise price is $_______ for each share of -------------- Common Stock. 3. Exercise of Option. This Option shall be exercisable during its term ------------------ in accordance with the provisions of Section 8 of the Plan as follows: (a) Right to Exercise. ----------------- (i) This Option shall become exercisable in installments cumulatively with respect to twenty-five percent (25%) of the shares subject to the Option on the first anniversary of the date of grant, and as to an additional 1/48 of the shares subject to the Option at the end of each full month thereafter, subject to Optionee continuing to provide services as a Director, so that one hundred percent (100%) of the Optioned Stock shall be exercisable four years after the date of grant; provided, however, that in no event shall any Option be exercisable prior to the date the stockholders of the Company approve the Plan. (ii) This Option may not be exercised for a fraction of a share. (iii) In the event of Optionee's death, Disability or other termination of service as a Director, the exercisability of the Option is governed by Section 8 of the Plan. (b) Method of Exercise. This Option shall be exercisable by written ------------------ notice which shall state the election to exercise the Option and the number of Shares in respect of which the Option is being exercised. Such written notice, in the form attached hereto as Exhibit A, shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the exercise price. 4. Method of Payment. Payment of the exercise price shall be by any of ----------------- the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; or (c) surrender of other shares which (x) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; or (d) delivery of a properly executed exercise notice together with such other documentation as the Company and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price. 5. Restrictions on Exercise. This Option may not be exercised if the ------------------------ issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulations, or if such issuance would not comply with the requirements of any stock exchange upon which the Shares may then be listed. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. 6. Non-Transferability of Option. This Option may not be transferred in ----------------------------- any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 7. Term of Option. This Option may not be exercised more than ten (10) -------------- years from the date of grant of this Option, and may be exercised during such period only in accordance with the Plan and the terms of this Option. 8. Taxation Upon Exercise of Option. Optionee understands that, upon -------------------------------- exercise of this Option, he or she will recognize income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares purchased over the exercise price paid for such Shares. Since the Optionee is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain limited circumstances the measurement and timing of such income (and the commencement of any capital gain holding period) may be deferred, and the Optionee is advised to contact a tax advisor concerning the application of Section 83 in general and the availability a Section 83(b) election in particular in connection with the exercise of the Option. Upon a resale of such Shares by the Optionee, any difference between the sale price and the Fair Market Value of the Shares on the date of exercise of the Option, to the extent not included in income as described above, will be treated as capital gain or loss. Optionee acknowledges receipt of a copy of the Plan, a copy of which is attached hereto, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Plan. OPTIONEE: POINTCAST INCORPORATED ___________________________________ ______________________________________ Signature By ___________________________________ ______________________________________ Print Name Title ____________________________________ Residence Address ____________________________________ -3- EXHIBIT A --------- 1998 DIRECTOR OPTION PLAN DIRECTOR OPTION EXERCISE NOTICE PointCast Incorporated 501 Macara Avenue Sunnyvale, CA 94086 Attention: Secretary 1. Exercise of Option. The undersigned ("Optionee") hereby elects to ------------------ exercise Optionee's option to purchase ______ shares of the Common Stock (the "Shares") of PointCast Incorporated (the "Company") under and pursuant to the Company's 1998 Director Option Plan and the Director Option Agreement dated _______________ (the "Agreement"). 2. Representations of Optionee. Optionee acknowledges that Optionee has --------------------------- received, read and understood the Agreement. 3. Tax Consequences. Optionee understands that Optionee may suffer ---------------- adverse tax consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultant(s) Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. 4. Delivery of Payment. Optionee herewith delivers to the Company the ------------------- aggregate purchase price for the Shares that Optionee has elected to purchase and has made provision for the payment of any federal or state withholding taxes required to be paid or withheld by the Company. 5. Entire Agreement. The Agreement is incorporated herein by reference. ---------------- This Exercise Notice, the Plan and the Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. This Exercise Notice, the Plan and the Agreement are governed by California law except for that body of law pertaining to conflict of laws. Submitted by: Accepted by: PURCHASER: POINTCAST INCORPORATED __________________________________ _____________________________________ Signature By __________________________________ _____________________________________ Print Name Its Address: Address: - ------- ------- _________________________________ 501 Macara Avenue _________________________________ Sunnyvale, CA 94086 _________________________________ Date Received -2- POINTCAST INCORPORATED 1998 DIRECTOR OPTION PLAN DIRECTOR OPTION AGREEMENT [SUBSEQUENT OPTION] 1. Grant of Option. Effective as of today, _______________, 19__, --------------- PointCast Incorporated, a Delaware corporation (the "Company"), hereby grants to _______________________ (the "Optionee"), a nonstatutory stock option to purchase a total of five thousand (5,000) shares of the Company's Common Stock ("Common Stock"), at the price deter mined as provided herein, and in all respects subject to the terms, definitions and provisions of the Company's 1998 Director Option Plan (the "Plan") adopted by the Company which is incorporated herein by reference. The terms defined in the Plan shall have the same defined meanings herein. 2. Exercise Price. The exercise price is $_______ for each share of -------------- Common Stock. 3. Exercise of Option. This Option shall be exercisable during its term ------------------ in accordance with the provisions of Section 8 of the Plan as follows: (a) Right to Exercise. ----------------- (i) This Option shall become exercisable in installments cumulatively with respect to one hundred percent (100%) of the shares subject to the Option on the fourth anniversary of the date of grant, subject to Optionee continuing to provide services as a Director, so that one hundred percent (100%) of the Optioned Stock shall be exercisable four years after the date of grant; provided, however, that in no event shall any Option be exercisable prior to the date the stockholders of the Company approve the Plan. (ii) This Option may not be exercised for a fraction of a share. (iii) In the event of Optionee's death, Disability or other termination of service as a Director, the exercisability of the Option is governed by Section 8 of the Plan. (b) Method of Exercise. This Option shall be exercisable by written ------------------ notice which shall state the election to exercise the Option and the number of Shares in respect of which the Option is being exercised. Such written notice, in the form attached hereto as Exhibit A, shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the exercise price. 4. Method of Payment. Payment of the exercise price shall be by any of ----------------- the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; or (c) surrender of other shares which (x) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; or (d) delivery of a properly executed exercise notice together with such other documentation as the Company and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price. 5. Restrictions on Exercise. This Option may not be exercised if the ------------------------ issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulations, or if such issuance would not comply with the requirements of any stock exchange upon which the Shares may then be listed. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. 6. Non-Transferability of Option. This Option may not be transferred in ----------------------------- any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 7. Term of Option. This Option may not be exercised more than ten (10) -------------- years from the date of grant of this Option, and may be exercised during such period only in accordance with the Plan and the terms of this Option. 8. Taxation Upon Exercise of Option. Optionee understands that, upon -------------------------------- exercise of this Option, he or she will recognize income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares purchased over the exercise price paid for such Shares. Since the Optionee is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain limited circumstances the measurement and timing of such income (and the commencement of any capital gain holding period) may be deferred, and the Optionee is advised to contact a tax advisor concerning the application of Section 83 in general and the availability a Section 83(b) election in particular in connection with the exercise of the Option. Upon a resale of such Shares by the Optionee, any difference between the sale price and the Fair Market Value of the Shares on the date of exercise of the Option, to the extent not included in income as described above, will be treated as capital gain or loss. Optionee acknowledges receipt of a copy of the Plan, a copy of which is attached hereto, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Plan. OPTIONEE: POINTCAST INCORPORATED ___________________________________ ___________________________________ Signature By ___________________________________ ___________________________________ Print Name Title ___________________________________ Residence Address ____________________________________ -3- EXHIBIT A --------- 1998 DIRECTOR OPTION PLAN DIRECTOR OPTION EXERCISE NOTICE PointCast Incorporated 501 Macara Avenue Sunnyvale, CA 94086 Attention: Secretary 1. Exercise of Option. The undersigned ("Optionee") hereby elects to ------------------ exercise Optionee's option to purchase ______ shares of the Common Stock (the "Shares") of PointCast Incorporated (the "Company") under and pursuant to the Company's 1998 Director Option Plan and the Director Option Agreement dated _______________ (the "Agreement"). 2. Representations of Optionee. Optionee acknowledges that Optionee has --------------------------- received, read and understood the Agreement. 3. Tax Consequences. Optionee understands that Optionee may suffer ---------------- adverse tax consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultant(s) Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. 4. Delivery of Payment. Optionee herewith delivers to the Company the ------------------- aggregate purchase price for the Shares that Optionee has elected to purchase and has made provision for the payment of any federal or state withholding taxes required to be paid or withheld by the Company. 5. Entire Agreement. The Agreement is incorporated herein by reference. ---------------- This Exercise Notice, the Plan and the Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. This Exercise Notice, the Plan and the Agreement are governed by California law except for that body of law pertaining to conflict of laws. Submitted by: Accepted by: PURCHASER: POINTCAST INCORPORATED ___________________________________ ___________________________________ Signature By ___________________________________ ___________________________________ Print Name Its Address: Address: - ------- ------- _________________________________ 501 Macara Avenue _________________________________ Sunnyvale, CA 94086 _________________________________ Date Received -2- EX-10.6 6 POINTCAST JAPAN LLC AGREEMENT EXHIBIT 10.6 POINTCAST JAPAN, L.L.C. LIMITED LIABILITY COMPANY AGREEMENT ----------------------------------- This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of PointCast Japan, L.L.C. ("LLC") is made and entered into as of May 30, 1997, by and among PointCast Incorporated, a California corporation ("PCI"), TransCosmos, Incorporated, a Japanese corporation ("TCI") and such other persons or entities as may be admitted to LLC after the date hereof, whose names shall be set forth in Schedule 1 hereto (collectively with PCI and TCI, the "Members"). ---------- Capitalized terms not otherwise defined herein are defined in Section 1.9. WHEREAS, the Members desire to form a Delaware limited liability company on the terms and conditions set forth in this Agreement. NOW, THEREFORE, the Members hereby agree as follows: ARTICLE I FORMATION OF LLC 1.1 Formation. The Members hereby form LLC pursuant to the Delaware --------- Limited Liability Company Act (6 Del. Code (S)(S)18-101 et seq.) (the "Act"), -- --- which Act shall govern the rights and liabilities of the Members except as otherwise herein expressly stated. 1.2 Name of LLC. The name of LLC is PointCast Japan, L.L.C., a Delaware ----------- limited liability company. 1.3 Filings, Other Actions. PCI has caused to be filed a Certificate of ---------------------- Formation (the "Certificate") with the office of the Secretary of State of Delaware. The Board (as defined below) shall take all other actions which may be necessary or appropriate from time to time to comply with all requirements of law for the formation and operation of a limited liability company and to ensure the limited liability of the Members in the State of Delaware and any jurisdictions where LLC may conduct activities. 1.4 Place of Business. The principal place of business for LLC initially ----------------- shall be at Sumitomoseimei Akasaka Bldg., 3-3-3, Akasaka, Minato-ku, Tokyo, Japan 107; provided, however, that the Board may change the address of the principal office by notice in writing to all the Members. In addition, LLC may maintain such other offices and places of business as the Board may deem advisable. Notwithstanding the foregoing, unless the Members unanimously agree otherwise, LLC shall in no event maintain a place of business, own any assets or have any employees in the United States. 1.5 Term. LLC shall continue in effect until May 30, 2096, subject in any ---- event to earlier termination in accordance with the provisions of this Agreement. -1- 1.6 Purposes and Powers. ------------------- (a) Subject to the provisions of this Agreement, the purposes of LLC shall be to commercially exploit, through a wholly owned subsidiary to be formed as a Japanese corporation ("NewCo"), the localized PointCast network technology within the country of Japan, as well as any and all activities necessary or incidental thereto. (b) LLC shall have all powers necessary, suitable or convenient for the accomplishment of its purposes. (c) Nothing set forth herein shall be construed as authorizing LLC to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of Delaware. 1.7 Delaware Office; Agent for Service of Process. LLC's agent for --------------------------------------------- service of process in the State of Delaware shall be c/o Corporation Service Company, Inc., 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name of the registered agent for service of process on LLC is Corporation Service Company, Inc. The Board may designate a different agent for service of process at any time, provided, however, that the Board shall give all of the Members written notice promptly following such change. 1.8 Title to LLC Property. All property owned by LLC, whether real or --------------------- personal, tangible or intangible, shall be owned by LLC as an entity, and no Member individually nor any other person, partnership, corporation or other entity shall have any ownership interest in such property. 1.9 Definitions. For purposes of this Agreement, the following terms ----------- shall have the meanings set forth respectively after each: (a) "Act" shall mean the Delaware Limited Liability Company Act, 6 --- Del. Code Sections 18-101 et seq. -- --- (b) "Administrative Services and Management Agreement" shall mean the ------------------------------------------------ agreement by and between NewCo and TCI in the form attached to this Agreement as Exhibit A. - --------- (c) "Affiliate" of any party shall mean any person or entity that --------- controls, is controlled by or is under common control with such party. (d) "Agreement" shall mean this Limited Liability Company Agreement, --------- as the same may be amended from time to time (including by the addition of Counterparts). (e) "Approval" shall mean consent by the Members to an action of LLC -------- by the affirmative vote of Members holding a majority of the Percentage Interests in LLC entitled to vote with respect to such matter, or such other Percentage Interests as may be expressly stated herein, which vote may be obtained either at a meeting of Members duly noticed (to the address -2- of each Member shown on LLC's records at least ten (10) days prior to the date set forth in such notice) or by a written consent executed and delivered by such Members. (f) "Bankruptcy" shall mean with respect to any person, being the ---------- subject of an order for relief under Title 11 of the United States Code, or any successor statute in any foreign jurisdiction having like import or effect, or that such person shall have made an assignment for the benefit of its creditors generally or a receiver shall have been appointed for substantially all of the property and assets of such person. (g) "Board" shall mean the Board of Managers of LLC, designated in ----- accordance with Section 3.1. (h) "Book Value" shall mean, as of any particular date, the value at ---------- which LLC's assets are properly reflected on the books of LLC as of such date in accordance with the provisions of Treasury Regulations Section 1.704-1(b). The Book Values of all LLC assets shall, if the Board in its sole discretion deems it appropriate, be adjusted to equal their respective gross fair market values, as determined by the Board, at the times specified in those regulations. (i) "Capital Account" shall mean the individual capital account of a --------------- Member maintained in accordance with Section 2.5 hereof. (j) "Capital Contribution" shall have the meaning set forth in -------------------- Section 2.2 hereof. (k) "Commercial Exploitation Rights Agreement" shall mean the ---------------------------------------- agreement of this date between TCI and PCI in the form attached to this Agreement as Exhibit B. --------- (l) "Commercial Exploitation Rights Assignment" shall mean the ----------------------------------------- assignment of the Commercial Exploitation Rights Agreement by TCI to LLC in the form attached to this Agreement as Exhibit C. --------- (m) "Distributable Cash" shall mean, with respect to each fiscal year ------------------ of LLC, LLC's cash flow from operations for such fiscal year, as reflected in financial statements audited by LLC's independent public accountants, after providing for reserves that are determined by the Board to be required to fund ongoing development, marketing, operations and capital expenditures of LLC, and after deducting any amounts determined by the Board to be subject to any contingency. (n) "Certificate" shall have the meaning set forth in Section 1.3. ----------- (o) "Code" shall mean the Internal Revenue Code of 1986, as amended. ---- (p) "LLC" shall have the meaning set forth in the preamble to this --- Agreement. (q) "Counterpart" shall mean an additional document executed and ----------- delivered by (i) any new Member admitted to membership in LLC after the original date of this Agreement, and (ii) such Members having the right under this Agreement to approve the -3- admission of such Member, which document shall set forth the new Member's Percentage Interest, the resulting Percentage Interests of all other Members, and any other terms and conditions as shall apply to such Members membership in LLC. Each Counterpart shall be attached to, and shall become part of, this Agreement. (r) "Member" shall have the meaning set forth in the preamble to this ------ Agreement, each of whose name, Capital Contributions and Percentage Interests are or will be set forth on Schedule 1 hereto and all Counterparts. ---------- (s) "Percentage Interest" shall have the meaning set forth in Section ------------------- 2.1 hereof. (t) "Phase I" shall mean the period from the inception of NewCo until ------- completion by NewCo of three consecutive quarters in which it has earned profits, as determined in accordance with United States generally accepted accounting principles. (u) "Profit" or "Loss" shall mean for each taxable year, LLC's ---------------- taxable income or taxable loss for such taxable year, as determined under Section 703(a) of the Code and Section 1.703-1 of the Treasury Regulations (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or taxable loss), but with the following adjustments: (i) any tax-exempt income or LLC expenditures described in Section 705(a)(2)(B) of the Code shall be taken into account in computing such taxable income or taxable loss; (ii) any item of income or gain required to be allocated specially to a Member under Section 6.2 shall not be taken into account in computing such taxable income or taxable loss; and (iii) in lieu of the depreciation, amortization, gain or loss taken into account in computing such taxable income or loss, LLC shall compute such items based on the Book Value of LLC property rather than its tax basis, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3). (v) "Tax Matters Partner" has the meaning set forth in Section 5.6. ------------------- (w) "Technology and Trademark License Agreement" shall mean the ------------------------------------------ Technology and Trademark License Agreement of this date between PCI and LLC in the form attached to this Agreement as Exhibit D. --------- (x) "Treasury Regulations" shall mean the Income Tax Regulations -------------------- issued by the United States Department of the Treasury. ARTICLE II CAPITAL CONTRIBUTIONS 2.1 Percentage Interests. Each Member shall have an initial undivided -------------------- percentage economic interest in LLC, including, except as may otherwise be provided in Article VI hereof, each item of income, gain, loss, deduction, credit and distributions or dividends of LLC (a "Percentage Interest"), as follows: -4- (a) PCI -- 60% (b) TCI -- 40% The Percentage Interests of the Members as of any date shall be as set forth next to such Member's name on Schedule 1 of this Agreement (or the most recently ---------- adopted Counterpart) and shall adjust appropriately upon admission of any new Members and other events. 2.2 Capital Contributions. --------------------- (a) Upon execution of this Agreement, PCI has contributed to the capital of LLC (i) cash in the amount of $1 million, and (ii) certain rights to PCI technology as specified in the Technology and Trademark License Agreement, which rights have a fair market value as of the date hereof, as agreed by the Members, of $2 million. PCI's initial Capital Account balance shall equal $3 million, subject to adjustment hereafter as provided in Section 2.5 of this Agreement. The contributions made by PCI and TCI under this Section 2.2, and any subsequent contributions of capital by Members to LLC under Sections 2.3 or 2.4, are hereafter referred to as "Capital Contributions." (b) Upon execution of this Agreement, TCI has contributed to the capital of LLC (i) cash in the amount of $2 million, and (ii) the commercial exploitation rights in respect of the localized PointCast network in Japan acquired by TCI pursuant to the Commercial Exploitation Rights Agreement. TCI's initial Capital Account balance shall equal $2 million, subject to adjustment hereafter as provided in Section 2.5 of this Agreement. (c) In the event that the Board from time to time hereafter determines that LLC requires additional funding in excess of the amounts contributed to LLC pursuant to this Section 2.2 (and Section 2.4, if applicable) and any amounts advanced pursuant to Section 2.3, then the Members may (but shall have no obligation to) make, and LLC shall accept, such additional Capital Contributions on such terms as may be agreeable to the contributing Member and LLC. 2.3 Member Advances. In addition to the Capital Contributions provided --------------- for under Section 2.2, the Members may, if the Board in its discretion deems it appropriate, make cash advances in such amounts and upon such repayment, interest and other terms as the Board and the Member providing such advance shall agree. Any such cash advances shall be treated as loans to LLC rather than Capital Contributions and shall therefore not affect a Member's Capital Account. 2.4 Additional Members. Subject to Section 3.3 hereof, the Board may ------------------ admit additional Members and accept additional Capital Contributions from such additional Members from time to time and on such terms as the Board deems appropriate in its sole discretion, and (other than such approval of the Board and, if applicable under Section 3.3, TCI) no approval from the Members shall be required for such actions. Notwithstanding the preceding sentence, no additional Member shall be admitted (a) which is a direct competitor of PCI or TCI unless such Member consents to such admission, or (b) upon terms which would disproportionately -5- reduce either PCI's or TCI's Percentage Interest relative to the interests of other Member(s). Any additional Members who may hereafter be admitted to LLC shall make such Capital Contributions for such interests in LLC as the Board and such additional Member shall mutually agree. No Member shall be obligated or permitted to make any other Capital Contributions except as otherwise provided in this Article II. 2.5 Capital Accounts. ---------------- (a) A separate capital account (a "Capital Account") shall be maintained for each Member strictly in accordance with the rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv). Subject to the preceding sentence, each Member's Capital Account shall be (i) increased by the amount of Capital Contributions made by such Member to LLC and allocations to such Member of Company Profits and other items of book income and gain; and (ii) decreased by the amount of money and fair market value of property (net of liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Code) distributed to it by LLC and allocations to such Member of LLC Loss and other items of book loss and deductions; and (iii) otherwise adjusted in accordance with the additional rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv). (b) In the event the Book Values of LLC assets are adjusted pursuant to Treasury Regulations Section 1.704-1(b) and Section 1.9(u), the Capital Accounts of all Members shall be adjusted simultaneously to reflect the allocations of income, gain, loss or deduction that would be made to the Members if there were a taxable disposition of LLC's property for its fair market value. If any assets of LLC are to be distributed in kind, such assets shall be distributed on the basis of their fair market values after the Members' Capital Accounts have been adjusted to reflect the manner in which any unrealized income gain, loss or deduction with respect to such assets (that have not been reflected in the Capital Accounts previously) would be allocated between the Members if there were a taxable disposition of the property for its fair market value. (c) If any interest in LLC is transferred in accordance with the provisions of this Agreement, the transferee Member shall succeed to that portion of the Capital Account of the transferring Member as relates to such transferred interest. (d) It is the intent of LLC that the Capital Accounts of all Members be determined and maintained in accordance with the principles of Treasury Regulations Section 1.704-1 at all times throughout the full term of LLC and the foregoing provisions of this Section 2.5 shall be interpreted in accordance with such intention. 2.6 Return of Capital; Partition. Except as otherwise provided herein, no ---------------------------- Member shall have any right to (a) withdraw from LLC, (b) demand the return of all or any part of such Member's capital during the term of LLC or (c) receive a return of such Member's capital from any specific assets of LLC. Each Member irrevocably waives any right which such Member may have to cause a partition of all or any part of LLC's assets. No Member shall be entitled to receive any interest with respect to a Capital Contribution. -6- 2.7 Liability of Members. Notwithstanding anything to the contrary herein -------------------- contained, no Member shall be liable for any debts, expenses, liabilities or obligations of LLC in excess of such Member's Capital Contribution except as may be provided in the Act. To the extent required by law, any capital distributed to a Member shall be restored to LLC as necessary to meet such Member's share of any liability or loss of LLC. ARTICLE III MANAGEMENT OF LLC 3.1 Board of Managers. The Board shall consist of five members, three of ----------------- whom shall be appointed by PCI and two of whom shall be appointed by TCI. Meetings of the Board shall be held upon such prior notice and in accordance with such other procedures as the Board may adopt. 3.2 Control by Board. Subject to the provisions of Section 3.3, and ---------------- except as may be otherwise expressly stated in this Agreement, the Board shall have full and exclusive responsibility and authority for the management, supervision and conduct of the business and affairs of LLC, and the Board is hereby granted the right, power and authority to do on behalf of LLC all things determined thereby to be necessary or desirable to carry out such duties and responsibilities, including (without limitation) the right, power and authority from time to time to do the following: (a) to borrow money in the name and on behalf of LLC, and to secure any such loans by a mortgage, pledge or other encumbrance upon any assets of LLC; (b) to cause to be paid all amounts due and payable by LLC to any person or entity; (c) to employ such agents, employees, managers, accountants, attorneys, consultants and other persons necessary or appropriate to carry out the business and affairs of LLC, to delegate by express Board action any powers of the Board enumerated herein, and to pay to such persons such fees, expenses, salaries, wages and other compensation as it shall in its sole discretion determine; (d) to pay, extend, renew, modify, adjust, subject to arbitration, prosecute, defend or compromise, upon such terms as it may determine and upon such evidence as it may deem sufficient, any obligation, suit, liability, cause of action or claim, including taxes, either in favor of or against LLC; (e) to pay any and all fees and to make any and all expenditures which it deems necessary or appropriate in connection with the organization of LLC, the management of the affairs of LLC and the carrying out of its obligations and responsibilities under this Agreement; -7- (f) to the extent that funds of LLC are, in the Board's judgment, not immediately required for the conduct of LLC's business, temporarily to deposit the excess funds in such bank account or accounts, or invest such funds in such interest-bearing taxable or nontaxable investments, as the Board shall deem appropriate; (g) to acquire, prosecute, maintain, protect and defend or cause to be protected and defended all patents, patent rights, trade names, trademarks, copyrights and service marks, all applications with respect thereto and all proprietary information which may be held by LLC; (h) to enter into, execute, acknowledge and deliver any and all contracts, agreements or other instruments necessary or appropriate to carry on the business of LLC as set forth herein, including without limitation the Commercial Exploitation Rights Assignment, the Technology and Trademark License Agreement, a license agreement with NewCo, and such other agreements and documents as are entered into in connection with the formation of LLC; (i) to form NewCo as a wholly owned subsidiary of LLC, to cause NewCo to enter into the Administrative Services and Management Agreement, and to acquire interests in such other entities as the Board may deem appropriate to conduct the planned business activities of LLC on such terms as the Board deems to be in LLC's interests; (j) to cause to be paid any and all taxes, charges and assessments that may be levied, assessed or imposed upon any of the assets of LLC, unless the same are contested by LLC; (k) to make all elections and decisions of a tax and accounting nature required or permitted on behalf of LLC, including without limitation the election provided for by Section 754 of the Code and tax elections and decisions of the "Tax Matters Partner" in accordance with Section 5.6; and (l) to exercise all other powers conferred by the Act or other applicable law on, or not prohibited to, a "Manager" of LLC from time to time (as such term is defined in the Act). 3.3 TCI Approval Rights. Notwithstanding anything to the contrary in ------------------- Section 3.2, the following actions shall be subject to Approval by TCI during Phase I: (a) The removal from office of any Board member appointed by TCI or the statutory auditor of NewCo; (b) The amendment or repeal of any provisions of this Agreement or of the charter documents of NewCo; (c) The sale, sublicense, encumbrance or other transfer of any of the intellectual property rights of LLC or NewCo in a manner inconsistent with the provisions of this Agreement or the exhibits hereto; -8- (d) The filing of a petition for liquidation or dissolution of LLC or NewCo in Bankruptcy; (e) The declaration or payment of any distribution to the Members, other than distributions in respect of taxes attributable to Profits of LLC in accordance with Section 6.4(a) of this Agreement, and the declaration or payment of any dividend or other distribution with respect to the equity interests of NewCo; (f) The issuance of any additional Percentage Interests (or options, warrants or other rights to acquire Percentage Interests) to existing or additional Members, excluding issuances to employees or other persons providing services to LLC, and the issuance of any securities of NewCo (or options, warrants or other rights to acquire such securities, or any securities convertible into or exchangeable for such securities or such options, warrants or other rights), excluding issuances to employees or other persons providing services to NewCo; (g) The sale, transfer or disposal of assets of LLC or NewCo in excess of Y75 Million and any merger of LLC or NewCo with or into any other entity; (h) The organization, acquisition or disposition by LLC or NewCo of any interest in another entity, other than the organization by LLC of NewCo; (i) The borrowing of funds by LLC or NewCo in excess of Y75 Million; (j) Hiring, firing and setting compensation of senior management of LLC or NewCo; and (k) Approval of the annual operating and capital budgets of LLC or NewCo. In addition, after Phase I, the actions set forth in subsections (a) - (d) of this Section 3.3 shall continue to be subject to Approval by TCI. 3.4 Extent of Board Members' Obligations. Each Board member shall devote ------------------------------------ such time and attention to the activities of LLC as are reasonably necessary and appropriate to carry out the Board member's duties hereunder. It is expressly acknowledged and understood that the Board members may also devote time to the affairs of other entities and to other business activities. 3.5 Standard of Care; Indemnification. No Board member shall be liable, --------------------------------- in damages or otherwise, to LLC or to any of the Members for any act or omission performed or omitted by such Board member pursuant to the authority granted by this Agreement, except if such act or omission results from gross negligence, willful misconduct or bad faith. LLC shall save, indemnify, defend and hold harmless each Board member to the fullest extent permitted by the Act, including without limitation, from and against any and all claims or liabilities of any nature whatsoever, including, but not limited to, reasonable attorneys' fees, arising out of or in connection with any action taken or omitted by such Board member pursuant to the authority granted by this Agreement, except where attributable to the gross negligence, willful misconduct -9- or bad faith of such Board member or such Board member's agents. Each Board member shall be entitled to rely on the advice of counsel, public accountants or other independent experts experienced in the matter at issue, and any act or omission of such Board member in reliance on such advice shall in no event subject such Board member to liability to LLC or any Member. Each Member expressly acknowledges and agrees that, except as otherwise expressly set forth herein, other Members (and Board members who may be related to such Members) may engage in activities competitive with those of LLC, and may pursue business opportunities that may also be available to LLC; and except as otherwise provided herein or in any other agreement among Members, and except for any liability relating to the misuse or improper disclosure of LLC confidential or proprietary information, no Member shall have any liability as a fiduciary or otherwise in connection with the pursuit of such activities. During the term of the LLC (as set forth in Section 1.5), TCI shall not engage directly or indirectly in any business activities in Japan that would reasonably be deemed to be competitive with the business activities of LLC or NewCo. ARTICLE IV RIGHTS OF MEMBERS 4.1 No Authority to Manage. Except as expressly set forth in any ---------------------- provision of this Agreement, it is expressly understood that no Member, in such Member's capacity as such (as opposed to the capacity of its representatives as members of the Board), shall take part in the management or control of the business, transact any business for LLC, have the right to vote on any LLC matter, or have the power to sign for or bind LLC to any agreement or document. Notwithstanding the foregoing, Members (or their representatives) may participate in the management of LLC if and to the extent so contemplated by the terms of any employment relationship with LLC. 4.2 Records of LLC. LLC shall make available for inspection at its -------------- principal place of business, upon reasonable request for purposes reasonably related to the interest of a person as a Member, any of the following records of LLC: (a) a current list of the full name, last known business or residence address, Capital Contribution and Percentage Interests owned by each Member; and (b) such other books and records as may be required to be provided to the Members pursuant to the Act or other applicable law. The Members acknowledge that the records of LLC constitute valuable trade secrets, and any information or records so obtained or copied shall be kept and maintained in strictest confidence and shall in no event be disclosed to any other parties without the written consent of LLC. ARTICLE V ACCOUNTING, RECORDS, REPORTS AND MEETINGS 5.1 Books of Accounts and Records. LLC's books and records and the ----------------------------- Certificate shall be maintained at the principal office of LLC and the Members and their designated representatives shall each have access thereto at all reasonable times to the extent set forth in Section 4.2. The books and records shall be kept in accordance with sound accounting practices -10- and principles applied in a consistent manner by LLC and shall reflect all transactions and be appropriate and adequate for the business of LLC. 5.2 Financial Statements and Reports. LLC will provide to the Members -------------------------------- financial statements of LLC annually, which shall be audited by independent auditors of national standing (which may also be the independent auditors to any Member). LLC also will provide within ninety (90) days after the end of each fiscal year of LLC a copy of LLC's income tax or information returns for such fiscal year and any other information reasonably necessary for the preparation of the Members' income tax returns under each applicable taxing jurisdiction. 5.3 Bank Account. LLC moneys shall be deposited in the name of LLC in one ------------ or more financial institutions to be designated by the Board and may be withdrawn on the signatures of such officers of LLC as the Board may designate from time to time. 5.4 Fiscal Year. The fiscal year of LLC shall be from January 1 to ----------- December 31, or such other period as may be required by law or determined by the Board. 5.5 Tax Elections. The Board, in its sole discretion, shall determine ------------- LLC's accounting methods and conventions under applicable tax laws of the United States, Japan and other relevant jurisdictions as to the treatment of income, gain, loss, deduction and credit of LLC or any other method or procedure related to the preparation of such tax returns. The Board, in its sole discretion, may cause LLC to make or refrain from making any and all elections permitted by such tax laws (including, without limitation, an election under Section 754 of the Code). 5.6 Tax Matters Partner. Pursuant to Section 6231(a)(7)(A) of the Code, ------------------- the Members hereby designate PCI as LLC's "Tax Matters Partner." As such, for any fiscal year in which LLC is subject to the provisions of Section 6221, et seq. of the Code, PCI is authorized, at the expense of LLC, to represent LLC and each Member in connection with any examinations of LLC's affairs by United States tax authorities, including resulting administrative and judicial proceedings, and to expend the funds of LLC for professional services and costs in connection therewith. The other Members hereby agree to cooperate with the Tax Matters Partner and to do or refrain from doing any and all acts reasonably required by the Tax Matters Partner in connection with any such proceedings. The Tax Matters Partner will at all times act in accordance with the direction of the Board with respect to its decisions and actions. ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS 6.1 Allocations of LLC Profits and Losses. LLC Profits and Losses for ------------------------------------- each fiscal year shall be allocated in proportion to the Members' Percentage Interests, provided that, if the Members' Capital Accounts are not in proportion to their Percentage Interests, then Profits or Losses shall first be allocated to cause the Members' Capital Accounts to be in such proportion. -11- 6.2 Special Allocations for U.S. Tax Purposes. ----------------------------------------- (a) If LLC ever has "partnership minimum gain" or "partner minimum gain" (as defined by Treasury Regulations Section 1.704-2), then the rules of such Regulations regarding allocation and chargebacks of such items shall apply. (b) All deductions, losses, and Code Section 705(a)(2)(B) expenditures of LLC, as the case may be, that are treated under Treasury Regulations Section 1.704-2(b) as attributable to "partner nonrecourse debt" of LLC shall be allocated to the Members bearing the risk of loss with respect to such liabilities in accordance with such Treasury Regulations. (c) If any Member unexpectedly receives an adjustment, allocation, or distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) which creates or increases a deficit in such Member's Capital Account in excess of such Member's share of partnership minimum gain and partner minimum gain (as determined under Treasury Regulations Section 1.704-2), if any, such Member shall be allocated items of book income and gain in an amount and manner sufficient to eliminate or to reduce, as quickly as possible, such deficit. For purposes of this Section 6.2(c), Capital Accounts shall be adjusted hypothetically as provided for in Treasury Regulations Section 1.704- (b)(2)(ii)(d). The Members intend that the provision set forth in this Section 6.2(c) shall constitute a "qualified income offset" as described in such section of the Treasury Regulations and this Section 6.2(c) shall be interpreted consistent with such intention. 6.3 Time of Allocations. The Profit, Loss and other items of LLC for each ------------------- fiscal year shall be allocated to the Members' Capital Accounts at the end of such fiscal year in accordance with the provisions of Sections 6.1 and 6.2. 6.4 Distributions. Subject to Section 3.3, LLC shall distribute its ------------- Distributable Cash for any fiscal year as follows: (a) First, to the Members in amounts equal to (i) the higher of the combined effective federal and California maximum corporate income tax rates (taking into account the deductibility of state taxes against federal income, currently 41%) or the effective Japanese tax corporate income tax rate in effect for such fiscal year, multiplied by (ii) the amount by which LLC's Profit allocated to such Member for such fiscal year, if any, exceeds the cumulative net Loss, if any, allocated to such Member since the inception of LLC, with any such distribution made no later than 90 days after the end of each fiscal year of LLC. (b) Thereafter, if the Board deems it appropriate in its sole discretion, any remaining Distributable Cash shall be distributed to the Members in proportion to their respective Percentage Interests, as determined by the Board, in its discretion, within ninety (90) days following the end of such fiscal year. Any distributions made to the Members under subsection (a) shall be credited against and reduce by a corresponding amount the distributions to which such Members are entitled under this subsection (b). -12- (c) LLC shall withhold all such amounts as may be required by applicable law and any amounts so withheld shall be deemed to have been distributed under this Section 6.4 to the Member with respect to whom such withholding obligation arose and, to the extent such amounts exceed the amount such Member would have otherwise received, shall be counted towards and reduce by a corresponding amount future distributions to such Member. (d) Notwithstanding any other provision herein, no distribution shall be made to the Members which would render LLC insolvent. 6.5 Tax Return. LLC shall, within 90 days after the end of each calendar ---------- year, file a federal income tax information return and transmit to each Member a copy of such return and a schedule (Schedule K-1 or successor schedule) showing such Member's distributive share of LLC's income, deductions and credits. 6.6 Allocation of Certain Tax Items for U.S. Income Tax Purposes. If any ------------------------------------------------------------ property of LLC is reflected in the Capital Accounts of the Members and on the books of LLC at a Book Value that differs from the adjusted tax basis of such property, then the tax items with respect to that property shall, in accordance with Treasury Regulations Section 1.704-1(b)(4)(i), be shared among the Members in a manner that takes account of the variation between the adjusted tax basis of the applicable property and its Book Value in the same manner as variations between the adjusted tax basis and fair market value of property contributed to LLC are taken into account in determining the Members' share of tax items under Code Section 704(c). 6.7 Allocation Between Transferor and Transferee. The proportion of the -------------------------------------------- income, gain, loss, deductions and credits of LLC for any fiscal year of LLC during which any Percentage Interest in LLC is transferred by a Member to another party pursuant to the terms hereof that is allocable in respect of such Percentage Interest shall be apportioned between the transferor and the transferee of the Percentage Interest on the basis of the number of days during such fiscal year that each is the owner thereof, without regard to (a) the results of LLC's operations before or after the effective date of the transfer, or (b) any distributions made to the Members before or after the date of the transfer. 6.8 Tax Allocations Binding. The Members are aware of the income tax ----------------------- consequences of the allocations made by this Article VI and hereby agree to be bound by the provisions of this Article VI in reporting their shares of LLC allocations for income tax purposes. ARTICLE VII TRANSFER OF INTERESTS 7.1 Limitations on Transfers. No Percentage Interest shall be assigned or ------------------------ transferred by any Member, directly or indirectly, without the approval of Members holding a majority of the Percentage Interests of LLC then outstanding. 7.2 Rights of First Refusal. Without limiting the provisions of Section ----------------------- 7.1, in the event of any proposed assignment or transfer permitted under this Agreement, the party -13- proposing such transfer (the "transferring Member") shall provide the other Members (the "non-transferring Members") with notice of such proposed transfer, which notice shall include a description of all terms of such transfer (including the amount to be transferred, the price to be paid and the date of the proposed transfer), and the name, address and telephone number of the proposed transferee. Each non-transferring Member shall have the right, exercisable by notice to the transferring Member within 30 days following receipt of such notice, to purchase all or any part of the Percentage Interest to be transferred upon the terms and conditions set forth in the transferring Member's notice, up to that portion of such Percentage Interest as equals the ratio of such non-transferring Member's Percentage Interest to the aggregate Percentage Interests of all of the non-transferring Members. In the event that any non-transferring Member elects not to exercise all or any part of its purchase right as set forth in the preceding sentence, the transferring Member shall be entitled to complete such transaction (on terms no more favorable to the transferee in any respect) with respect to the unpurchased remainder of such Percentage Interest within 15 days following the end of such 30-day period (and any transfer proposed thereafter shall again comply with the foregoing notice and right of first refusal provisions). 7.3 Special Buy-Out Rights Upon Irreconcilable Dispute. If the Board -------------------------------------------------- approves any action subject to the special approval rights of TCI as set forth in Section 3.3 and TCI refuses to grant its Approval to such action, then PCI and TCI shall negotiate in good faith the purchase by either of them of the Percentage Interest of the other or shall, subject to the provisions of this Agreement, attempt to negotiate a sale of either of their Percentage Interests to a third party. If such negotiations fail to result in a mutually acceptable resolution within a reasonable period of time (as mutually agreed by PCI and TCI), then LLC shall be dissolved in accordance with the provisions of Article X of this Agreement. ARTICLE VIII DEATH, INCOMPETENCE OR DISSOLUTION OF A MEMBER 8.1 Effect on LLC. The death, incompetence, dissolution or Bankruptcy of ------------- a Member shall not entitle any Member to a return of capital other than to the extent such Member normally would be entitled to a distribution under the provisions of this Agreement. Such event shall not cause a dissolution of LLC except as otherwise provided in Section 10.1. 8.2 Rights of Personal Representative. On the death, incompetence, --------------------------------- dissolution or Bankruptcy of a Member, his or her personal representative, executor, administrator, guardian or conservator shall have all the rights of a Member for the purpose of settling such Member's estate, or administering such Member's property, including the power of assignment. -14- ARTICLE IX WITHDRAWAL 9.1 Withdrawal of Members. --------------------- (a) No Member may withdraw from LLC and receive a distribution with respect to such Member's Capital Account unless such withdrawal has received the Approval of Members holding a majority of all Percentage Interests (disregarding for such purpose the Percentage Interest of the withdrawing Member). (b) In the event of a withdrawal permitted hereunder, the Percentage Interest in LLC of such Member shall terminate as of such date and, subject to the provisions hereof, the former Member's Capital Account (together with such Member's allocable share of LLC Profits or less such Member's allocable share of LLC Losses through the date of effectiveness of such withdrawal) shall be paid, subject to the provisions of this Agreement, in cash or in kind, to such former Member within thirty (30) days after the effective date of withdrawal. ARTICLE X DISSOLUTION, MERGER AND LIQUIDATION 10.1 Events of Dissolution. Upon the determination of the Board (without --------------------- any requirement of approval by the other Members, except as otherwise expressly provided herein), or the expiration of the term of LLC as provided in Section 1.5, LLC will be dissolved and the assets shall either be liquidated forthwith or the property shall be distributed in kind to the Members after payment of the debts of LLC as determined by agreement of the Members. LLC shall also dissolve (a) upon the death, insanity, Bankruptcy, retirement, resignation or expulsion of any Member unless Approval is provided by the remaining Members within ninety (90) days after such event to continue LLC, or (b) under the circumstances set forth in Section 7.3. 10.2 Merger. LLC shall be merged with another entity under applicable ------ provisions of the Act if (and on such terms as) the Board in its sole discretion deems appropriate. 10.3 Liquidation Proceeds. In settling accounts after liquidation, the -------------------- moneys of LLC shall be applied in the following manner: (a) The liabilities of LLC to creditors, including Members who are creditors to the extent permitted by law, shall be paid or otherwise adequately provided for except for liabilities of LLC for distributions to Members; and (b) The remaining assets shall be distributed to the Members in accordance with their positive Capital Account balances. If any assets are to be distributed in kind, each Member's Capital Account shall first be adjusted to reflect the Profits or Losses that would have been allocated to such Member if such assets had been sold for cash at their fair market value at the time of the distribution. -15- (c) In the event that any Member withdraws from LLC in accordance with the provisions of this Agreement, such Member shall be distributed an amount equal to such Member's Capital Account balance as of the date of such withdrawal (taking into account all adjustments to such Capital Account through the date of such withdrawal). ARTICLE XI CERTAIN SECURITIES RELATED MATTERS 11.1 Investment Intent. Each Member hereby represents and warrants to LLC ----------------- and to the other Members that such Member's Percentage Interest will be acquired for such Member's own account, for investment, and not with a view to or for sale in connection with any distribution thereof, nor with any present intention of reselling or distributing such Percentage Interest. Each Member fully understands that LLC is relying upon the truth and accuracy of the foregoing representations, and the representations that follow, to establish exemptions from registration under the Securities Act of 1933 (the "1933 Act"), and from registration or qualification under the California Corporate Securities Law of 1968 and other applicable securities laws. 11.2 Absence of Registration. Each Member also hereby represents that ----------------------- such Member understands that such Member must bear the economic risk of such Member's investment in such LLC for an indefinite period of time because such Percentage Interest has not been registered under the 1933 Act or registered/qualified under applicable laws and therefore cannot be sold unless they are subsequently so registered and qualified or exemptions from such registration and qualification are available, and LLC is under no obligation to so register or qualify any Percentage Interest or to comply with any exemption and has no current intention of so doing. 11.3 Restricted Securities; Absence of Trading Market. Each Member ------------------------------------------------ further hereby represents that such member understands that (a) such member's Percentage Interest constitute "restricted securities" under the 1933 Act and that Rule 144 promulgated under the 1933 Act is not now available with respect to the transfer of such Member's Percentage Interest and that there is no present likelihood that it will be available in the future, (b) that there is no public market for such Percentage Interest and there is no present likelihood that any such market will develop, and (c) LLC is newly formed and has no earnings or operating history. 11.4 Preexisting Relationship; Investment Experience. Each Member ----------------------------------------------- represents and warrants (a) that such Member has a preexisting personal or business relationship with the other, such that such Member is aware of the character, business acumen and general business and financial circumstances of such party, or (b) that either alone or with a purchaser representative, such Member can bear the economic risk of the investment in LLC and has such knowledge and experience in financial or business matters that such Member is capable of evaluating the merits and risks of an investment in LLC. 11.5 Accredited Investor. Each Member represents that such Member is an ------------------- "accredited investor" for purposes of Rule 501(a) promulgated under the 1933 Act. -16- 11.6 Economic Risk. Each Member hereby represents that such Member has ------------- adequate net worth and means for providing for such Member's current needs and personal contingencies to sustain a complete loss of such Member's investment, is able to bear such a loss, and that such Member has no need of liquidity of such Member's investment. 11.7 Resale. Each Member hereby represents such Member's awareness that ------- such Member's rights to transfer such Member's Percentage Interest will be restricted by the 1933 Act, the applicable laws, and this Agreement; that any certificates or other documents evidencing such Member's Percentage Interest may bear the legends relating to those restrictions which are set forth below; and that corresponding notations will be made by LLC in its appropriate records. ARTICLE XII MISCELLANEOUS 12.1 Notices. Any notice, payment, demand or communication required or ------- permitted to be given by any provisions of this Agreement shall be deemed to have been sufficiently given or served for all purposes if delivered personally to the party or to an officer of the party to whom the same is directed or if sent by registered or certified mail, postage and charges prepaid addressed as set forth on Schedule 1. ---------- 12.2 Execution in Counterparts. This Agreement may be executed in any ------------------------- number of counterparts with the same effect as if all parties hereto had all signed the same document. All counterparts shall be construed together and shall constitute one agreement. 12.3 Assignability. Without limiting the restrictions upon assignment and ------------- transfer set forth herein, each and all of the covenants, terms, provisions and agreements herein contained shall be binding upon and inure to the benefit of the successors and assigns of the respective parties hereto. 12.4 Gender and Number. Whenever required by the context hereof, the ----------------- singular shall include the plural and the plural shall include the singular. The masculine gender shall include the feminine and neuter genders, and the neuter shall include the masculine and feminine. 12.5 Captions. Sections, titles or captions in no way define, limit, -------- extend or describe the scope of this Agreement nor the intent of any of its provisions. 12.6 Severability. Any provision of this Agreement that is prohibited or ------------ unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. -17- 12.7 Integration. This Agreement, together with the exhibits hereto and ----------- all Counterparts, contains the entire agreement of the parties with respect to the subject matter hereof, and supersedes all other agreements or understandings of any kind. 12.8 Amendments. ---------- (a) Except as otherwise provided in Section 3.3 or elsewhere in this Agreement, this Agreement may be amended by the Board without the consent of any Member for the purpose of adding provisions hereto or changing in any manner or eliminating any of the provisions hereof or of modifying in any manner the rights and obligations of the Members hereunder, in each case without the consent of any other Member. (b) Each of the Members does hereby constitute and appoint the Secretary of LLC (as directed by the Board) as such Member's true and lawful representative and attorney-in-fact, in his name, place and stead to make, execute, sign and file, the Certificate and any amendments thereto in the office of the Secretary of State of the State of Delaware which may be required because of this Agreement or the making of any amendments or supplements thereto as provided in this Section 12.8 and to make, execute, sign and file this Agreement and all amendments thereto and all such other instruments, documents and Certificate which, from time to time, in the opinion of LLC's legal counsel, may be required, by the laws of any applicable jurisdiction, or by this Agreement, or which such legal counsel may deem necessary or appropriate to effectuate, implement and continue the valid and subsisting existence and business of LLC. 12.9 Confidential Information. Each Member acknowledges that as a result ------------------------ of its status as a Member, it may have access to information concerning the LLC's or another Member's business, products, proposed new products, customers and related information (collectively, "Confidential Information"). Each Member agrees to treat such Confidential Information with at least the degree of care and protection with which it treats its own confidential information, but in any event with no less than reasonable care and protection. Each Member agrees not to use or disclose such Confidential Information except as explicitly authorized in writing by the LLC or such other Member, as applicable. 12.10 Governing Law. This Agreement shall in all respects be governed by ------------- the laws of the State of Delaware without reference to its principles of conflicts of laws. Each Member and LLC hereby agrees that all disputes arising out of this Agreement shall be subject to the exclusive jurisdiction of and venue in the federal and state courts within Santa Clara County, California. Each Member and LLC hereby consents to the personal and exclusive jurisdiction and venue of these courts. [SIGNATURE PAGE FOLLOWS] -18- IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above. POINTCAST INCORPORATED, A CALIFORNIA CORPORATION By: /s/ Jim Wickett -------------------------------------------- Title: Sr. V.P. ----------------------------------------- TRANSCOSMOS, INCORPORATED, A JAPANESE CORPORATION By: /s/ Koki Okuda -------------------------------------------- Title: President ----------------------------------------- -19- Schedule 1 ----------
Member Initial Capital Percentage - ------ Contribution Interest ------------ -------- PointCast Incorporated $3 million 60.0% 501 Macara Avenue Sunnyvale, CA 94086 Attention: Jim Wickett, SVP TransCosmos, Incorporated $2 million 40.0% Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 --------------- --------------- $5,000,000 100% =============== ===============
-20- EX-10.7 7 ASSIGNMENT OF COMM. EXPLOIT. AGRMNT DTD 5/30/97 EXHIBIT 10.7 ASSIGNMENT OF COMMERCIAL EXPLOITATION RIGHTS AGREEMENT This is an irrevocable Assignment (the "Assignment"), effective as of May 30, 1997, of the rights and obligations of TransCosmos, Incorporated, a Japanese corporation (the "Assignor"), arising under the Commercial Exploitation Rights Agreement, dated May 30, 1997 (the "Agreement") between PointCast Incorporated, a California corporation ("PCI") and Assignor, to PointCast Japan, L.L.C., a Delaware limited liability company (the "Assignee"). Recitals WHEREAS, PCI granted certain rights and licenses to the Assignor under the Agreement; and WHEREAS, the Assignor wishes to assign its rights and licenses under the Agreement together with its obligations under the Agreement to the Assignee in accordance with the terms set forth herein. NOW THEREFORE, the parties hereby agree as follows: 1. Assignment. a. Assignment of the Rights and Obligations under the Agreement. The Assignor hereby irrevocably assigns and transfers unto Assignee and unto Assignee's successors and assigns for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Assignor, forever, all right, title and interest in and to the Agreement and to all rights and licenses thereunder (the "Assigned Rights") and all obligations under the Agreement effective from May 30, 1997. b. Assumption of Obligations under the Agreement. The Assignee hereby irrevocably assumes all obligations of Assignor under the Agreement. Assignor and Assignee shall be jointly and severally liable for any obligation or liability of the Assignor under the Agreement arising before the date hereof. c. Consent. PCI hereby irrevocably consents to this Assignment and agrees to continue to comply with the terms and conditions of the Agreement. 2. Representations and Warranties. a. Representations and Warranties of the Assignor. The Assignor represents and warrants to the Assignee and to PCI as follows: (i) The Assignor is a company duly organized and validly existing under the laws of Japan and has full power, authority and legal right to execute and deliver this Assignment, and to perform and observe the terms and conditions hereof; (ii) The execution and delivery of this Assignment and the consummation of the transaction contemplated herein does not and will not result in any breach of any applicable law, regulation, order, writ, injunction or decree of any court or governmental authority (domestic or foreign) or of any of the terms, conditions or provisions of, or constitute a default under, or, with notice or lapse of time, or both, constitute a default under, or result in the creation of any lien upon any property or assets of the Assignor pursuant to (a) the charter documents of the Assignor, (b) any laws, regulations or instruments governing the operations or activities of the Assignor or (c) any indenture, agreement or other instrument to which the Assignor is a party or by which it or its assets are bound; (iii) No authorization, approval, filing or consent, other than that provided for in Section 1(c) hereof, and no license, exemption, order, notice, registration or other action of any governmental agency or commission or public or quasi-public body or authority is necessary for the due execution and delivery by the Assignor of this Assignment; (iv) The Agreement and this Assignment have been duly authorized, executed and delivered by the Assignor and constitute legal, valid and binding obligations of the Assignor, enforceable against it in accordance with their respective terms; (v) The Assigned Rights are free from all security interests, liens, pledges, encumbrances and claims; (vi) Since May 30, 1997, the Assignor has not terminated, replaced, amended or waived any provision of the Agreement; (vii) The Assignor has not assigned the Agreement or any of the Assigned Rights to any third party; (viii) No judicial or administrative proceedings are pending to the knowledge of the Assignor which would adversely affect its rights, obligations or licenses under this Assignment or under the Agreement; and (ix) The Assignor has paid all amounts due under Section 3 of the Agreement. b. Representations and Warranties of the Assignee. Assignee represents and warrants to the Assignor and to PCI as follows: (i) The Assignee is a limited liability company duly organized and validly existing under the laws of the State of Delaware and has full power, authority and legal right to execute and deliver this Assignment, and to perform and observe the terms and conditions hereof; (ii) The execution and delivery of this Assignment and the consummation of the transaction contemplated herein does not and will not result in any breach of any applicable law, regulation, order, writ, injunction or decree of any court or governmental authority (domestic or foreign) or of any of the terms, conditions or provisions of, or constitute a default under, or, with notice or lapse of time, or both, constitute a default under, or, result in the creation of any lien upon any property or assets of the Assignee pursuant to (a) the charter documents of the Assignee, (b) any laws, regulations or instruments governing the operations or activities of the Assignee or (c) any indenture, agreement or other instrument to which the Assignee is a party or by which it or its assets are bound; (iii) No authorization, approval, filing or consent, and no license, exemption, order, notice, registration or other action of any governmental agency or commission or public or quasi-public body or authority is necessary for the due execution and delivery by the Assignee of this Assignment; and (iv) This Assignment has been duly authorized, executed and delivered by the Assignee and this Assignment and the Agreement (including the obligations thereunder assumed by the Assignee hereby) constitute legal, valid and binding obligations of the Assignee, enforceable against it in accordance with their respective terms. 3. Miscellaneous. a. Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. b. Notices. Any and all notices, requests, demands and other communications required or otherwise contemplated to be made under this Assignment shall be in writing and in English and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered airmail, return receipt requested, postage prepaid, on the sixth business day following the date of deposit in the mail or (d) if by international courier service, on the second business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed to the sender by such courier service. All such notices, requests, demands and other communications shall be addressed as follows: (i) If to the Assignor: TransCosmos, Incorporated Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Hiroshi Kaizuka Telephone: Facsimile: 011 81 3 3584 6079 (ii) If to the Assignee: PointCast Japan, L.L.C. Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Douglas W.C. Boake Telephone: Facsimile: 011 81 3 3584 6079 (iii) If to PCI: PointCast Incorporated 2475 Augustine Drive, Suite 101 Santa Clara, California 95054 Attention: Jim Wickett, SVP Telephone: (408) 253-0894 Facsimile: (408) 253-8590 or in each case to such other address or facsimile number as the party may have furnished to the other party in writing. c. Governing Law. This Assignment shall in all respects be governed by the laws of the State of California without reference to its principles of conflicts of laws. The parties hereby agree that all disputes arising out of this Agreement shall be subject to the exclusive jurisdiction of and venue in the federal and state courts within Santa Clara County, California. The Assignor and the Assignee hereby consent to the personal and exclusive jurisdiction and venue of these courts. IN WITNESS WHEREOF, the parties have executed this Assignment effective as of the date first set forth above. ASSIGNOR: TransCosmos, Incorporated By: /s/ Koki Okuda Name: Koki Okuda Title: President and C.E.O ASSIGNEE: PointCast Japan, L.L.C. By: /s/ Douglas W.C. Boake Name: Douglas W.C. Boake Title: Douglas W.C. Boake Manager PCI PointCast Incorporated By: /s/ Jim Wickett Name: Jim Wickett Title: Senior Vice President EX-10.8 8 ASSIGNMENT OF COMM. EXPLOIT. AGRMNT DTD 7/25/97 EXHIBIT 10.8 ASSIGNMENT OF COMMERCIAL EXPLOITATION RIGHTS This is an assignment (the "Assignment"), effective as of July 25, 1997, of the rights and obligations of PointCast Japan, L.L.C. (the "Assignor"), a Delaware limited liability corporation, arising under the Commercial Exploitation Rights Agreement, dated May 30, 1997 (the "Agreement") between PointCast Incorporated, a California corporation ("PCI") and TransCosmos, Incorporated ("TCI"), a Japanese corporation, as assigned to Assignor by TCI in the assignment dated May 30, 1997 (the "Original Assignment"), to PointCast K.K. (the "Assignee"), a Japanese corporation. Recitals WHEREAS, PCI granted certain rights and licenses to TCI under the Agreement; and WHEREAS, TCI has assigned such rights and licenses to LLC in the Original Assignment; and WHEREAS, LLC wishes to assign its rights and licenses under the Agreement and the Original Assignment together with its obligations under the Agreement and the Original Assignment to KK in accordance with the terms set forth herein. NOW THEREFORE, the parties hereby agree as follows: 1. Assignment. a. Assignment of the Rights and Obligations under the Agreement. The Assignor hereby assigns and transfers unto Assignee and unto Assignee's successors and assigns for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Assignor, all right, title and interest in and to the Agreement and to all rights and licenses thereunder (the "Assigned Rights") and all obligations under the Agreement effective from July 25, 1997. b. Assumption of Obligations under the Agreement. The Assignee hereby assumes all obligations of Assignor under the Agreement. Assignor and Assignee shall be jointly and severally liable for any obligation or liability of the Assignor under the Agreement arising before the date hereof. 2. Representations and Warranties. a. Representations and Warranties of the Assignor. The Assignor represents and warrants to the Assignee as follows: (i) The Assignor is a limited liability company duly organized and validly existing under the laws of the State of Delaware and has full power, authority and legal right to execute and deliver this Assignment, and to perform and observe the terms and conditions hereof; (ii) The execution and delivery of this Assignment and the consummation of the transaction contemplated herein does not and will not result in any breach of any applicable law, regulation, order, writ, injunction or decree of any court or governmental authority (domestic or foreign) or of any of the terms, conditions or provisions of, or constitute a default under, or, with notice or lapse of time, or both, constitute a default under, or result in the creation of any lien upon any property or assets of the Assignor pursuant to (a) the charter documents of the Assignor, (b) any laws, regulations or instruments governing the operations or activities of the Assignor or (c) any indenture, agreement or other instrument to which the Assignor is a party or by which it or its assets are bound; (iii) No authorization, approval, filing or consent, other than that provided for in Section 1(c) hereof, and no license, exemption, order, notice, registration or other action of any governmental agency or commission or public or quasi-public body or authority is necessary for the due execution and delivery by the Assignor of this Assignment; (iv) The Agreement and this Assignment have been duly authorized, executed and delivered by the Assignor and constitute legal, valid and binding obligations of the Assignor, enforceable against it in accordance with their respective terms; (v) The Assigned Rights are free from all security interests, liens, pledges, encumbrances and claims; (vi) Since May 30, 1997, the Assignor has not terminated, replaced, amended or waived any provision of the Agreement; (vii) The Assignor has not assigned the Agreement or any of the Assigned Rights to any third party; (viii) No judicial or administrative proceedings are pending to the knowledge of the Assignor which would adversely affect its rights, obligations or licenses under this Assignment or under the Agreement; and (ix) The Assignor has paid all amounts due under Section 3 of the Agreement. b. Representations and Warranties of the Assignee. Assignee represents and warrants to the Assignor as follows: (i) The Assignee is a company duly organized and validly existing under the laws of Japan and has full power, authority and legal right to execute and deliver this Assignment, and to perform and observe the terms and conditions hereof; (ii) The execution and delivery of this Assignment and the consummation of the transaction contemplated herein does not and will not result in any breach of any applicable law, regulation, order, writ, injunction or decree of any court or governmental authority (domestic or foreign) or of any of the terms, conditions or provisions of, or constitute a default under, or, with notice or lapse of time, or both, constitute a default under, or, result in the creation of any lien upon any property or assets of the Assignee pursuant to (a) the charter documents of the Assignee, (b) any laws, regulations or instruments governing the operations or activities of the Assignee or (c) any indenture, agreement or other instrument to which the Assignee is a party or by which it or its assets are bound; (iii) No authorization, approval, filing or consent, and no license, exemption, order, notice, registration or other action of any governmental agency or commission or public or quasi-public body or authority is necessary for the due execution and delivery by the Assignee of this Assignment; and (iv) This Assignment has been duly authorized, executed and delivered by the Assignee and this Assignment (including the obligations thereunder assumed by the Assignee hereby) constitutes legal, valid and binding obligations of the Assignee, enforceable against it in accordance with its terms. 3. Miscellaneous. a. Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. b. Notices. Any and all notices, requests, demands and other communications required or otherwise contemplated to be made under this Assignment shall be in writing and in English and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered airmail, return receipt requested, postage prepaid, on the sixth business day following the date of deposit in the mail or (d) if by international courier service, on the second business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed to the sender by such courier service. All such notices, requests, demands and other communications shall be addressed as follows: (i) If to the Assignor: PointCast Japan, L.L.C. Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Hiroshi Kaizuka Telephone: 011 81 3 3586 2880 Facsimile: 011 81 3 3584 6079 (ii) If to the Assignee: PointCast K.K. Toshin Aoyama Building 3F, Shibuya 2-10-13, Shibuya-ku Tokyo 150, Japan Attention: Douglas W.C. Boake Telephone: 011 81 3 5468 1260 Facsimile: 011 81 3 5468 1275 or in each case to such other address or facsimile number as the party may have furnished to the other party in writing. c. Governing Law. This Assignment shall in all respects be governed by the laws of the State of California without reference to its principles of conflicts of laws. The parties hereby agree that all disputes arising out of this Agreement shall be subject to the exclusive jurisdiction of and venue in the federal and state courts within Santa Clara County, California. The Assignor and the Assignee hereby consent to the personal and exclusive jurisdiction and venue of these courts. IN WITNESS WHEREOF, the parties have executed this Assignment effective as of the date first set forth above. ASSIGNOR: PointCast Japan, L.L.C. By: /s/ Douglas Boake Name: Douglas Boake Title: Manager ASSIGNEE: PointCast K.K. By: /s/ Douglas Boake Name: Douglas Boake Title: President EX-10.9 9 COMMERCIAL EXPLOITATION RIGHTS AGREEMENT EXHIBIT 10.9 COMMERCIAL EXPLOITATION RIGHTS AGREEMENT This Commercial Exploitation Rights Agreement ("Agreement") by and between PointCast Incorporated ("PCI"), a California corporation with its principal place of business at 501 Macara Avenue, Sunnyvale, CA 94086 and TransCosmos, Incorporated ("TCI"), a Japanese corporation with its principal place of business at Sumitomoseimei Akasaka Bldg., 3-3-3, Akasaka, Minato-ku, Tokyo, Japan 107, shall be effective as of May 30, 1997 (the "Effective Date"). 1. Definitions. ----------- a. "Commercial Exploitation Rights" shall mean the rights granted under Section 2 (a-b) below. b. "Localized PointCast Network" shall mean a localized version of the PointCast Network, in the Japanese language, whose operations are located in the Territory, utilizing PCI's technology to broadcast news, information and advertising content via the Internet or corporate intranets, targeted primarily to viewers and corporations in the Territory utilizing PCI's client software. c. "Territory" shall mean Japan. 2. Obligations. ----------- PointCast --------- a. Commercial Exploitation Rights. PCI grants TCI the exclusive right ------------------------------ during the term of this Agreement to commercially exploit a Localized PCI Network in the Territory, subject to the terms and conditions of this Agreement. b. Trademarks. PCI will provide TCI with artwork for the "PointCast" and ---------- "PointCast Network" trademarks, trade names and related logos (the "Marks") as set forth in Exhibit A. Subject to the terms and conditions of this Agreement, PCI grants TCI the nonexclusive right to utilize the Marks in the Territory in connection with the commercial exploitation rights granted in Section 2(a); provided, however, that: (i) no names or descriptive words or phrases shall be - -------- ------- co-joined with the Marks without the prior written consent of PCI; (ii) TCI will comply with any instruction or requirement issued by PCI with respect to the appearance and use of the Marks; (iii) TCI shall use the Marks only in a manner so as to preserve and protect all rights of PCI therein; (iv) TCI shall not challenge PCI's ownership of the Marks or use or adopt any trademarks which might be confusingly similar to the Marks; (v) TCI shall take all necessary steps and pay all related expenses in connection with protecting the Marks as PCI intellectual property under all applicable trademark, unfair competition or other laws in the Territory, making all applications in PCI's name, if possible, or otherwise assigning to PCI the rights to the resulting marks as soon as possible; and (vi) TCI shall additionally take all necessary steps and pay all related expenses in connection with so protecting any new or modified marks created with the approval of PCI under clause (i) of this Section. All rights in the Marks shall at all times during the term of this Agreement and thereafter, be and remain the sole property of PCI. TCI shall have no right to alter or in any way transfer the Marks, and TCI shall provide PCI with reasonable assistance in any efforts to prevent or terminate any infringement, unauthorized use or imitation thereof. c. Commercial Exploitation Rights Support. During the first two (2) years -------------------------------------- of this Agreement, PCI shall use commercially reasonable efforts to assist and train TCI in the development and implementation of the rights granted under this Agreement, focusing upon the establishment of an advertising sales force, content acquisition and development initiatives, software distribution and circulation-building programs, demographic research and market identification efforts, establishment of end-user technical support services and other assistance in establishing effective operational methods within the Territory, periodically throughout such periods as mutually agreed. d. Restrictions on TCI. The Commercial Exploitation Rights granted in ------------------- this Agreement may not be sublicensed or transferred to a third party. Such Commercial Exploitation Rights may be assigned by TCI only in connection with the assignment of this Agreement in accordance with Section 9(a). e. Advertising Inventory. PCI shall provide TCI with US $2 million in --------------------- advertising inventory on the U.S. PointCast Network at PCI's prevailing rate card. f. Intranet Tools. PCI grants TCI a non-exclusive, non-transferable -------------- license, for the term of this Agreement, to redistribute at no charge to end users the PointCast Intranet Tools ("Tools"), as updated and modified from time to time by PCI in its discretion. TCI shall redistribute the Tools with all built-in end-user licensing terms intact, and shall not alter such terms. g. Tools Support. Pursuant to Section 2(c), for the period commencing ------------- January 1, 1998 through December 31, 1998, PCI shall provide TCI with technical support and training regarding the Tools on an exclusive basis in the Territory to facilitate the distribution of the Tools and other PCI products. TCI --- h. TCI shall make a non-refundable payment to PCI, upon execution of this Agreement, of US $2 million. -2- 3. Taxes. ----- TCI shall pay any and all sales, use, value added or other taxes, federal, state or otherwise, however designated, which are levied or imposed by reason of the transactions contemplated by this Agreement, excluding only taxes based on PCI's net income. TCI shall hold PCI harmless from all claims and liability arising from TCI's failure to report or pay any such taxes, duties and assessments. 4. Ownership. --------- Except for the express licenses set forth in Section 2(b), nothing in this Agreement shall be construed as granting TCI any rights in the patents, copyrights, trademarks, trade secrets or other intellectual property rights of PCI. 5. Disclaimer of Warranties. ------------------------ ALL RIGHTS, LICENSES AND SERVICES PROVIDED BY PCI UNDER THIS AGREEMENT ARE PROVIDED "AS IS." PCI PROVIDES NO WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO ANY SUCH RIGHTS, LICENSES OR SERVICES AND SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT. 6. Indemnity. --------- TCI agrees to indemnify and hold PCI harmless against any cost, loss, liability or expense (including attorneys' fees) arising out of third-party claims against PCI that result from TCI's commercial exploitation of Localized PCI Networks under this Agreement. 7. Limitation of Liability. ----------------------- EACH PARTY AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER PARTY'S LIABILITY FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN NO EVENT EXCEED ONE MILLION DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER WILL NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE -3- POSSIBILITY OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE AMOUNTS PAYABLE HEREUNDER ARE BASED IN PART ON THESE LIMITATIONS, AND FURTHER AGREES THAT THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. 8. Term and Termination. -------------------- a. Effective Date and Term. This Agreement and the licenses granted ----------------------- hereunder shall be effective as of the Effective Date and shall continue in perpetuity unless terminated as set forth in this Section 8. b. Termination. Either party shall have the right to terminate this ----------- Agreement and the licenses granted herein effective upon written notice to the other party upon the occurrence the following events: (i) in the event the other party fails to comply with any of the terms and conditions of this Agreement and such default has not been cured within thirty (30) days after written notice to the other party; (ii) in the event PointCast Japan, L.L.C. is dissolved; (iii) in the event the Technology and Trademark License Agreement between PCI and PointCast Japan, L.L.C. is terminated; or (iv) in the event the other party (A) terminates or suspends its business, (B) becomes subject to any bankruptcy or insolvency proceeding under any U.S., state or other national or governmental statute, (C) becomes insolvent or subject to direct control by a trustee, receiver or similar authority, or (D) has wound up or liquidated, voluntarily or otherwise. c. Effect of Termination. The obligations of PCI and TCI in Sections --------------------- 2(b)(iv), 3(b), 4, 5, 6, 7, 8 and 9 shall survive termination of this Agreement. Termination of this Agreement shall not relieve either party for any liability that accrued prior to such termination. 9. Miscellaneous. ------------- a. Assignment. All the terms and provisions of this Agreement shall be ---------- binding upon and inure to the benefit of the parties to this Agreement and to their respective heirs, successors, assigns and legal representatives, except that TCI shall not assign its rights under this Agreement without PCI's prior written consent. Notwithstanding the foregoing, TCI shall be entitled to assign its rights under this Agreement to PointCast Japan, L.L.C., provided that PointCast Japan, L.L.C. expressly assumes all of TCI's obligations under this Agreement. PCI shall be entitled to assign this Agreement to a successor of all or substantially all of its relevant assets without restriction. b. Entire Agreement. This Agreement, together with the Exhibits hereto, ---------------- constitutes the entire agreement among the parties with respect to the subject matter hereof and shall supersede all prior understandings and agreements between the parties with respect to such subject matter. This Agreement may be executed in any number of counterparts, each of which -4- shall be deemed an original, but all of which together shall constitute one and the same instrument. c. Amendment. This Agreement may be amended only by a written instrument --------- signed by both parties. d. Notices. Any and all notices, requests, demands and other ------- communications required or otherwise contemplated to be made under this Agreement shall be in writing and in English and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered airmail, return receipt requested, postage prepaid, on the sixth business day following the date of deposit in the mail or (d) if by international courier service, on the second business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed to the sender by such courier service. All such notices, requests, demands and other communications shall be addressed as follows: (i) If to TCI: TransCosmos, Incorporated Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Hiroshi Kaizuka Telephone: 011 81 3 3586 2880 Facsimile: 011 81 3 3584 6079 (ii) If to PCI: PointCast Incorporated 501 Macara Avenue Sunnyvale, California 94086 Attention: Jim Wickett Telephone: (408) 990-7000 Facsimile: (408) 990-7251 or in each case to such other address or facsimile number as the party may have furnished to the other party in writing. e. Severability. In the event of the invalidity of any part or ------------ provision of this Agreement, such invalidity shall not affect the enforceability of any other part or provision of this Agreement. -5- f. Waiver. No waiver by any party of any default in the performance of or ------ compliance with any provision herein shall be deemed to be a waiver of the performance and compliance as to any other provision, or as to such provision in the future; nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. No remedy expressly granted herein to any party shall be deemed to exclude any other remedy which would otherwise be available. g. Governing Law. This Agreement shall in all respects be governed by the ------------- laws of the State of California without reference to its principles of conflicts of laws. The parties hereby agree that all disputes arising out of this Agreement shall be subject to the exclusive jurisdiction of and venue in the federal and state courts within Santa Clara County, California. TCI hereby consents to the personal and exclusive jurisdiction and venue of these courts. IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first set forth above. POINTCAST INCORPORATED TRANSCOSMOS, INCORPORATED By: /s/ Jim Wickett By: /s/ Koki Akuda -------------------------------- ------------------------- Name: Jim Wickett Name: Koki Akuda ------------------------------ ----------------------- Title: Sr. V.P. Title: President ----------------------------- ---------------------- -6- EXHIBIT A TO COMMERCIAL EXPLOITATION RIGHTS AGREEMENT The following is a listing of marks and logos licensed under Section 2(b) of the Commercial Exploitation Rights Agreement: PointCast(TM) PointCast Network(TM) The PointCast logo icon is comprised of a purple square containing a white broadcast tower with a yellow dot in the center. The icon is a square and should account for one quarter the length of the logo (not including the TM symbol). For example, if the PointCast logo word is represented as 4 inches long, the tower icon should be a one inch square. The PointCast Corporate Signature can appear in either a centered (primary) or horizontal configuration. The centered configuration is the primary orientation and should be used whenever possible. The horizontal configuration can be used when there are size or space limitations. In the centered configuration, the logotype PointCast (black) should lie centered beneath the tower icon (purple/yellow). In the horizontal configuration, the logotype should lie to the right of the purple tower icon. The logo word PointCast may reside without the icon however, the tower icon may not reside without the logo word PointCast. The logo word "PointCast" must always be black unless approved by PointCast Marketing. The tower icon must always appear in the Pantone colors indicated in the corporate palette unless approved by PointCast Marketing. The clear-space area should measure at least 1/2x on all sides of the PointCast Corporate Signature, where x equals the height of the logo icon. Placement of the trademark symbol (TM) should also appear after the word PointCast. [EXAMPLE OF POINTCAST LOGO, WITH TOWER ICON ABOVE NAME] [EXAMPLE OF POINTCAST LOGO, WITH TOWER ICON TO LEFT OF NAME] The corporate palette is comprised of two colors: Purple is the primary color, Yellow is the secondary color and Black. The PMS, RGB and CMYK formulas are listed below. When necessary PointCast Signature can also appear in Black and White, please make sure the logo icon and the logotype is in black. The dot above the tower should be white. PMS RGB CMYK Purple: 527C 102,0,153 65,85,0,0 Yellow: 116C 255,204,0 0,20,90,0 EX-10.10 10 ADMINISTRATIVE SERVICES & MANAGEMENT AGREEMENT EXHIBIT 10.10 ADMINISTRATIVE SERVICES AND MANAGEMENT AGREEMENT THIS ADMINISTRATIVE SERVICES AND MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of July 25, 1997, by and between PointCast K.K., a Japanese corporation ("PointCast Japan"), and TransCosmos, Incorporated, a Japanese corporation ("TCI"). RECITALS -------- 1. PointCast Incorporated, a California corporation ("PCI"), has established an English language network (the "Network") to provide current news, information services and advertising via the Internet and corporate intranets using PCI's proprietary software and interface technology. 2. PCI and TCI have formed PointCast Japan, L.L.C. (the "LLC") as a limited liability company under the laws of the State of Delaware. The LLC has formed a Japanese corporation, PointCast Japan, to operate the business of the joint venture between PCI and TCI, specifically to operate a localized, Japanese version of the Network (the "Localized Network") in Japan (the "Territory"). 3. TCI has agreed to manage certain operations of the business of PointCast Japan on the terms set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: ARTICLE I Appointment Of Manager ---------------------- 1.1 Appointment. PointCast Japan hereby appoints TCI to manage those ----------- areas of the business operations of PointCast Japan (other than "Miscellaneous") specified on Exhibit A (the "Business Areas"), and TCI hereby accepts such appointment by PointCast Japan, to manage and direct the Business Areas in the Territory as specified in Article II below and subject to the general supervision and control of the Board of Managers of the LLC and the officers of PointCast Japan. 1.2 Term. The term of this Agreement shall begin as of the date ---- hereof and continue for a period of two years from the date of the launch of the "open beta" period of the Localized Network ("Launch"), subject to the provisions of Section 1.3 below. 1.3 Termination for Breach. If either party materially breaches any ---------------------- provision of this Agreement and fails to cure such breach within thirty (30) days following written notice of such breach from the other party, then the other party may, at its sole discretion, terminate this Agreement upon written notice to the defaulting party. ARTICLE II Powers and Duties of TCI ------------------------ 2.1 Powers of TCI. Subject to such limitations as may be imposed by ------------- law or this Agreement, TCI is hereby authorized and empowered, in the name of and on behalf of PointCast Japan, to manage the Business Areas in accordance with, and subject to the provisions of, this Agreement. 2.2 Duties of TCI. TCI shall perform its duties hereunder in the ------------- manner in which TCI reasonably deems necessary or appropriate, subject to the other provisions of this Agreement. Without limiting the generality of the foregoing, the duties of TCI in the Territory shall include the following: (a) to provide, from time to time, consultants or employees who will assist PointCast Japan in activities concerning the items specified in Section 1.1 above; (b) to control and determine the day-to-day conduct of the business activities of PointCast Japan relating to matters concerning banking, payroll, credit policies, billing procedures, collection matters and cash management policies; (c) to provide marketing and sales activities for PointCast Japan; and (d) to conduct the services in compliance with all applicable laws, rules and regulations and in accordance with the terms of this Agreement, and any other applicable agreement, indenture or other instrument to which PointCast Japan is bound or may be subject. 2.3 Limitation on Powers. Notwithstanding the provisions of Sections -------------------- 2.1 and 2.2 above, all day-to-day decisions regarding the operations of PointCast Japan shall be made at the discretion of the President of PointCast Japan and, as appropriate or necessary, the Board of Managers of the LLC. Except as expressly set forth in Sections 2.1 and 2.2 above, without the prior written authority of the Board of Managers of the LLC, TCI shall not have authority or take any other action on behalf of PointCast Japan. 2.4 Additional Duties of TCI. TCI shall advance such funds during ------------------------ the term of this Agreement, on a quarterly basis, as required to permit PointCast Japan to operate in accordance with the budget attached hereto as Exhibit A, with any deviation from the budget subject to approval by the representatives on the Board of Managers of the LLC appointed by PCI. In no event will TCI be required to expend an amount in excess of the sum of the management fees paid to TCI under this Agreement plus [*] Yen ((Yen) [*]). [*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. -2- ARTICLE III Management Fees --------------- Compensation. In consideration of the performance of the duties set ------------ forth herein, PointCast Japan shall pay to TCI a management fee equal to 46% of the gross revenues of PointCast Japan, determined in accordance with generally accepted accounting principles consistently applied, paid at the conclusion of each fiscal quarter, until TCI recovers its expenses incurred in accordance with Section 2.4 above. Thereafter, TCI will be paid management fees at the conclusion of each fiscal quarter at a rate equal to 46.5% of the gross revenues of PointCast Japan with respect to revenues in each such succeeding quarter. ARTICLE IV Miscellaneous ------------- 4.1 Distribution. During the term of this Agreement PointCast Japan ------------ shall permit TCI to distribute localized versions of PCI software that are distributed by third parties under agreement with PointCast Japan under terms to TCI that are no less favorable than those granted to such third parties. 4.2 Technical Support. Prior to the termination of this Agreement, ----------------- the parties shall use their best efforts to enter a separate agreement for the provision of technical support services by TCI to PointCast Japan upon commercially reasonable terms to extend beyond the term of this Agreement. 4.3 Independent Contractor. Nothing herein shall be construed or ---------------------- deemed to create a joint venture, contract of employment or partnership. 4.4 Notices. Any notice, request, consent or communication ------- (collectively a "Notice") under this Agreement shall be effective only if it is in writing and (a) personally delivered, (b) sent by certified or registered mail, return receipt requested, postage prepaid, (c) sent by delivery service, with delivery confirmed, or (d) telexed or telecopied, with receipt confirmed, addressed as follows: TransCosmos, Incorporated Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Hiroshi Kaizuka Telephone: 011 81 3 3586 2880 Facsimile: 011 81 3 3584 6079 -3- PointCast, K.K. Toshin Aoyama Building 3F, Shibuya 2-10-13, Shibuya-ku Tokyo 150, Japan Attention: Douglas W.C. Boake Telephone: 011 81 3 5468 1260 Facsimile: 011 81 3 5468 1275 With copies to: PointCast Japan, L.L.C. Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Hiroshi Kaizuka Telephone: 011 81 3 3586 2880 Facsimile: 011 81 3 3584 6079 PointCast Incorporated 501 Macara Avenue Sunnyvale, California 94086 Attention: Jim Wickett Telephone: (408) 990-7000 Facsimile: (408) 990-7251 or to such other address or addresses as shall be furnished in writing by any party to the other party. A Notice shall be deemed to have been given as of the date when (i) personally delivered, (ii) seven (7) business days after being deposited with postal authorities, properly addressed, (iii) the next day when delivered during business hours to said overnight delivery service, properly addressed and prior to such delivery service's cutoff time for next day delivery, or (iv) when receipt of the telex or telecopy is confirmed, as the case may be, unless the sending party has actual knowledge that a Notice was not received by the intended recipient. 4.5 Assignment. TCI will not assign this Agreement to any other ---------- party or parties, without the prior written consent of PointCast Japan (which will not be unreasonably withheld). 4.6 Headings. Section headings contained in this Agreement are for -------- reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 4.7 Entire Agreement; Modification. This Agreement contains the ------------------------------ complete expression of the agreement between the parties with respect to the matters addressed herein and there are no promises, representations, or inducements except as herein provided. The terms and provisions of this Agreement may not be modified, supplemented or amended except in writing signed by both parties hereto. All terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto. -4- 4.8 No Waiver. Failure by either party hereto to enforce at any time --------- or for any period of time any provision or right hereunder shall not constitute a waiver of such provision or of the right of such party thereafter to enforce each and every such provision. 4.9 Governing Law. This Agreement shall be governed by and ------------- construed and enforced in accordance with the laws of California. The prevailing party in any litigation concerning this Agreement shall be entitled to reimbursement of its reasonable costs, including legal and accounting fees, incurred in connection with any such matter. 4.10 Counterparts. This Agreement may be executed in any number of ------------ counterparts, all of which together shall constitute one agreement binding on the parties hereto. 4.11 Third Party Beneficiaries. PCI and the LLC shall be deemed to ------------------------- be third party beneficiaries for purposes of this Agreement. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first above written. TRANSCOSMOS, INCORPORATED By: /s/ Koki Okuda ------------------------------------- Title: President ---------------------------------- POINTCAST K.K. By: /s/ Douglas Boake ------------------------------------- Title: President ---------------------------------- -5- EXHIBIT A --------- TCI MANAGEMENT AREAS AND BUDGET ------------------------------- (all figures in Japanese Yen)
BUSINESS AREAS TCI "MANAGEMENT FEE" EXPENSES - ------------------------------------ --------------------------------------------------------- PRE-LAUNCH YR 1 YR 2 ----------------- ----------------- ----------------- Payroll [*] [*] Network Operations [*] [*] Marketing [*] [*] Equipment [*] [*] Recruiting [*] [*] Translation [*] [*] Travel and Entertainment [*] [*] Rent and Utilities [*] [*] Telephone [*] [*] Legal [*] [*] Finance/Acctg [*] [*] Supplies [*] [*] Miscellaneous [*] [*] ----------------- ----------------- ----------------- [*] [*] [*] ================= ================= =================
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. EX-10.11 11 SUB-LICENSE OF TECHNOLOGY & TRADEMARK RIGHTS EXHIBIT 10.11 SUB-LICENSE OF TECHNOLOGY AND TRADEMARK RIGHTS This is a sub-license (the "Sub-license"), effective as of July 25, 1997, of the rights and obligations of PointCast Japan, L.L.C. (the "Sub-licensor"), a Delaware limited liability corporation, arising under the Technology and Trademark License Agreement, dated May 30, 1997 (the "Master License") between PointCast Incorporated, a California corporation ("PCI") and Sub-licensor, to PointCast K.K. (the "Sub-licensee"), a Japanese corporation. Recitals -------- WHEREAS, PCI granted certain rights and licenses to Sub-licensor under the Master License (attached as Exhibit A hereto); and WHEREAS, Sub-licensor wishes to license its rights and licenses under the Master License to Sub-licensee in accordance with the terms set forth herein; NOW THEREFORE, the parties hereby agree as follows: 1. Sub-license. ----------- a. Server-Side Technology Rights. Subject to the terms and conditions of ----------------------------- this Sub-license and the Master License, Sub-licensor grants to Sub-licensee the exclusive right to use the Server-Side Technology licensed from PCI by Sub- Licensor, for the limited purpose of establishing and maintaining a Localized PointCast Network in the Territory. b. Client-Side Software Rights. Subject to the terms and conditions of --------------------------- this Sub-license and the Master License, Sub-licensor grants to Sub-licensee the right to use, reproduce, market and distribute the object code for the Client- Side Software in the Territory, as licensed from PCI by Sub-licensor. c. Trademark Rights. Subject to the terms and conditions of this Sub- ---------------- license and the Master License, Sub-licensor grants to Sub-licensee a non- exclusive right to utilize the Marks utilized by PCI in connection with the Client-Side Software, solely in connection with the marketing, manufacture, distribution and promotion of the Client-Side Software, as licensed from PCI by Sub-licensor. d. Restrictions. The foregoing sub-licensed rights may not be sub- ------------ licensed or transferred to a third-party without the advance, written consent of PCI and Sub-licensor. e. Reservation of Rights. Sub-licensor reserves all rights granted to it --------------------- in the Master License not expressly granted to Sub-licensee in this Sub-license. f. Source Code; Reverse Engineering. Sub-licensee shall have no rights to -------------------------------- any source code for the Client-Side Software or Server-Side Software. Sub- licensee shall not decompile, reverse engineer or otherwise attempt to derive, obtain or modify the source code for such software. g. No Modification. Sub-licensee shall not modify, translate or create --------------- derivative works of all or any part of the technology sub-licensed herein. h. Proprietary Notices. Sub-licensee agrees to reproduce and include any ------------------- copyright or other proprietary rights notices of PCI in all copies, in whole or in part, of the Client-Side Software or Server-Side Technology or any other physical embodiment of the sub-licensed technology. Sub-licensee shall not remove any PCI copyright or other proprietary rights notices from any materials provided by Sub-licensor to Sub-licensee under this Agreement. i. Homogeneous Network. Sub-licensee shall not use the Client-Side ------------------- Software as part of a network that does not also use the Server-Side Technology, nor use the Server-Side Technology as part of a network that does not also use the Client-Side Software, nor use the same server(s) in a Localized PointCast Network and in any other broadcast network, without the express written consent of PCI and Sub-licensor. j. U.S. Government Restricted Rights. Sub-licensee acknowledges, shall --------------------------------- state in every license agreement under which an end user that is an agency, department or entity of the United States Government ("Government") obtains rights to use the Client-Side Software or Server-Side Technology, and shall ensure that each such end user understands and agrees, that (i) use, reproduction, release, modification or disclosure of the Client-Side Software and Server-Side Technology, or any part thereof, including technical data, is restricted in accordance with Federal Acquisition Regulation ("FAR") 12.212 for civilian agencies and Defense Federal Acquisition Regulation Supplement ("DFARS") 227.7202 for military agencies, (ii) the Client-Side Software and Server-Side Technology are commercial products, which were developed at private expense, and (iii) use of the Client-Side Software and Server-Side Technology by any Government agency, department or other agency of the Government is further restricted as set forth in this Agreement. 2. Representations and Warranties. ------------------------------ a. Representations and Warranties of the Sub-licensor. The Sub-licensor -------------------------------------------------- represents and warrants to the Sub-licensee as follows: (i) The Sub-licensor is a limited liability company duly organized and validly existing under the laws of the State of Delaware and has full power, authority and legal right to execute and deliver this Sub-license, and to perform and observe the terms and conditions hereof; (ii) The execution and delivery of this Sub-license and the consummation of the transaction contemplated herein does not and will not result in any breach of any applicable law, regulation, order, writ, injunction or decree of any court or governmental authority (domestic or foreign) or of any of the terms, conditions or provisions of, or constitute a default under, or, with notice or lapse of time, or both, constitute a default under, or result in the creation of any lien upon any property or assets of the Sub-licensor pursuant to (a) the charter documents of the Sub-licensor, (b) any laws, regulations or instruments governing the operations or activities of the Sub-licensor or (c) any indenture, agreement or other instrument to which the Sub-licensor is a party or by which it or its assets are bound; -2- (iii) No authorization, approval, filing or consent, other than that provided for in Section 1(c) hereof, and no license, exemption, order, notice, registration or other action of any governmental agency or commission or public or quasi-public body or authority is necessary for the due execution and delivery by the Sub-licensor of this Sub-license; (iv) The Master License and this Sub-license have been duly authorized, executed and delivered by the Sub-licensor and constitute legal, valid and binding obligations of the Sub-licensor, enforceable against it in accordance with their respective terms; (v) The sub-licensed rights are free from all security interests, liens, pledges, encumbrances and claims; (vi) Since May 30, 1997, the Sub-licensor has not terminated, replaced, amended or waived any provision of the Master License; (vii) The Sub-licensor has not sub-licensed its rights under the Master License to any third party; and (viii) No judicial or administrative proceedings are pending to the knowledge of the Sub-licensor which would adversely affect its rights, obligations or licenses under this Sub-license or under the Master License. b. Representations and Warranties of the Sub-licensee. Sub-licensee -------------------------------------------------- represents and warrants to the Sub-licensor as follows: (i) The Sub-licensee is a company duly organized and validly existing under the laws of Japan and has full power, authority and legal right to execute and deliver this Sub-license, and to perform and observe the terms and conditions hereof; (ii) The execution and delivery of this Sub-license and the consummation of the transaction contemplated herein does not and will not result in any breach of any applicable law, regulation, order, writ, injunction or decree of any court or governmental authority (domestic or foreign) or of any of the terms, conditions or provisions of, or constitute a default under, or, with notice or lapse of time, or both, constitute a default under, or, result in the creation of any lien upon any property or assets of the Sub-licensee pursuant to (a) the charter documents of the Sub-licensee, (b) any laws, regulations or instruments governing the operations or activities of the Sub-licensee or (c) any indenture, agreement or other instrument to which the Sub-licensee is a party or by which it or its assets are bound; (iii) No authorization, approval, filing or consent, and no license, exemption, order, notice, registration or other action of any governmental agency or commission or public or quasi-public body or authority is necessary for the due execution and delivery by the Sub-licensee of this Sub-license; and (iv) This Sub-license has been duly authorized, executed and delivered by the Sub-licensee and this Sub-license (including the obligations thereunder assumed by the Sub-licensee hereby) constitutes legal, valid and binding obligations of the Sub-licensee, enforceable against it in accordance with its terms. -3- 3. Payment; Taxes. -------------- a. Fees. At the end of each of Sub-licensee's fiscal quarters Sub-licensee ---- shall pay to Sub-licensor a licensing fee ("Royalty") of [*] percent ([*]) of Sub-licensee's gross revenues for such quarter. Upon Sub-licensee's operations becoming profitable, the parties agree that Sub-licensor shall be entitled to [*] for subsequent fiscal quarters, such [*] to be mutually agreed upon, which shall reflect a fair return to Sub-licensor and permit recoupment of the measure of Royalties previously foregone by Sub-licensor under the prior [*] percent rate. Within ten (10) days of the end of each such fiscal quarter, Sub- licensee shall report such revenue data to Sub-licensor as mutually agreed by the parties as necessary for determining the Royalty to be paid to Sub-licensor under this section. b. Taxes. Sub-licensee shall, in addition to any other amounts payable ----- under this Agreement, pay all sales, use, value added or other taxes, federal, state or otherwise, however designated, which are levied or imposed by reason of the transactions contemplated by this Sub-license, excluding only taxes based on Sub-licensor's net income. Sub-licensee shall hold Sub-licensor harmless from all claims and liability arising from sub-licensee's failure to report or pay any such taxes, duties and assessments. 4. Proprietary Rights and Confidential Information. ----------------------------------------------- a. Ownership. Except for the express licenses set forth in Section 2, --------- nothing in this Agreement shall be construed as granting Sub-licensee any rights in the sub-licensed technology. PCI shall own all rights to the sub-licensed technology, including all patent rights, copyrights, trade secret rights and other intellectual property rights and rights to applications therefor (collectively, "Intellectual Property Rights") as well as all rights, including all Intellectual Property Rights, to any inventions, enhancements, improvements or derivative works of or relating to the sub-licensed technology, whether made by PCI, Sub-licensor or Sub-licensee. Sub-licensee shall take all actions and execute any documents necessary or appropriate to secure in PCI ownership of such rights. b. Confidentiality. Sub-licensee acknowledges that the sub-licensed --------------- technology constitutes PCI's confidential and proprietary information ("Confidential Information"). Sub-licensee agrees to treat the Confidential Information with at least the degree of care and protection with which it treats its own proprietary and confidential information, but in any event with no less than reasonable care and protection, and to use the Confidential Information only as expressly set forth herein. c. Return of Confidential Information. Sub-licensee shall promptly ---------------------------------- return all Confidential Information (i) after termination of this Sub-license, or (ii) upon receipt by Sub-licensee of written notice requesting return of such Confidential Information. 5. Disclaimer of Warranties. ------------------------ ALL LICENSED TECHNOLOGY (INCLUDING SOFTWARE) PROVIDED BY SUB-LICENSOR UNDER THIS AGREEMENT IS PROVIDED "AS IS." SUB-LICENSOR PROVIDES NO WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR [*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. -4- OTHERWISE, WITH RESPECT TO ANY SUCH TECHNOLOGY AND SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT. 6. Indemnity. --------- Sub-licensor agrees to indemnify Sub-licensee and PCI and hold each harmless against any cost, loss, liability or expense (including attorneys' fees) arising out of claims against either which result from Sub-licensee's use or distribution of the sub-licensed technology. 7. Limitation of Liability. ----------------------- EACH PARTY AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER PARTY'S LIABILITY FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN NO EVENT EXCEED ONE MILLION DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER WILL NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE AMOUNTS PAYABLE HEREUNDER ARE BASED IN PART ON THESE LIMITATIONS, AND FURTHER AGREES THAT THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. 8. Term and Termination. -------------------- a. Effective Date and Term. This Sub-license shall be effective as of the ----------------------- Effective Date and shall continue in perpetuity unless terminated as set forth in this Section 8. b. Termination. Either party shall have the right to terminate this Sub- ----------- license effective upon written notice to the other party upon the occurrence the following events: (i) in the event the other party fails to comply with any of the terms and conditions of this Sub-license and such default has not been cured within sixty (60) days after written notice to the other party; (ii) in the event the Master License between PCI and Sub-licensor is terminated; (iii) in the event Sub-licensee dissolves; or (iv) in the event the other party (A) terminates or suspends its business, (B) becomes subject to any bankruptcy or insolvency proceeding under any U.S., state or other national or governmental statute or law, (C) becomes insolvent or subject to direct control by a trustee, receiver or similar authority, or (D) has wound up or liquidated, voluntarily or otherwise. c. Effect of Termination. The obligations of Sub-licensor and Sub- --------------------- licensee in Sections 2, 3, 4, 5, 6, 7, 8 and 9 shall survive termination of this Sub-license. Termination of this Sub-license shall not relieve either party for any liability that accrued prior to such termination. -5- 9. Miscellaneous. ------------- a. Assignment. All the terms and provisions of this Sub-license shall be ---------- binding upon and inure to the benefit of the parties to this Sub-license and to their respective heirs, successors, assigns and legal representatives, except that Sub-licensee shall not assign its rights under this Sub-license to anyone without the prior written consent of PCI and Sub-licensor. Sub-licensee shall be entitled to assign this Sub-license to a successor of all or substantially all of its relevant assets without restriction. b. Entire Agreement. This Sub-license, together with the Exhibits hereto, ---------------- constitutes the entire agreement among the parties with respect to the subject matter hereof and shall supersede all prior understandings and agreements between the parties with respect to such subject matter. This Sub-license may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. c. Amendment. This Sub-license may be amended only by a written instrument --------- signed by both parties. d. Notices. Any and all notices, requests, demands and other ------- communications required or otherwise contemplated to be made under this Sub- license shall be in writing and in English and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered airmail, return receipt requested, postage prepaid, on the sixth business day following the date of deposit in the mail or (d) if by international courier service, on the second business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed to the sender by such courier service. All such notices, requests, demands and other communications shall be addressed as follows: (i) If to the Sub-licensor: PointCast Japan, L.L.C. Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Hiroshi Kaizuka Telephone: 011 81 3 3586 2880 Facsimile: 011 81 3 3584 6079 (ii) If to the Sub-licensee: PointCast K.K. Toshin Aoyama Building 3F, Shibuya 2-10-13, Shibuya-ku Tokyo 150, Japan Attention: Douglas W.C. Boake -6- Telephone: 011 81 3 5468 1260 Facsimile: 011 81 3 5468 1275 or in each case to such other address or facsimile number as the party may have furnished to the other party in writing. e. Governing Law. This Sub-license shall in all The parties hereby agree ------------- that all disputes respects be governed by the laws of the State of arising out of this Sub-license shall be subject California without reference to its principles of to the exclusive jurisdiction of and venue in conflicts of laws. the federal and state courts within Santa Clara Sub-licensee hereby consent to the personal and exclusive jurisdiction and venue of these courts. f. Import and Export Controls. Sub-licensee understands that Sub-licensor -------------------------- may be subject to regulation by agencies of the U.S. government, including the U.S. Department of Commerce, which prohibit export or diversion of certain products and technology to certain countries. Any and all obligations of Sub- licensor to provide the sub-licensed technology, as well as any technical assistance, shall be subject in all respects to such United States laws and regulations and shall from time to time govern the license and delivery of technology and products abroad by persons subject to the jurisdiction of the United States, including the Export Administration Act of 1979, as amended, any successor legislation, and the Export Administration Regulations issued by the Department of Commerce, International Trade Administration, or Office of Export Licensing. Sub-licensee warrants that it shall comply in all respects with the export and reexport restrictions set forth in the export license (if necessary) for the sub-licensed technology. IN WITNESS WHEREOF, the parties have executed this Sub-license as of the Effective Date set forth above. SUB-LICENSOR: SUB-LICENSEE: POINTCAST JAPAN, L.L.C. PointCast K.K. BY: /s/ Douglas Boake BY: /s/ Douglas Boake ----------------------------- ------------------------- NAME: Douglas Boake NAME: Douglas Boake --------------------------- ----------------------- TITLE: Manager TITLE: President -------------------------- ---------------------- -7- EX-10.12 12 MAINTENANCE & SUPPORT AGREEMENT EXHIBIT 10.12 MAINTENANCE AND SUPPORT AGREEMENT Maintenance and Support Agreement ("Agreement") dated as of July 25, 1997 (the "Effective Date") by and between PointCast Incorporated ("PCI"), a California corporation with its principal place of business at 501 Macara Avenue, Sunnyvale, CA 94086 and PointCast K.K. ("NewCo"), with its principal place of business at Toshin Aoyama Building, 3F, Shibuya 2-10-13, Shibuya-ku, Tokyo 150, Japan. This Agreement sets forth the terms and conditions under which PCI will localize and maintain the software (the "Software") licensed to NewCo pursuant to the License Agreement dated May 30, 1997 between PointCast Japan, L.L.C. and NewCo (the "License Agreement"). All terms shall have the meanings set forth in the License Agreement, unless otherwise defined in this Agreement. 1. Support Services. ---------------- a. Localization. PCI shall use commercially reasonable efforts to develop ------------ Localized Versions of its Client and Developer's Tools software and its Server- Side Software, as necessary, to allow NewCo to establish the Localized PointCast Network. As such Localized Versions are developed, PCI shall deliver them to NewCo in beta and final forms. b. Training. After PCI has delivered the Localized Versions of its -------- software pursuant to Section 1(a), PCI shall conduct a training session in California for employees of NewCo. NewCo shall be responsible for the travel and lodging expenses of those employees attending the training. c. Error Corrections. PCI shall use commercially reasonable efforts to ----------------- fix any reproducible programming error identified by NewCo in the Localized Versions of the Client-Side Software or the Server-Side Software. d. Updates and Upgrades. PCI shall use commercially reasonable efforts to -------------------- provide updates and upgrades to the Localized Versions of the Client-Side Software and the Server-Side Software, as PCI in its sole discretion shall determine, for the purpose of (i) adding channels to such Localized Versions as requested by NewCo and agreed to by PCI, and (ii) adding functionality developed by PCI for implementation in the PointCast Network that PCI deems appropriate for the Localized PointCast Network. e. Limitations. NewCo acknowledges that PCI shall not be obligated under ----------- this Agreement to support any software other than that developed by PCI. 2. Fees. ---- a. Support Fees. In consideration for PCI's maintenance, support and ------------ training obligations under this Agreement, NewCo shall pay PCI a yearly fee (the "Support Fee"), payable in advance. The Support Fee for the first year of this Agreement shall be US$[*], and shall be paid on the Effective Date. Following the first year of this Agreement, the Support Fee will be raised to reflect the higher cost of support by PCI in later years, as mutually agreed by PCI and the NewCo Board of Directors. It is currently estimated that the Support Fee for the second year of this Agreement will be US$[*]. NewCo shall pay the Support Fee for such years following the first year on the appropriate anniversary of the Effective Date. [*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. b. Taxes. NewCo shall, in addition to the other amounts payable under ----- this Agreement, pay all applicable sales, use, value added or other taxes, federal, state or otherwise, however designated, which are levied or imposed by reason of the transactions contemplated by this Agreement, excluding only taxes based on PCI's net income. NewCo shall hold PCI harmless from all claims and liability arising from NewCo's failure to report or pay any such taxes, duties and assessments. 3. Term and Termination. -------------------- a. Term. The term of this Agreement shall begin on the Effective Date and ---- shall continue in perpetuity unless earlier terminated as set forth in this Section 3. b. Termination. Either party shall have the right to terminate this ----------- Agreement effective upon written notice to the other party upon the occurrence of any of the following events: (i) in the event the other party fails to comply with any of the terms and conditions of this Agreement and such default has not been cured within sixty (60) days after written notice to the other party; (ii) in the event the License Agreement is terminated; (iii) in the event PointCast Japan, L.L.C. dissolves; or (iv) in the event the other party (A) terminates or suspends its business, (B) becomes subject to any bankruptcy or insolvency proceeding under any U.S., state or other national or governmental statute or law, (C) becomes insolvent or subject to direct control by a trustee, receiver or similar authority, or (D) has wound up or liquidated, voluntarily or otherwise. c. Effect of Termination. The obligations of PCI and NewCo in Sections --------------------- 2(b), 3(c), 4, 5, 6 and 7 shall survive termination of this Agreement. Termination of this Agreement shall not relieve either party for any liability that accrued prior to such termination. 4. Proprietary Rights and Confidential Information. ----------------------------------------------- a. Software Under the License Agreement. Any error corrections, updates, ------------------------------------ upgrades, derivative works, additions, improvements, enhancements or modifications to the Software or to documentation for the Software effected or delivered under this Agreement shall be the property of PCI and shall be deemed part of the Licensed Technology, and subject to all of the provisions of the License Agreement. b. Confidentiality. Any Confidential Information disclosed by either --------------- party to the other in the performance of this Agreement shall be subject to the protections and restrictions set forth in Section 4 of the License Agreement. 5. Disclaimer. ---------- PCI PROVIDES NO WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO ANY SERVICES OR SOFTWARE, INCLUDING ANY ERROR CORRECTIONS OR UPDATES, PROVIDED UNDER THIS AGREEMENT, AND PCI SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. -2- 6. Limitation of Liability. ----------------------- EACH PARTY AGREES THAT, EXCEPT IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER PARTY'S LIABILITY FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN NO EVENT EXCEED ONE MILLION DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES THAT, EXCEPT IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER WILL NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE AMOUNTS PAYABLE HEREUNDER ARE BASED IN PART ON THESE LIMITATIONS, AND FURTHER AGREES THAT THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. 7. Miscellaneous. ------------- a. Assignment. All the terms and provisions of this Agreement shall be ---------- binding upon and inure to the benefit of the parties to this Agreement and to their respective heirs, successors, assigns and legal representatives, except that NewCo shall not assign its rights under this Agreement to anyone without PCI's prior written consent. PCI shall be entitled to assign this Agreement to a successor of all or substantially all of its relevant assets without restriction. b. Entire Agreement. This Agreement, together with the Exhibits hereto, ---------------- constitutes the entire agreement among the parties with respect to the subject matter hereof and shall supersede all prior understandings and agreements between the parties with respect to such subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. c. Amendment. This Agreement may be amended only by a written instrument --------- signed by both parties. d. Notices. Any and all notices, requests, demands and other ------- communications required or otherwise contemplated to be made under this Agreement shall be in writing and in English and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered airmail, return receipt requested, postage prepaid, on the sixth business day following the date of deposit in the mail or (d) if by international courier service, on the second business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed to the sender by such courier service. All such notices, requests, demands and other communications shall be addressed as follows: -3- (i) If to NewCo: PointCast K.K. Toshin Aoyama Building 3F, Shibuya 2-10-13, Shibuya-ku Tokyo 150, Japan Attention: Douglas W.C. Boake Telephone: 011 81 3 5468-1260 Facsimile: 011 81 3 5468-1275 (ii) If to PCI: PointCast Incorporated 501 Macara Avenue Sunnyvale, California 94086 Attention: Jim Wickett, SVP Telephone: (408) 990-7000 Facsimile: (408) 990-7251 or in each case to such other address or facsimile number as the party may have furnished to the other party in writing. e. Severability. In the event of the invalidity of any part or provision ------------ of this Agreement, such invalidity shall not affect the enforceability of any other part or provision of this Agreement. f. Waiver. No waiver by any party of any default in the performance of or ------ compliance with any provision herein shall be deemed to be a waiver of the performance and compliance as to any other provision, or as to such provision in the future; nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. No remedy expressly granted herein to any party shall be deemed to exclude any other remedy which would otherwise be available. g. Governing Law. This Agreement shall in all respects be governed by the ------------- laws of the State of California without reference to its principles of conflicts of laws. The parties hereby agree that all disputes arising out of this Agreement shall be subject to the exclusive jurisdiction of and venue in the federal and state courts within Santa Clara County, California. NewCo hereby consents to the personal and exclusive jurisdiction and venue of these courts. h. Import and Export Controls. NewCo understands that PCI is subject to -------------------------- regulation by agencies of the U.S. government, including the U.S. Department of Commerce, which prohibit export or diversion of certain products and technology to certain countries. Any and all obligations of PCI to provide the Software, as well as any technical assistance, shall be subject in all respects to such United States laws and regulations and shall from time to time govern the license and delivery of technology and products abroad by persons subject to the jurisdiction of -4- the United States, including the Export Administration Act of 1979, as amended, any successor legislation, and the Export Administration Regulations issued by the Department of Commerce, International Trade Administration, or Office of Export Licensing. NewCo warrants that it shall comply in all respects with the export and re-export restrictions set forth in the export license (if necessary) for the Software. IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date set forth above. POINTCAST INCORPORATED (PCI) POINTCAST K.K. (NEWCO) By: /s/ Jim Wickett By: /s/ Douglas Boake -------------------------------- ---------------------------- Name: Jim Wickett Name: Douglas Boake ------------------------------ -------------------------- Title: Sr. V.P. Title: President ----------------------------- ------------------------- -5- EX-10.13 13 TECHNOLOGY & TRADEMARK LICENSE AGREEMENT EXHIBIT 10.13 TECHNOLOGY AND TRADEMARK LICENSE AGREEMENT This Technology and Trademark License Agreement ("Agreement") by and between PointCast Incorporated ("PCI"), a California corporation with its principal place of business at 501 Macara Avenue, Sunnyvale, CA 94086 and PointCast Japan, L.L.C. ("LLC"), a Delaware limited liability company with its principal place of business at Sumitomoseimei Akasaka Bldg., 3-3-3, Akasaka, Minato-ku, Tokyo, Japan 107, shall be effective as of May 30, 1997 (the "Effective Date"). 1. Definitions. ----------- a. "Client" shall mean PCI's software that presents information from the PointCast Network to Viewers via channels, presented on Viewers' computer monitors through SmartScreen screen savers and the interactive channel viewer module. b. "Client-Side Software" shall mean any Localized Versions developed by PCI of the Client and Developers' Tools software. c. "Developers' Tools" shall mean PCI's software tools and utilities distributed by PCI to developers of content and/or advertising for distribution on the PointCast Network. d. "Licensed Technology" shall mean the Client-Side Software and the Server-Side Technology. e. "Localized PointCast Network" shall mean a localized version of the PointCast Network, in the Japanese language, whose operations are located in the Territory, utilizing PCI's Server-Side Technology to broadcast news, information and advertising content via the Internet or corporate intranets, targeted primarily to viewers and corporations in the Territory utilizing the Client-Side Software. f. "Localized Version" shall mean a version of software that was created by PCI, if any, by modifying software used in the PointCast Network to create software for use in connection with a Localized PointCast Network. g. "PointCast Network" shall mean the public broadcast network of servers, located in the United States and operated by PCI, that delivers news, information and advertising content via the Internet or corporate intranets to the computer screens of Viewers using Client software. h. "Server-Side Technology" shall mean Localized Versions of PCI's broadcast server, content formatting, feed handling, back-end statistic tracking and other software required for and used by PCI in the operation of a PointCast Network broadcast data center (the "Server-Side Software"), and trade secrets relating to the installation and integration of broadcast data center hardware, software and staffing (the "Trade Secrets"). i. "Territory" shall mean Japan. j. "Viewer" shall mean a user who accesses the PointCast Network, or any Localized Version thereof, using Client software. 2. Licenses. -------- a. Server-Side Technology. Subject to the terms and conditions of this ---------------------- Agreement, PCI grants to LLC an exclusive license to use the Server-Side Technology for the sole purpose of establishing and maintaining a Localized PointCast Network in the Territory. b. Client-Side Software. Subject to the terms and conditions of this -------------------- Agreement, PCI grants to LLC a license to use, reproduce, market and distribute the object code for the Client-Side Software solely in the Territory. c. Restrictions. The rights granted in Sections 2(a) and 2(b) may not be ------------ sublicensed or transferred to a third party by LLC without the express written consent of PCI. PCI may condition such consent upon the sublicensee entering into a sublicense agreement acceptable to PCI. Notwithstanding the foregoing, LLC may sublicense such rights, as well as the rights granted in Section 2(d), to its wholly owned subsidiary to be formed as a Japanese corporation ("NewCo") pursuant to an agreement that is reasonably acceptable in form and substance to PCI. LLC may not sublicense or transfer any rights to the Server-Side Technology in any event, except as described above to NewCo. In no event may a sublicense granted under this Section to any sublicensee extend rights beyond those granted to LLC under this Agreement. d. Trademarks. PCI will provide LLC with artwork for PCI's trademarks, ---------- tradenames and logos (the "Marks") utilized by PCI in connection with the Client-Side Software. Subject to the terms and conditions of this Agreement, PCI grants LLC the nonexclusive right to use the Marks in the Territory solely in connect ion with the marketing, manufacture, distribution and promotion of the Client-Side Software; provided, however, that: (i) no names or descriptive words -------- ------- or phrases shall be co-joined with the Marks without the prior written consent of PCI; (ii) LLC will comply with any instruction or requirement issued by PCI with respect to the appearance and use of the Marks; (iii) LLC shall use the Marks only in a manner so as to preserve and protect all rights of PCI therein; (iv) LLC shall not challenge PCI's ownership of the Marks or use or adopt any trademarks which might be confusingly similar to the Marks; (v) LLC shall take all necessary steps and pay all related expenses in connection with protecting the Marks as PCI intellectual property under all applicable trademark, unfair competition or other laws in the Territory, making all applications in PCI's name, if possible, or otherwise assigning to PCI the rights to the resulting marks as soon as possible; and (vi) LLC shall additionally take all necessary steps and pay all related expenses in connection with so protecting any new or modified marks created with the approval of PCI under clause (i) of this Section. All rights in the Marks shall at all times during the term of this Agreement and thereafter be and remain the sole property of PCI. LLC shall have no right to alter or in any way transfer the Marks, and LLC shall provide PCI with reasonable assistance in any efforts to prevent or terminate any infringement, unauthorized use or imitation thereof. -2- e. Reservation of Rights. PCI reserves all rights in the Licensed --------------------- Technology which are not expressly granted to LLC in this Agreement. f. Source Code; Reverse Engineering. LLC shall have no rights to any -------------------------------- source code for the Client-Side Software or Server-Side Software. LLC shall not decompile, reverse engineer or otherwise attempt to derive, obtain or modify the source code for such software. g. No Modification. LLC shall not modify, translate or create derivative --------------- works of all or any part of the Licensed Technology. h. Proprietary Notices. LLC agrees to reproduce and include any ------------------- copyright or other proprietary rights notices of PCI in all copies, in whole or in part, of the Client-Side Software or Server-Side Software any other physical embodiment of the Licensed Technology. LLC shall not remove any PCI copyright or other proprietary rights notices from any materials provided by PCI to LLC under this Agreement. i. Homogeneous Network. LLC shall not use the Client-Side Software as ------------------- part of a network that does not also use the Server-Side Technology, nor use the Server-Side Technology as part of a network that does not also use the Client- Side Software, nor use the same server(s) in a Localized PointCast Network and in any other broadcast network, without the express written consent of PCI. j. U.S. Government Restricted Rights. LLC acknowledges, shall state in --------------------------------- every license agreement under which an end user that is an agency, department or entity of the United States Government ("Government") obtains rights to use the Client-Side Software or Server-Side Software, and shall ensure that each such end user understands and agrees, that (i) use, reproduction, release, modification or disclosure of the Client-Side Software and Server-Side Software, or any part thereof, including technical data, is restricted in accordance with Federal Acquisition Regulation ("FAR") 12.212 for civilian agencies and Defense Federal Acquisition Regulation Supplement ("DFARS") 227.7202 for military agencies, (ii) the Client-Side Software and Server-Side Software is a commercial product, which was developed at private expense, and (iii) use of the Client- Side Software and Server-Side Software by any Government agency, department or other agency of the Government is further restricted as set forth in this Agreement. 3. Payment; Taxes. -------------- a. License Fees. The license granted by PCI to LLC under this Agreement ------------ is a capital contribution by PCI to LLC having a value of US$2,000,000.00 (two million dollars). b. Taxes. LLC shall, in addition to any other amounts payable under this ----- Agreement, pay all sales, use, value added or other taxes, federal, state or otherwise, however designated, which are levied or imposed by reason of the transactions contemplated by this Agreement, excluding only taxes based on PCI's net income. LLC shall hold PCI harmless from -3- all claims and liability arising from LLC's failure to report or pay any such taxes, duties and assessments. 4. Proprietary Rights and Confidential Information. ----------------------------------------------- a. Ownership. Except for the express licenses set forth in Section 2, --------- nothing in this Agreement shall be construed as granting LLC any rights in the Licensed Technology. PCI shall own all rights to the Licensed Technology, including all patent rights, copyrights, trade secret rights and other intellectual property rights and rights to applications therefor (collectively, "Intellectual Property Rights") as well as all rights, including all Intellectual Property Rights, to any inventions, enhancements, improvements or derivative works of or relating to the Licensed Technology, whether made by PCI or LLC. LLC shall take all actions and execute any documents necessary or appropriate to secure in PCI ownership of such rights. b. Confidentiality. LLC acknowledges that the Licensed Technology, as --------------- well as other information disclosed by PCI to LLC during the term of this Agreement concerning PCI's business, products, proposed new products, licensees and related information, constitutes PCI's confidential and proprietary information ("Confidential Information"). LLC agrees to treat the Confidential Information with at least the degree of care and protection with which it treats its own proprietary and confidential information, but in any event with no less than reasonable care and protection, and to use the Confidential Information only as expressly set forth herein. c. Exceptions. LLC agrees not to disclose or otherwise make such ---------- Confidential Information available to third parties without PCI's prior written consent except to the extent that the Confidential Information (i) was in the public domain at the time it was disclosed or has entered the public domain through no fault of LLC; (ii) was known to LLC, without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure; (iii) is disclosed with the prior written approval of PCI; (iv) became known to LLC, without restriction, from a source other than PCI without breach of this Agreement by LLC and otherwise not in violation of PCI's rights; or (v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that LLC shall use all reasonable efforts to provide prompt, written, and sufficient advance notice thereof to PCI to enable PCI to seek a protective order or otherwise prevent or restrict such disclosure. LLC agrees that LLC will take appropriate action by instruction, agreement, or otherwise with LLC's employees to satisfy LLC's obligations under this Agreement with respect to use, copying, modification, protection and security of Confidential Information. d. Return of Confidential Information. LLC shall promptly return all ---------------------------------- Confidential Information to PCI (i) after termination of this Agreement, or (ii) upon receipt by LLC of written notice from PCI requesting return of such Confidential Information. -4- 5. Disclaimer of Warranties. ------------------------ ALL LICENSED TECHNOLOGY (INCLUDING SOFTWARE) PROVIDED BY PCI UNDER THIS AGREEMENT IS PROVIDED "AS IS." PCI PROVIDES NO WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO ANY SUCH TECHNOLOGY AND SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT. 6. Indemnity. --------- LLC agrees to indemnify PCI and hold it harmless against any cost, loss, liability or expense (including attorneys' fees) arising out of claims against PCI which result from LLC's use of the Licensed Technology, distribution of the Client-Side Software or operation of the Localized PointCast Networks. 7. Limitation of Liability. ----------------------- EACH PARTY AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER PARTY'S LIABILITY FOR DAMAGES ARISING OUT OF THIS AGREEMENT SHALL IN NO EVENT EXCEED ONE MILLION DOLLARS (US$1,000,000). EACH PARTY FURTHER AGREES THAT, EXCEPT UNDER SECTION 6 OR IN CONNECTION WITH A BREACH OF SECTION 4 OR ANY INFRINGEMENT OF PCI'S INTELLECTUAL PROPERTY RIGHTS, THE OTHER WILL NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE AMOUNTS PAYABLE HEREUNDER ARE BASED IN PART ON THESE LIMITATIONS, AND FURTHER AGREES THAT THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. 8. Term and Termination. -------------------- a. Effective Date and Term. This Agreement and the licenses granted ----------------------- hereunder shall be effective as of the Effective Date and shall continue in perpetuity unless terminated as set forth in this Section 8. b. Termination. Either party shall have the right to terminate this ----------- Agreement and the licenses granted herein effective upon written notice to the other party upon the occurrence the following events: (i) in the event the other party fails to comply with any of the terms and conditions of this Agreement and such default has not been cured within sixty (60) days after written notice to the other party; (ii) in the event the Maintenance and Support Agreement -5- between PCI and NewCo is terminated; (iii) in the event LLC dissolves; or (iv) in the event the other party (A) terminates or suspends its business, (B) becomes subject to any bankruptcy or insolvency proceeding under any U.S., state or other national or governmental statute or law, (C) becomes insolvent or subject to direct control by a trustee, receiver or similar authority, or (D) has wound up or liquidated, voluntarily or otherwise. c. Effect of Termination. The obligations of PCI and LLC in Sections --------------------- 2(d)(iv), 3(b), 4, 5, 6, 7, 8 and 9 shall survive termination of this Agreement. Termination of this Agreement shall not relieve either party for any liability that accrued prior to such termination. 9. Miscellaneous. ------------- a. Assignment. All the terms and provisions of this Agreement shall be ---------- binding upon and inure to the benefit of the parties to this Agreement and to their respective heirs, successors, assigns and legal representatives, except that LLC shall not assign its rights under this Agreement to anyone without PCI's prior written consent. PCI shall be entitled to assign this Agreement to a successor of all or substantially all of its relevant assets without restriction. b. Entire Agreement. This Agreement, together with the Exhibits hereto, ---------------- constitutes the entire agreement among the parties with respect to the subject matter hereof and shall supersede all prior understandings and agreements between the parties with respect to such subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. c. Amendment. This Agreement may be amended only by a written instrument --------- signed by both parties. d. Notices. Any and all notices, requests, demands and other ------- communications required or otherwise contemplated to be made under this Agreement shall be in writing and in English and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, upon receipt of a transmittal confirmation, (c) if sent by registered airmail, return receipt requested, postage prepaid, on the sixth business day following the date of deposit in the mail or (d) if by international courier service, on the second business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed to the sender by such courier service. All such notices, requests, demands and other communications shall be addressed as follows: -6- (i) If to LLC: PointCast Japan, L.L.C. Sumitomoseimei Akasaka Bldg. 3-3-3, Akasaka, Minato-ku Tokyo, Japan 107 Attention: Hiroshi Kaizuka Telephone: 011 81 3 3586 2880 Facsimile: 011 81 3 3584 6079 (ii) If to PCI: PointCast Incorporated 501 Macara Avenue Sunnyvale, California 94086 Attention: Jim Wickett, SVP Telephone: (408) 990-7000 Facsimile: (408) 990-7251 or in each case to such other address or facsimile number as the party may have furnished to the other party in writing. e. Severability. In the event of the invalidity of any part or provision ------------ of this Agreement, such invalidity shall not affect the enforceability of any other part or provision of this Agreement. f. Waiver. No waiver by any party of any default in the performance of or ------ compliance with any provision herein shall be deemed to be a waiver of the performance and compliance as to any other provision, or as to such provision in the future; nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. No remedy expressly granted herein to any party shall be deemed to exclude any other remedy which would otherwise be available. g. Governing Law. This Agreement shall in all respects be governed by the ------------- laws of the State of California without reference to its principles of conflicts of laws. The parties hereby agree that all disputes arising out of this Agreement shall be subject to the exclusive jurisdiction of and venue in the federal and state courts within Santa Clara County, California. LLC hereby consents to the personal and exclusive jurisdiction and venue of these courts. h. Import and Export Controls. LLC understands that PCI is subject to -------------------------- regulation by agencies of the U.S. government, including the U.S. Department of Commerce, which prohibit export or diversion of certain products and technology to certain countries. Any and all obligations of PCI to provide the Licensed Technology, as well as any technical assistance, shall be subject in all respects to such United States laws and regulations and shall from time to time -7- govern the license and delivery of technology and products abroad by persons subject to the jurisdiction of the United States, including the Export Administration Act of 1979, as amended, any successor legislation, and the Export Administration Regulations issued by the Department of Commerce, International Trade Administration, or Office of Export Licensing. LLC warrants that it shall comply in all respects with the export and reexport restrictions set forth in the export license (if necessary) for the Technology. IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date set forth above. POINTCAST INCORPORATED POINTCAST JAPAN, L.L.C. By: /s/ Jim Wickett By: /s/ Douglas Boake ------------------------------- ------------------------- Name: Jim Wickett Name: Douglas Boake ----------------------------- ----------------------- Title: Sr. V.P. Title: Manager ---------------------------- ---------------------- -8- EX-10.18 14 SERVICES AGREEMENT EXHIBIT 10.18 SERVICES AGREEMENT THIS SERVICES AGREEMENT (the "Agreement"), dated as of December 19, 1996 (the "Effective Date"), is between Electronic Data Systems Corporation, a Delaware corporation ("EDS"), and PointCast Incorporated, a California corporation ("PointCast"). BACKGROUND - ---------- WHEREAS, the Internet & New Media Business Unit of the Communications Industry Group of EDS has resources and experience to support the delivery of Internet, Intranet and New Media services, such as consulting, systems design, integration, development, administration and project management; WHEREAS, PointCast is a company that desires to have electronic presence on the Internet by establishing and having EDS operate for it an additional data center in Plano, Texas ("the "PointCast Texas Data Center") to host PointCast's Internet servers and PointCast NetworkTM; WHEREAS, PointCast may desire for EDS to provide to it during the term of this Agreement, for the benefit of PointCast and its viewers and customers of the PointCast Network, certain other Internet-related, information technology services on the terms and conditions set forth in this Agreement; and WHEREAS, EDS is willing to provide such services on the terms and conditions set forth in this Agreement. NOW, THEREFORE, EDS and PointCast hereby agree to the following: 1. DEFINITIONS. ----------- (a) "EDS Services" means the services to be performed by EDS under any Work Order. (b) "PCN" means the PointCast NetworkTM, a network of servers that delivers news and information content over the Internet to Viewers via PCN Clients on the Viewers' desktop computers. (c) "PCN Client" means the portion of the PointCast software for PCN which resides on the hard disk of the Viewer's desktop computer and functions as an Internet-aware screen saver, customized content transmitter, WWW browser and animated advertisement player capable of delivering information via PCN. (d) "Technology" means deliverables specifically required by a Work Order to be created by EDS for PointCast and delivered to PointCast, including, without limitation, the assignment of copyrights in all such deliverables to PointCast. (e) "Viewer" means a user who accesses PCN using a PCN Client. (f) "Work Order" means a supplement to this Agreement in the form of an Amendment executed by the parties from time to time and attached to a copy of this Agreement which describes services to be provided by EDS, PointCast's obligations relating thereto and the payment terms for such services, all as more particularly described in Section 2 below. 2. WORK ORDERS. ----------- From time to time during the Term of this Agreement, EDS and PointCast may execute a Work Order for agreed upon services to be provided by EDS, the applicable acceptance criteria and performance standards for such work, the support obligations of PointCast, and the payment obligations of PointCast under this Agreement. Each such Work Order shall consist of a Schedule A describing the services to be delivered by and other obligations of EDS, a Schedule B describing the obligations of PointCast, and a Schedule C describing the payment obligations of PointCast. Each such Work Order shall be signed by authorized representatives of both parties and shall be attached to this Agreement and, when so executed and attached, shall be subject to the terms and conditions of this Agreement. Work Orders shall be numbered 1 consecutively beginning with number 1, attached hereto. If there is a conflict between the terms of this Agreement and the terms of any Work Order, the terms of the Work Order shall take precedence. 3. EDS SERVICES. ------------ (a) EDS will provide the EDS Services to PointCast pursuant to the terms and conditions of this Agreement, including the applicable Work Order. Each Work Order when attached to this Agreement shall be incorporated herein by reference. (b) The EDS Services will be undertaken at various PointCast or EDS sites to be identified and mutually agreed upon by the parties and identified in the applicable Work Order (the "Facilities"). 4. TERM. The term of this Agreement will begin on the Effective Date and ---- will end on the third anniversary of the Effective Date, unless sooner terminated as provided in this Agreement, and shall automatically renew for successive one year periods for so long as there are outstanding obligations of the parties under any Work Order attached hereto. The term of this Agreement may be extended by the mutual written agreement of the parties. If the term is extended because of outstanding obligations of the parties under and Work Order, the Agreement will terminate as soon as such obligations have been performed. 5. ACCOUNT MANAGERS. Within 24 hours of signing this Agreement, EDS and ---------------- PointCast shall each designate and maintain, respectively, a representative who will be the primary point of contact of such party in dealing with the other with respect to the EDS Services (each, the respective party's "Account Manager"). If called for in an applicable Work Order, each party shall provide the other party's Account Manager at no charge to such other party with furnished office space, administrative support, and voice and data networking services in the host party's facility. The Account Manager of each party will have the authority and power to make decisions with respect to actions to be taken by such party in connection with the EDS Services within the scope of this Agreement and the attached Work Orders. EDS and PointCast shall mutually consult regarding the nomination of and shall have the right to request replacement of the other party's Account Manager and other key team members described in the applicable Work Order, and the party to which the request has been made will consult with the requesting party on the selection of a replacement and will use reasonable efforts to accommodate the request as promptly as is practicable. 6. COMPENSATION; BOOKS AND RECORDS. EDS shall not be entitled to ------------------------------- compensation for any services which are not authorized in an applicable Work Order unless such services have been authorized in advance in writing by the PointCast Account Manager in the form of an executed modification to such Work order. If EDS is to be reimbursed for costs and expenses incurred in connection with the EDS Services or for any EDS Services performed on other than a fixed-price basis, EDS shall maintain comprehensive books and records to substantiate both the services and expenses. Such books and records will be retained by EDS for a period of at least two (2) years from and after the completion of the services to which they apply. PointCast or its designated agent shall have the right to audit such records at all reasonable times upon five (5) business days' prior written notice to EDS. In no event will PointCast have the right to review any records related to other customers of EDS. 7. PAYMENTS; REIMBURSEMENT. PointCast will pay EDS the aggregate of the ----------------------- amounts described in Schedule C of the applicable Work Order in accordance with the payment provisions set forth in such Schedule C. If any Work Order calls for reimbursements of EDS by PointCast for travel and other expenses, the following terms and conditions shall apply: EDS agrees to use its best efforts to keep travel and living expenses as economical as possible and within a moderate range. Absent PointCast's prior written approval, PointCast will not be liable to reimburse EDS for airfare in excess of coach class. Reimbursable expenses shall include travel and related lodging and meals, long-distance telephone charges, postage and other shipping charges. Expenses for facsimile, duplication, supplies, word-processing and local telephone charges will be borne by EDS and will not be chargeable to PointCast. EDS shall secure PointCast's written approval prior to incurring any individual reimbursable expenditure exceeding five hundred dollars ($500) in connection with the EDS Services. EDS will bill PointCast monthly at EDS' cost for all such routine reimbursable charges, and payment will be due within thirty (30) days of receipt of EDS' properly submitted invoice. All invoices submitted to PointCast by EDS for any expenses for which EDS claims reimbursement shall include a detailed listing of all out-of-pocket disbursements together with supporting documentation, including, without limitation, copies of hotel bills and airline tickets. 2 8. POINTCAST OBLIGATIONS. --------------------- During the term of this Agreement and in addition to its other obligations set forth in this Agreement, PointCast, at its cost and expense, will have the responsibilities assigned to it in Schedule B to each of the Work Orders attached hereto from time to time. 9. EMPLOYEE BENEFITS. The EDS personnel performing the EDS Services will be ----------------- and remain the employees of EDS, and EDS will provide for and pay the compensation and other benefits of such employees including salary, health, accident and workers' compensation benefits and all taxes and contributions which an employer is required to pay relating to the employment of employees. 10. HIRING OF EMPLOYEES. The parties agree that, during the term of this ------------------- Agreement and for a period of 12 months thereafter, neither party will, except with the prior written consent of the other, offer employment to or employ any person who is employed by the other party (or any person who is a subcontractor to the other party or an employee thereof) and who has been introduced to the other party in connection with this Agreement. 11. PROPRIETARY RIGHTS. ------------------ (a) POINTCAST INFORMATION. As between PointCast and EDS, information relating to PointCast, PCN, PointCast's affiliates, Viewers and customers of PCN and the PCN Client and other PointCast software will remain the sole and exclusive property of PointCast. EDS is hereby authorized during the term of this Agreement to have access to and to make use of such information only to the extent necessary for the performance of its obligations hereunder. EDS' access and use of such information shall be governed by the terms of Section 12. (b) TECHNOLOGY. Unless otherwise agreed by the parties in writing in the applicable Work Order, PointCast shall own the copyright in and to the Technology (and all renewals and extensions thereof). EDS hereby makes a full, irrevocable assignment, in perpetuity, to PointCast, of the Technology and such copyrights. (c) FURTHER ASSURANCES. EDS shall, and shall cause any parties acting under it in relation to this Agreement, to execute any and all documents and do such other acts requested at any time by PointCast as may be required to evidence, confirm and/or further effect the rights granted PointCast under this Agreement, including without limitation the rights under this Section 11. EDS shall establish and maintain written agreements with its employees and such parties sufficient to enable EDS to comply with the provisions of the foregoing sentence. (d) ACCESS; RETURN OF MATERIALS. PointCast shall have continuous access to the Facilities and to all data, documents, computer software, Content (as defined in Section 14), Technology and other materials provided to EDS by PointCast. EDS will return the original and any copies of all Technology and all data, documentation, software, Content and other materials promptly upon PointCast's request. Upon the expiration or earlier termination of this Agreement for any reason whatsoever, EDS shall promptly return the original and any copies of all Technology and all data, documents, computer software, Content and other materials provided by PointCast, in whatever stage of completion, to PointCast, or PointCast's designated agent. 12. CONFIDENTIALITY Except as otherwise expressly provided in this Agreement, --------------- EDS and PointCast each agree that all information communicated to it by or on behalf of the other, whether before or after the Effective Date, which is marked or identified or otherwise deemed confidential as described below, will be and will be deemed to have been received in strict confidence and will be used only as required to carry out the recipient party's obligations or exercise the recipient party's rights under this Agreement. EDS and PointCast each agree that it will use the same means as it uses to protect its own confidential information, but in any event not less than reasonable means including written agreements, to prevent the disclosure and to protect the confidentiality of the other party's confidential information. No such information, including the terms of this Agreement, will be disclosed by the recipient party, its agents, representatives or employees without the prior written consent of the other party; provided, however, that each party may 3 disclose such information to those of its third party consultants identified to, and approved by, the other party and employees, in each case having a need for access to such information for purposes of this Agreement and with respect to each of whom such party has taken steps, no less rigorous than what it would do to protect its own proprietary information, but in any event at least reasonable steps including written agreements, to prevent any such employees or consultants from acting in any manner inconsistent with this Section 12. Recipient's obligations of non-disclosure under this Section 12 shall not apply to Information which; (a) is already known to the recipient party and is not governed by the term of another separate nondisclosure agreement with the disclosing party, (b) is publicly known or becomes publicly known through no unauthorized act of the recipient party, (c) is rightfully received from a third party, authorized to disclose such information (d) is independently developed without use of the other party's confidential information or (e) is disclosed without similar restrictions to third parties generally by the party owning the confidential information. If confidential information is required to be disclosed pursuant to a requirement of a governmental authority, such confidential information may be disclosed pursuant to such requirement so long as the party required to disclose the information provides the other party with timely prior notice of such requirement and coordinates with such other party in an effort to limit the nature and scope of such required disclosure. All confidential information that is subject to this Section 12 must be, if in written form when received from the other party, marked or identified as confidential and, if in oral or visual form when received from the other party, identified in advance as confidential. Notwithstanding the foregoing, the following information will be deemed the confidential information of PointCast without the necessity of marking or identifying it as such: (i) information developed by PointCast or PCN, (ii) information on performance and utilization of PCN, and (iii) information in whatever form relating to (A) the design, functionality, operational methods, or coding of any PointCast software, including, without limitation, any complete or partial object or source code versions of such software, (B) the design elements and tradeoffs, system components and configurations, and operating and performance characteristic of the current operating environment of PCN (as it may change over a period of time) and/or the PointCast Texas Data Center, and (C) the collection, transmission, and analysis of statistical information from the PCN Client or PointCast server software. 13. TERMINATION. In the event that either party materially or repeatedly ----------- defaults in the performance of any of its duties or obligations hereunder, (a) which default, if of a non-monetary nature, is not substantially cured within thirty (30) days after written notice is given to the defaulting party specifying the default, or with respect to those defaults that cannot reasonably be cured within thirty (30) days, should the defaulting party fail to proceed within thirty (30) days to commence curing the default and thereafter to proceed with all reasonable diligence to substantially cure the default, or (b) which default, if of a monetary nature, is not cured within thirty (30) days after written notice is given to the defaulting party specifying the default, the party not in default may, by giving written notice thereof to the defaulting party, terminate this Agreement as of a date specified in such notice of termination. Notwithstanding the foregoing, any Work Order hereunder may be terminated in accordance with the terms of a Work Order. Upon expiration or termination of this Agreement or any Work Order for any reason, EDS will cease to perform the EDS Services for PointCast, or the EDS Services under such Work Order (as appropriate), and PointCast will pay to EDS all sums due to EDS as a result of EDS Services performed prior to such termination (prorated as appropriate). Upon expiration or any other termination of this Agreement, EDS will return to PointCast or destroy, at PointCast's option, all copies of all materials, including software, and all equipment provided to EDS hereunder by PointCast and shall erase from computer memory any copies of such materials, including software, residing thereon. If PointCast directs that any materials are to be destroyed, EDS shall certify in writing that such materials have been destroyed. The provisions of Sections 1, 6, 10, 11, 12, 14, 15, 16, 20, 23, and 24 as well as any payment obligations for payments due and payable as of the date of termination shall survive the expiration or other termination of this Agreement. 14. INDEMNITIES. ----------- (a) Subject to Section 14(d) , EDS and PointCast (each, as an indemnifying party, the "Indemnitor") each agree to indemnify and defend the other party (each, as an indemnified party, the "Indemnitee") and hold the Indemnitee harmless from any and all claims, actions, damages, liabilities, costs and expenses, including but not limited to reasonable attorneys' fees and expenses (collectively, "Costs"), arising out of, under or in connection with (i) any claim for rent or utilities at any location where the Indemnitor is financially responsible under this Agreement for such rent or utilities, (ii) any claim for taxes, wages, benefits or third party fees for which the Indemnitor is 4 financially responsible under this Agreement or (iii) the death or personal injury, or loss or damage to the property, of the Indemnitee or its employees or representatives caused by the negligent act or omission or willful misconduct of the Indemnitor; and, (iv) in addition EDS agrees to indemnify and defend and hold harmless PointCast from any costs of EDS or its officers, directors, employees, agents, or representatives arising out of or relating to the termination of this Agreement in accordance with its terms or the termination of any other agreements or employment relationships as may be entered into by EDS which results from such termination of this Agreement. (b) Subject to Section 14(d), EDS and PointCast each agree to defend the Indemnitee against any action to the extent that such action is based upon a claim that the software (other than third party software), Technology or confidential information provided by the Indemnitor, or any part thereof, (i) infringes a copyright perfected under United States statute, (ii) infringes a patent granted under United States law or (iii) constitutes an unlawful disclosure, use or misappropriation of another party's trade secret or confidential information. The Indemnitor will bear the expense of such defense and pay any Costs that are attributable to such claim finally awarded by a court of competent jurisdiction. Neither EDS nor PointCast will be liable to the other for claims of indirect or contributory infringement. (c) Subject to Section 14(d), PointCast will defend EDS from any action by third parties to the extent that such action is based on a claim of infringement of the literary property of another, libel, indecency, false light, misrepresentation, invasion of privacy or misappropriations of image or personality rights, arising out of, under or in connection with any claims relating to (Ii) the provision, use or distribution of the content via PCN over the Internet from the PointCast Texas Data Center where transmission of such content was authorized by PointCast, whether such content is of an editorial, advertising or other nature, (ii) (iii) statements or other materials made or made available on PCN by Viewers, by PointCast's customers or by others to whom such content is linked at the request of PointCast. PointCast will bear the expense of such defense and pay any Costs that are attributable to such claim finally awarded by a court of competent jurisdiction. (d) Each of the above indemnities is conditioned upon the Indemnitor having received full and prompt notice in writing of the claim and the Indemnitee allowing the Indemnitor to fully direct the defense or settlement of such claim. The Indemnitor will not be responsible for any settlement or compromise made without its consent. 15. LIABILITY. In the event that either party is liable to the other for any --------- matter relating to or arising in connection with this Agreement except for PointCast's obligations of payment pursuant to Section 7 hereof, whether based upon an action or claim in contract, equity, negligence, intended conduct or otherwise, the amount of damages recoverable against a party for all events, acts or omissions will not exceed, in the aggregate, [*] to be paid by PointCast under this Agreement in the [*] preceding such claim, or if the claim occurs during the first year of the Agreement, then [*] to be paid by PointCast in the [*] of this Agreement. In no event will the measure of damages include, nor will either party be liable for, any amounts for loss of profits, income or savings or indirect, consequential, incidental or punitive damages of any party, including third parties. Further, no cause of action may be asserted against either parties later than [*] following the date after the date on which the cause of action will have accrued. EDS and PointCast expressly acknowledge that the limitations contained in this Section 15 have been the subject of active and extensive negotiation between the parties and represent the parties' agreement based upon the level of risk to EDS associated with the performance of the EDS Services and the payments provided hereunder to EDS for such performance. Nothing in this Section 15 shall apply to any liability for breach of confidentiality obligations or to any indemnity obligations under this Agreement. 16. REPRESENTATIONS, WARRANTIES AND DISCLAIMER. ------------------------------------------ (a) Representations and Warranties of the parties The parties hereby --------------------------------------------- represent and warrant to each other on a continuing basis that (i) such party has the right, experience and skill to enter into and fully perform its obligations under this Agreement and to grant the rights granted or agreed to be 5 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. granted hereunder; (ii) such party shall comply with all applicable federal, state, and local laws in effect at the time services are performed; (iii) such party shall perform said services in a workmanlike manner and in accordance with generally accepted professional standards, as applicable; (iv) there is no outstanding contract, commitment or agreement to which such party is a party or legal impediment of any kind known to such party which conflicts with this Agreement or which might limit, restrict, or impair the rights granted to the other party hereunder; and (vi) the media on which any computer programs, documentation and other deliverables delivered to or used on behalf of a party are contained will contain no willfully introduced computer instructions whose purpose is (A) to disrupt, damage or interfere with a party's or a Viewers' use of their computer or telecommunications facilities; or (B) to perform functions which are not an appropriate part of the functionality of such computer programs, documentation or other deliverables and whose result is to disrupt the use or operation of such computer programs, documentation or other deliverables. (b) Disclaimer. While EDS is primarily providing services to PointCast ---------- under this Agreement, EDS may from time to time provide certain hardware, software and other items as an incidental part of its services. With the exception of any manufacturers' or licensors' warranties which EDS is able to obtain, such hardware, software and other items will be provided on an "AS IS" basis without warranty. In all cases where EDS has not committed to a specific performance standard, EDS will use reasonable care in providing the EDS Services. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN OR IN WORK ORDERS HERETO, EDS MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING ANY MATTER, INCLUDING THE MERCHANTABILITY, SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE OR RESULTS TO BE DERIVED FROM THE USE OF ANY SERVICES, HARDWARE, SOFTWARE OR OTHER ITEMS PROVIDED UNDER THIS AGREEMENT. 17. NOTICE. Wherever under this Agreement one party is required or permitted ------ to give notice to the other, such notice will be in writing and will be deemed given the third day after its mailing, postage prepaid to the recipient party addressed as follows: In the case of EDS: Electronic Data Systems Corporation 5400 Legacy Drive Mailstop C3-3D-50 Plano, Texas 75024 Attention: William Winters with a copy to: Electronic Data Systems Corporation 5400 Legacy Drive Mailstop H3-3A-05 Plano, Texas 75024 Attention: General Counsel 6 In the case of PointCast: PointCast Incorporated 2475 Augustine Drive, Suite 101 Santa Clara, California 95054 Attention: President with a copy to: PointCast Incorporated 2475 Augustine Drive, Suite 101 Santa Clara, California 95054 Attention: General Counsel Notices may also be delivered by hand or transmitted by facsimile. Hand delivered notices (e.g., notices delivered by courier) will be effective upon receipt. Either party may change its address for notices upon giving at least ten (1O) days prior written notice of the change to the other party. 18. INSURANCE. Each party shall under each Work Order, unless otherwise agreed --------- in writing, maintain worker's compensation and employer's liability insurance with minimum limits of ONE MILLION DOLLARS ($1,000,000) and Commercial General Liability insurance (which shall include broad form contractual and automobile liability coverage), with minimum limits of TWO MILLION DOLLARS ($2,000,000) combined single limit per occurrence, with the providing party's insurance as primary and not contributory, protecting both parties from claims for personal injury (including bodily injury and death) and property damage which may arise from or in connection with (i) the activities of the insured party's employees or contractors on the other party's premises or (ii) any negligent act or omission of the insured party's officers, directors, agents, or employees. All such insurance policies shall be written by a responsible insurance company possessing an AV-VII rating or better as listed in the Best Guide, shall name the other party as an additional insured for commercial and automobile liability only, shall contain a waiver of subrogation with respect to the additional insured, shall be written on an occurrence basis and shall provide that the coverage thereunder may not be reduced or canceled unless thirty (30) days' prior written notice thereof is furnished to the other party. 19. ASSIGNMENT: APPROVALS; HEADINGS. Neither party may assign this Agreement ------------------------------- or subcontract any portion of its obligations under this Agreement to a third party without obtaining the prior written consent other party; provided, however, that EDS may subcontract any portion of its obligations under this Agreement to a third party so long as EDS notifies PointCast in writing of such subcontract in advance, receives such prior written consent and remains responsible for the performance of such obligations, and provided further that either party may, without consent of the other party, assign this Agreement to a successor to its business covered by this Agreement, whether by merger, acquisition of stock or assets, reorganization, reincorporation, or otherwise, so long as the assignor gives thirty (30) days prior written notice of such transaction before the transaction closes and the assignee agree in writing to be bound by all the terms and conditions of this Agreement. EDS shall remain responsible for the performance of any obligations it subcontracts under this Agreement. Where agreement, approval, acceptance or consent of either party is required by any provision of this Agreement, such action will not be unreasonably delayed or withheld. The headings used herein are for reference-and convenience only and will not enter into the interpretation hereof. 20. RELATIONSHIP OF PARTIES. EDS in furnishing services to PointCast under ----------------------- this Agreement is acting only as an independent contractor. EDS does not undertake by this Agreement or otherwise to perform any obligation of PointCast whether regulatory or contractual or to assume any responsibility to third parties for PointCast's business or operations. Each party has the sole right and obligation to supervise, manage, contract procure, perform or cause to be performed all obligations to be performed by that party pursuant to this Agreement. 21. MEDIA RELEASES. All media releases, public announcements and public -------------- disclosures by either party relating to this Agreement or the subject matter of this Agreement, including promotional or marketing material but not including any announcement intended solely for internal distribution or any disclosure required by legal, accounting or regulatory requirements beyond the reasonable control of the party, will be coordinated with and subject to final written approval by both parties prior to release. 7 22. EXCUSABLE DELAYS. Each party will be excused from performance under this ---------------- Agreement, and the time of any performance will be extended, to the extent reasonably necessary under the circumstances, if such party is prevented from or delayed in performing, in whole or in part, its obligations under this Agreement (other than payment obligations) as a result of acts or omissions by the other party or by an act of God or any governmental authority or any outbreak or escalation of hostilities, war, civil disturbance, court order, labor dispute, third party nonperformance (other than a subcontractor or assignee of EDS) or other cause beyond its reasonable control. Such nonperformance on the part of either party will not be considered a default under this Agreement or a ground for termination of this Agreement, provided that the party relying on this Section 22 shall (i) have given the other party written notice thereof promptly, and in any event, within five (5) days of discovery of the force majeure circumstance, (ii) take all steps reasonably necessary under the circumstances to mitigate the force majeure upon which such notice is based and (iii) perform such obligations as soon as is reasonably practicable after the termination or cessation of such event or circumstance. If performance is delayed for sixty (60) days by a force majeure circumstance, either party shall have the right to terminate the applicable Work Order by written notice to the other party. 23. DISPUTE RESOLUTION. In the event that either party believes that the other ------------------ has defaulted in the performance of any of its obligations hereunder, the complaining party's Account Manager shall notify the other party's Account Manager of such belief and the parties agree to make commercially reasonable efforts acting in good faith to resolve the matter without resort to the procedures set forth in Section 13 for a period of not less than five (5) working days after such notice is given, following which period the parties shall be free to proceed in accordance with the provisions of Section 13. 24. ENTIRE AGREEMENT; GENERAL PROVISIONS. This Agreement, including all ------------------------------------ attached and signed Work Orders and their exhibits, which are hereby incorporated by reference, constitutes the entire agreement between the parties with respect to the subject matter thereof. There are no representations, understandings or agreements which are not fully expressed in this Agreement. No change, waiver or discharge will be valid unless in writing and signed by an authorized representative of the party against whom such change, waiver or discharge is sought to be enforced. This Agreement will be governed by and construed in accordance with the substantive laws of the State of New York, without giving effect to any choice-of-law rules that may require the application of the laws of another jurisdiction. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. Electronic Data Systems corporation PointCast Incorporated BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett NAME: William R. Winters NAME: Christopher R. Hassett TITLE: President, INM TITLE: President & CEO DATE: 1/2/97 DATE: 12/20/96 8 WORK ORDER 1 SCHEDULE A EDS SERVICES - ----------------------- EDS has agreed to create a data center for the purpose of hosting the PCN in Plano, Texas (the "PointCast Texas Data Center"). PointCast has informed EDS that the data center is configured to be capable of handling approximately two hundred and Fifty thousand (250,000) PCN Clients each receiving one or more updates of customized news or information from PCN per 24 hour day when configured as PCN's current environment. The PCN is an integrated client/server system that provides updated current information on a variety of topics to users of the system via the Internet. The system allows each user to customize, within limits, the frequency of those operations. Obligations of EDS and Pointcast under this Work Order will expire three years from the date of acceptance under this Work Order. 1. PCN CURRENT ENVIRONMENT. ----------------------- The attached system block diagram shows the major components in the PCN: The PointCast Network - Block Diagram [IMAGE NOT SHOWN] Figure 1: The PCN Network 2. EDS OBLIGATIONS --------------- The PointCast Texas Data Center will provide secure hosting for the PointCast application and data servers in a high security environment as is standard for all EDS Information Processing Centers. It will also provide a high-bandwidth communications link to the public Internet that is monitored at all times with sophisticated wide area network management tools. The network is supported and managed by EDS network specialists, and an operations and systems administration staff will maintain the PointCast servers and provide all technical and support resources required to resolve any technical issues or failures of equipment. EDS is to provide constant operation of the PointCast servers, all in accordance with the description of services to be performed by EDS, which is attached to this Work Order as Attachment 1, Schedule A and is incorporated herein by reference. EDS shall perform the tasks in this Schedule A and in Attachment 1, Schedule A, attached to this Work Order, as part of normal operations for the monthly fee under this Work Order. Such tasks shall not be subject to any additional charges. 1 WORK ORDER 1 EDS will, at EDS' sole cost and expense, purchase, maintain and support the hardware, software and communications resources described in Attachment 2, Schedule A B attached to this Work Order. With the exception of any equipment provided by PointCast or a third party, which shall be the sole property of PointCast or such third party, EDS will own all equipment of the PointCast Texas Data Center. EDS will, at EDS' sole cost and expense, provide such office space, equipment and furnishings to PointCast's personnel as is reasonable required under this Work Order. EDS will derive from PCN and deliver to PointCast certain advertising statistics to be described more fully in the implementation plan under this Work Order. In accordance with EDS' standard practice, the PointCast Texas Data Center will be provided with multilayered uninterrupted power. 3. CHANGE ORDER PROCEDURES. ----------------------- PointCast may request changes in the operation or services provided under this Work Order in order to meet the changing needs of PCN. Such requests shall be made in writing. EDS and PointCast will evaluate the needs and proposed changes to determine the best course of action. EDS will maintain change records implemented by the EDS support team according to EDS Standard Change Management policies. System Changes requested by PCN or implemented by the EDS system administration team will be documented according to EDS standard Change Management practices. Changes that go beyond the scope of the original implementation plan, what is normal Microsoft NT system administration activities, and that involve work beyond that described in this Schedule A will be subject to additional fees and will require a new Work Order. 4. ACCEPTANCE TESTING. ------------------ Prior to the time PCN is ready to go live in Plano, Texas, the parties will develop and mutually agree on acceptance criteria and tests for the PointCast Texas Data Center, which will then be applied and conducted as described in this paragraph. Contingent upon the receipt of hardware from suppliers by dams agreed upon at time of execution of this Work Order, EDS will use best efforts to make the PointCast Texas Data Center ready for acceptance testing within fourteen (14) business days after such execution date. Once the required equipment is in place and the PointCast software is installed, PointCast will conduct acceptance tests during the following two-week period to verify that the PointCast Texas Data Center meets the agreed upon acceptance criteria. If at the end of such two-week period, the PointCast Texas Data Center has failed the acceptance tests, the parties will work together to determine the reasons for such failure. The party whose action or inaction is determined to be the cause of such failure, will, with the cooperation and assistance of the other party, work to remedy such fault. If the PointCast Texas Data Center has not passed the acceptance tests within thirty (30) days after the end of such two-week period, and if the cause has been attributed to PointCast, PointCast will immediately begin making the monthly payment to EDS called for by this Work Order. If the cause has been attributed to EDS, PointCast shall have the right, upon written notice to EDS, to terminate this Work Order or this Agreement at the end of such thirty day period. Once PointCast has accepted the PointCast Texas Data Center in accordance with the agreed upon acceptance tests, EDS will immediately staff its operations team and begin operating the PointCast Texas Data Center. 5. PERFORMANCE MONITORING. ---------------------- EDS and PointCast will work together during the implementation of the Data Center in Plano to mutually agree upon the reports that EDS will prepare and deliver as part of normal operations to document performance once the PointCast Texas Data Center has passed the above acceptance tests and gone into operation. EDS will permit PointCast to track performance and derive statistics via remote access to the PointCast Texas Data Center. 6. EDS IMPLEMENTATION AND OPERATIONS TEAMS. --------------------------------------- In addition to the EDS Account Manager, the EDS implementation team to set up the PointCast Texas Data Center will be comprised of a dedicated Project Manager, System Integrator, Communications Specialist and 2 WORK ORDER 1 Systems Analyst in Plano, Texas. This team will draw upon the following resources as needed; Data Center Operations Manager, System Administrator, Communications Specialist, Database Administrator, Hardware Specialist, Facilities Specialist, Integration Specialists and Security Specialist. EDS retains the right to dictate the composition of the EDS implementation team. EDS and PointCast implementation personnel will agree to a Project Plan after such time as this Work Order I is signed. The Project Plan will consist of a Project Schedule, Roles and Responsibilities, and Acceptance Testing Procedures (see Schedule A 4, Acceptance Testing ). The EDS ongoing operations team will consist of the EDS Account Manager and a Project Manager and the following full and shared resources as needed: Data Center Operations Manager, System Administrators, Database Administrators, Communications Specialists, Hardware Specialists, Systems Analysts, and Security Specialists to meet the agreed upon performance levels on a 24 hour 365 days per year basis. EDS retains the right to dictate the composition of the ongoing EDS operations team. 7. SPECIAL TERMS AND CONDITIONS ---------------------------- a) Advertising. EDS will purchase $[*] of advertising on PCN ----------- during the first twelve months of this Work Order 1 at PointCast's [*] rates. For succeeding second and third twelve month periods during the term of this Work Order 1, EDS will purchase $[*] of advertising at a rate published on the [*]. For 1998 purchases, the rate will be [*] and for 1999 purchases, the rate will be [*], provided however, that if EDS in the second and third twelve month periods either, (i) agrees to purchase in excess of $[*] of advertising, (ii) actually purchases in excess of $[*], then EDS and PointCast will negotiate rates to be applicable for the remainder of such twelve month period. b) I-Server Users - EDS will through its efforts provide PointCast with a total of 10,000 incremental I-Server Viewers utilizing PCN via PointCast I-Servers not later than June 30, 1997. The methods utilized by EDS to secure such Viewers shall be those chosen by EDS. c) Public Reference Account. During the term of Work Order 1, each ------------------------ party will act as a public reference account for each other in promoting their products and services, including, but not limited to PointCast's I-Server and EDS' Internet services. In such capacity each shall, inter alia, respond to inquiries from third- parties sent to each other by the other party directly or referred to it by the other party and issue periodic public releases in such a way as to stress and promote the benefits of such products and services and communicate the other parties endorsement of them. d) Trademarks. Each party agrees not to use the other's names, ---------- trademarks or other corporate identification without the express written approval of the other, excepting only that without prior approval either party may make a single reference for identification purposes without elaboration. 3 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 1 SCHEDULE B POINTCAST-OBLIGATIONS - -------------------------------- POINTCAST OBLIGATIONS. - --------------------- PointCast will provide EDS with all custom developed and PCN server related software and documentation including, but not limited to [*]. PointCast hereby grants to EDS for the term of this Work Order a non-exclusive, nontransferable (except to a permitted assignee under this Agreement) right and license to reproduce and use the such PointCast software delivered by PointCast in Cupertino, California when EDS personnel are at the latter site. Such reproduction and use shall be limited to authorized EDS employees and contractors and to such copying and use as is required to carry out the EDS Services for PointCast under this Work Order. EDS shall not use such software in the performance of any other services for any other person or entity and may not sublicense the rights granted hereunder. EDS shall not and shall not permit any other person or entity to, decompile, disassemble, reverse engineer, or otherwise attempt to derive source code from or modify such software. EDS and PointCast implementation personnel will agree to a Project Plan after such time as this contract is signed. The Project Plan will consist of a Project Schedule, Roles and Responsibilities, and Acceptance Testing Procedures (see Schedule A 4, Acceptance Testing ). PointCast will make available the timely support of the appropriate PointCast personnel to install, configure and test the PCN and to otherwise meet PointCast's obligations to provide the software, content, testing and approvals necessary to maintain the project schedule. PointCast will provide the encrypted data feed and network connection, including any required hardware, software, communications etc., from the PointCast Content Processing servers in Cupertino, California for news feeds delivered to the PointCast Texas Data Center in Plano, Texas via [*]. PointCast will provide EDS employees with a reasonable work environment to perform work when visiting a PointCast facility. EDS employees using PointCast facilities will need an adequate office environment, access to a telephone for voice and data, and will require access to appropriate PointCast personnel. PointCast will provide EDS with the Content to be broadcast over the Internet from the PointCast Texas Data Center PointCast will provide the EDS operations team with such training as is reasonably required to operate PCN. 4 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 1 SCHEDULE C - ---------- 1. FEES. PointCast will pay EDS the following fees: ---- * a monthly fee of [*] ($[*]) * a monthly fee of [*] ($[*]) for the T-1 Communications line * the above fees are payable for thirty-six (36) months, beginning on the date of acceptance (in accordance with the acceptance tests to be developed hereunder). The monthly fee will be prorated on a 30-day- month basis for any partial month during the term covered by this Work Order. 2. TRAVEL AND RELATED EXPENSES. PointCast will reimburse EDS, in accordance --------------------------- with the requirements set forth in Section 7 of the Agreement, for all reasonable travel and travel-related, living and other out-of-pocket expenses (without any markup) incurred by EDS for travel authorized by PointCast in connection with the EDS Services provided under this Work Order. 3. INVOICES. EDS will send to PointCast each month an invoice for charges for -------- EDS Services for the previous month. EDS will invoice PointCast separately for all travel, travel related and other expenses, which invoices will be sent by EDS to PointCast after EDS incurs such expenses. Any sum or charge due under this Agreement will be due and payable within thirty (30) days following receipt of the invoice therefor. Any sum not paid by its due date will bear interest until paid at a rate of interest equal to the lesser of (i) the prime rate established from time to time by Citibank N.A., New York, plus two percent, or (ii) the maximum rate of interest allowed by applicable law. IN WITNESS WHEREOF, the parties have executed this Work Order I as of the date of the signature of the last party to sign, as set forth below. Electronic Data Systems corporation PointCast Incorporated BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett NAME: William R. Winters NAME: Christopher R. Hassett TITLE: President, INM TITLE: President & CEO DATE: 1/2/97 DATE: 12/20/96 5 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 1 ATTACHMENT 1 - SCHEDULE A. - ------------------------- 1. DESCRIPTION OF SERVICES. -----------------------
FREQUENCY/ CYCLE TIME or PROJECTED MANAGEMENT SERVICES COVERAGE AVAILABILITY OCCURRENCES SYSTEMS ADMINISTRATION -- Perform routine system level tasks to provide user access. * Scheduled down time -- Once a week there Sat, Sun x 8 Scheduled 1/week will be a scheduled one hour down time for 1 hour/equipment each [*]. * User Administration - Creating, changing 5 x 8 6-hr response 2/week and deleting user id's and passwords. 15 min / occurrence * System Administrator Assistance -- Perform 5 x 8 4-hr response 10/week minor [*] PointCast network 30 min/ changes. occurrence * High Priority Assistance -- Perform 5 x 8 a.m. 15 min response 1/week immediate changes to the PointCast Eastern - 5 30 min/ Network p.m. Pacific SYSTEMS MANAGEMENT - Assures systems availability and performance levels meet expectations. * Software Revision Control Process -- Sat, Sun x 8 1 week notice 1/month Upgrades applications software or patches 8 hrs/occurrence (or major releases) the operating systems used by PCN systems. * Security Management Process Sat, Sun x 8 1 week notice 1/qtr 8 hrs/occurrence review * Fault Management Process -- The fault management process enables INM to actively monitor the network for error conditions and notify the appropriate parties to initiate resolution. * Maintain system availability - Through the 7 x 24 notify 7/day use of proactive monitoring. responsible party w/in 15 min * Resolve level 1 faults -Minor faults that the 7 x 24 1 hr response 7/day PointCast clients may not notice and cause 8 hr/repair little disruption of service. Examples include reboot a PointCast Server or router, restart feed program, looping processes on servers, memory short-runs, excessive paging or swapping. Also includes restarting aborted processes. * Resolve level 2 faults --Moderately severe 7 x 24 1 hr response 1/month faults that the PointCast clients may notice 4 hrs/repair a degraded system performance. Examples include failure in only one of the database, datafeed, [*].
6 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
WORK ORDER 1 * Resolve level 3 faults --Serious failures 7 X 24 .5 hr response 3 which cause the PointCast network to be 1 hrs/repair annually off-line. Will have spare parts on hand for immediate replacement, also have vendors contracts to supply the fastest possible recovery. Examples include failure of all database, datafeeds, [*]. * BACKUP/RECOVERY PROCESS -- Protects data through non-intrusive duplication and restore processes. * Perform offsite storage -- Tapes stored for 2 n/a 1/week months. * Perform full backup of [*], Sat or Sun scheduled 1/week datafeeds 4 hrs/ occurrence * Perform incremental backup of [*], 6/week scheduled daily datafeeds 1 hr/ (except occurrence on full back up day) * Restore image from off-site tape 5 X 8 4 hour response 1/qtr to start restore * Restore image from on-site tape 7 X 24 2 hour response 1/mo to start restore * [*], performance and table space 5 X 8 2 week notice 1/qtr tuning 2 hrs/ occurrence * CAPACITY & PERFORMANCE MANAGEMENT AND REPORTING PROCESS -- Measures, monitors and adjusts operating parameters of system components - network, application and operating system parameters to maintain performance. * Network Review Scheduled 1/mo 1 hr/occurrence * Processing Review Scheduled 1/mo 1 hr/occurrence * Storage Review Scheduled 1/mo 1 hr/occurrence POINTCAST RESPONSIBILITIES -- Documentation, Processes, Procedures and Participation that EDS must receive from PointCast in order for EDS to perform to SLA standards. * Gold Disk Installation process and Revised 1 week notice 1/mo procedures Documentation. Version * Initial Installation Startup 1 week notice 1/mo * Initial Orientation Startup included in Startup above * [*], performance and table space Startup included in Startup tuning training above * [*], network configuration, Startup included in Startup [*], start services, stop services above training
7 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 1 IN WITNESS WHEREOF the parties have executed this Work Order 1, Attachment I as of the date of the signature of the last party to sign, as set forth below. Electronic Data Systems Corporation PointCast Incorporated BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett NAME: William R. Winters NAME: Christopher R. Hassett TITLE: President, INM TITLE: President & CEO DATE: 1/2/97 DATE: 12/20/96 8 WORK ORDER 1 ATTACHMENT 2 - SCHEDULE A. - ------------------------- 1. EQUIPMENT LIST The system to operate the PointCast Network, will consist of the -------------- following equipment, or equivalents, thereof. Any equipment substitutions will be pre-approved, in writing, by PointCast:
SERVERS DESCRIPTION QTY MANUFACTURER - ------- --------------------------------------- ----------- ------------- [*]
* All PCs must have licenses for [*]. 9 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 1 ** EDS can substitute the specified Item with its own monitoring tools. *** All PCs must have [*] IN WITNESS WHEREOF, the parties have executed this Work Order 1, Attachment 2 as of the date of the signature of the last party to sign, as set forth below. Electronic Data Systems Corporation PointCast Incorporated BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett NAME: William R. Winters NAME: Christopher P. Hassett TITLE: President, INM TITLE: President & CEO DATE: 1/2/97 DATE: 12/20/96 10 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 2 Schedule A EDS Services - ----------------------- This Work Order will only become effective if Pointcast requests in writing that EDS increase the capacity of the Pointcast Texas Data Center approximately 500,000 PCN Clients, and all obligations under this Work Order will expire three (3) years from the date of acceptance under Work Order 1. EDS will expand the Pointcast Texas Data Center, as represented by Pointcast to handle such number of PCN Clients upon such request and will purchase and maintain the additional equipment listed below. EDS will provide the following equipment for the data center for the purpose of hosting the PCN in Plano, Texas (the "PointCast Texas Data Center"): 1. Equipment List. The following equipment, or equivalents, will be added to -------------- the Texas PointCast Data Center. Any equipment substitutions will be pre- approved, in writing, by PointCast:
Servers Description Qty Manufacturer - ------- ------------------------------------ --- ------------- [*]
2. EDS OBLIGATIONS. --------------- The PointCast Texas Data Center will provide secure hosting for the PointCast application and data servers in a high security environment as is standard for all EDS Information Processing Centers. 3. Acceptance Testing. ------------------ 11 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 2 Prior to the time PCN is ready to go live in Plano, Texas, the parties will develop and mutually agree on acceptance criteria and tests for the PointCast Texas Data Center, which will then be applied and conducted as described in this paragraph. Contingent upon the receipt of hardware from suppliers by dates agreed upon at time of execution of this Work Order, EDS will use best efforts to make the PointCast Texas Data Center ready for acceptance testing within fourteen (14) business days after such execution date. Once the required equipment is in place and the PointCast software is installed, PointCast will conduct acceptance test during the following two-week period to verify that the PointCast Texas Data Center meets the agreed upon acceptance criteria. If at the end of such two-week period, the PointCast Texas Data Center has failed the acceptance tests, the parties will work together to determine the reasons for such failure. The party whose action or inaction is determined to be the cause of such failure, will, with the cooperation and assistance of the other party, work to remedy such fault. If the PointCast Texas Data Center has not passed the acceptance tests within thirty (30) days after the end of such two week period, and if the cause has been attributed to PointCast, PointCast will immediately begin making the monthly payment to EDS called for by this Work Order. If the cause has been attributed to EDS, PointCast shall have the right, upon written notice to EDS, to terminate this Work Order or this Agreement at the end of such thirty day period. Once PointCast has accepted the PointCast Texas Data Center in accordance with the agreed upon acceptance tests, EDS will immediately staff its operations team and begin operating the PointCast Texas Data Center. WORK ORDER 2 SCHEDULE B POINTCAST OBLIGATIONS - -------------------------------- POINTCAST OBLIGATIONS. - --------------------- PointCast will provide EDS with all custom developed and PCN server related software and documentation including, but not limited to [*]. PointCast hereby grants to EDS for the term of this Work Order a non-exclusive, nontransferable (except to a permitted assignee under this Agreement) right and license to reproduce and use the such PointCast software delivered by PointCast in Cupertino, California when EDS personnel are at the latter site. Such reproduction and use shall be limited to authorized EDS employees and contractors and to such copying and use as is required to carry out the EDS Services for PointCast under this Work Order. EDS shall not use such software in the performance of any other services for any other person or entity and may not sublicense the rights granted hereunder. EDS shall not and shall not permit any other person or entity to, decompile, disassemble, reverse engineer, or otherwise attempt to derive source code from or modify such software. [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. WORK ORDER 2 SCHEDULE C - ---------- 1. FEES. PointCast will pay EDS the following fees: ---- * a monthly fee of [*] for the term of Work Order 1, beginning upon written notification by PointCast. The monthly fee will be prorated on a 30-day-month basis for any partial month during the term covered by this Work Order. * Above price valid until March 31, 1997. 2. TRAVEL AND RELATED EXPENSES. PointCast will reimburse EDS, in accordance --------------------------- will the requirements set forth in Section 7 of the Agreement, for all reasonable travel and travel-related, living and other out-of-pocket expenses (without any markup) incurred by EDS for travel authorized by PointCast in connection with the EDS Services provided under this Work Order. 3. INVOICES. EDS will send to PointCast each month an invoice for charges for -------- EDS Services for the previous month. EDS will invoice PointCast separately for all travel, travel related and other expenses, which invoices will be sent by EDS to PointCast after EDS incurs such expenses. Any sum or charge due under this Agreement will be due and payable within thirty (30) days following receipt of the invoice therefor. Any sum not paid by its due date will bear interest until paid at a rate of interest equal to the lesser of (i) the prime rate established from time to time by Citibank N.A., New York, plus two percent, or (ii) the maximum rate of interest allowed by applicable law. IN WITNESS WHEREOF, the parties have executed this Work Order 2 as of the date of the signature of the last party to sign, as set forth below. Electronic Dam Systems Corporation PointCast Incorporated BY: /s/ William R. Winters BY: /s/ Christopher R. Hassett NAME: Will R. Winters NAME: Christopher R. Hassett TITLE: President, INM TITLE: President & CEO DATE: 1/2/97 DATE: 12/20/96 [*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. EX-10.21 15 PREFERRED STOCK PURCHASE WARRANT (LIGHTHOUSE) EXHIBIT 10.21 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO. PREFERRED STOCK PURCHASE WARRANT Warrant No. 1 POINTCAST INCORPORATED Void after July 31, 2002 1. ISSUANCE. In consideration of $100, receipt of which is hereby acknowledged, this Warrant is issued to Lighthouse Capital Partners, L.P. by Pointcast Incorporated, a California corporation (hereinafter with its successors called "COMPANY"). 2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this Warrant (the "HOLDER"), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase form the Company at a per share (the "Next Purchase Price") equal to the price per share of the series of Preferred Stock of the Company next issued by the Company after July 1, 1995 (the "Next Preferred Stock") that number of fully paid and nonassessable shares of Next Preferred Stock equal to $52,500 divided by the Next Purchase Price. Notwithstanding the foregoing, if the closing sale of the Next Preferred Stock has not occurred by December 31, 1995, the Holder shall be entitled to purchase from the Company pursuant to the conditions set forth above 83,758 shares of Series A Preferred Stock at $0.6268 per share (the "Series A Purchase Price"). The Series A Preferred Stock or Next Purchase Stock, as the case may be, shall hereafter be known as the "Preferred Stock," and the Next Purchase Price or Series A Purchase Price, as the case may be, shall hereafter be known as the "Purchase Price." Until such time as this Warrant is exercised in full, or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed. 3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or by (iii) by any combination of the foregoing. 4. NET ISSUE ELECTION. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula: Y(A-B) X= -------- A 1 where: X= the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4. Y= the number of shares of Preferred Stock covered by this Warrant in respect of which the net issues election is made pursuant to the Section 4. A= the fair market value of one share of Preferred Stock, as determined in good faith by the Board, as at the time the net issue election is made pursuant to this Section 4. B= the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4. 5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised. 6. FRACTIONAL SHARES. In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise of this Warrant as an entirety, the Holder would, except as provided in this Section 6, be entitled to receive a fractional share of Preferred Stock, then the Company shall issue the next lower number of full shares of Preferred Stock. The Company shall pay to the Holder upon exercise the fair market value, determined by the Board of Directors of the Company in its sole discretion, acting reasonably, of any fractional share of Preferred Stock otherwise issuable upon exercise of this Warrant. 7. EXPIRATION DATE. This Warrant shall expire at the close of business on July 31, 2002, and shall be void thereafter. Notwithstanding the term of this Warrant fixed pursuant to Section 7 hereof and the provisions of Section 10 below, the right to purchase Preferred Stock as granted herein shall expire, if not previously exercised, immediately upon the closing of a merger or consolidation of the Company with or into another corporation when the Company is not the surviving corporation (other than a merger or consolidation for the principal purpose of changing the domicile of the Company), or the sale of all or substantially all of the Company's properties and assets to any other person (the "Merger"), provided that the price per share paid in the Merger is equal to or greater than two times the Purchase Price per share. The Company shall notify the Holder, in accordance with Section 13 below, of any Merger, and if the Company fails to deliver such notice, then notwithstanding anything to the contrary in this Warrant, the rights to purchase the Company's Preferred Stock shall not expire until ten (10) business days after the actual receipt by Holder of such notice; provided, however, that notwithstanding the foregoing, in no event shall the right to purchase Preferred Stock under this Warrant expire in Section 7 unless the Holder receives written notice of the proposed merger at least five (5) business days prior to the closing of such Merger. If such closing does not take place, the Company shall promptly notify the Holder that such proposed transaction has been terminated, and the Holder may rescind any exercise of its purchase rights promptly after such notice of termination of the proposed transaction if the exercise of the Warrant occurred after the Company notified the Holder that the Merger was proposed, or if the exercise was otherwise precipitated by such proposed Merger. In the event of such rescission, the Warrant will continue to be exercisable on the same terms and conditions contained herein. 8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will at all times from and after the earlier of the closing of the Next Preferred Stock or December 31, 1995 reserve and keep available such number of its authorized shares of such Preferred Stock and any Common Stock issuable upon the conversion thereof, $0.001 par value, of the Company (the "Common Stock"), free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise. The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof. 2 9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination. 10. MERGERS AND RECLASSIFICATIONS. Subject in all respects to Section 7 above, if after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 10, the term "REORGANIZATION" shall include without limitation any reclassification, capital reorganization or change of the Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company. 11. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the holder a certificate of the Company's chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. 12. NO RIGHTS AS SHAREHOLDERS. Except as provided herein, this Warrant does not entitle the Holder to any voting rights as a shareholder of the Company prior to the exercise if the Holder's rights to purchase Preferred Stock as provided herein. 13. NOTICE OF RECORD DATE, ETC. In the event of: (a) any taking of the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right; (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or convergence of all or substantially all of its assets; or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company; then and in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is taken. 3 14. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company: A. The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms. B. The shares of Preferred Stock issuable upon the exercise of this Warrant will be duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable. C. This issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company's Articles of Incorporation or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity. D. As long as this Warrant is, or any shares of Preferred Stock issued upon exercise of this Warrant or any shares of Common Stock issued upon conversion of such shares of Preferred Stock are, issued and outstanding, the Company will provide to the Holder the financial and other information described in that certain Lease Line Schedule No. 01 to Master Equipment Lease Agreement No. 111 between the Company and Lighthouse Capital Partners, L.P. dated as of August 10, 1995. E. The Company hereby grants to the Holder the Registration Rights contained in Section 1 of the Company's Investor Rights Agreement dated as of June 4, 1994, so that (i) the shares of Common Stock issuable upon conversion of the shares of Preferred Stock issuable upon exercise of this Warrant shall be Registrable Securities, and (ii) the Holder shall be a "Holder", for all purposes of such Investor Rights Agreement. 15. AMENDMENT. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder. 16. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Preferred Stock Purchase Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms: (a) INVESTMENT PURPOSE. The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Holder's rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption. (b) ACCREDITED INVESTOR. Holder is an "accredited investor" within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect. (c) PRIVATE ISSUE. The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder's rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant Agreement will be exempt from the registration and qualification requirements thereof, and (ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 16. (d) DISPOSITION OF HOLDER'S RIGHTS. In no event will the Holder make a disposition of any of its rights to acquire Preferred Stock or Preferred Stock issuable upon exercise of such rights unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall nave furnished the Company with an opinion of counsel (which counsel may either be inside or outside counsel to the Holder) reasonably satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available; provided that the Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder's notice of proposed sale. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Preferred Stock or Preferred Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of Preferred Stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been issued to the Holder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Holder at its request by such Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions or transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Holder or holder of a share of Preferred Stock then outstanding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense to such holder, one or more new certificates for the Warrant or for such shares of Preferred Stock not bearing any restrictive legend. (e) FINANCIAL RISK. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investments. (f) RISK OF NO REGISTRATION. The Holder understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d) of the Securities Exchange Act of 1934 (the "1934 Act"), or of a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to purchase, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale of the rights of the Holder to purchase Preferred Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule. 17. NOTICE TRANSFERS, ETC. A. Any notice or written communication required or permitted to be given to the Holder may be given by mail or delivered to the Holder at the address most recently provided by the Holder to the Company. B. Subject to compliance with applicable federal and state securities laws, and to the Holder's obtaining the Company's prior written consent, which shall not be unreasonably withheld, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred. 5 C. In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant. 18. NO IMPAIRMENT. The Company will not, by amendment of its Articles of Incorporation or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder. 19. GOVERNING LAW. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California. 20. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the Company's successors and assigns and shall inure to the benefit of the Holder's successors, legal representatives and permitted assigns. 21. BUSINESS DAYS. If the last or appointed day for the taking of any action required or the expiration of any right granted herein shall be a Saturday or Sunday or a legal holiday in California, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday. 22. QUALIFYING PUBLIC OFFERING. If the Company shall effect a firm commitment underwritten public offering of shares of Common Stock which results in the conversion of the Preferred Stock into Common Stock pursuant to the Company's Articles of Incorporation in effect immediately prior to such offering, then, effective upon such conversion, this Warrant shall change from the right to purchase shares of Preferred Stock to the right to purchase shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder upon the exercise of this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the right and interest of the Holder to the end that the provisions hereof (including, without limitation, provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof. 23. VALUE; TAX INDEMNITY. The Company and the Holder agree that the value of this Warrant on the date of grant is $100. The Company hereby agrees to pay, indemnify and hold the Holder harmless from, and to reimburse the Holder for, all taxes, penalties, fines, additions to tax or interest thereon (collectively, "Taxes") imposed on, incurred by or asserted against the Holder by any Federal, state or local taxing authority to the extent resulting from income attributable to such Holder due to warrant accretion expense incurred by the Company. The Company further agrees that, with respect to any payment or indemnity hereunder, such payment or indemnity shall include any amount necessary to hold the recipient of the payment or indemnity harmless on a net aggregate after tax basis from all Taxes required to be paid by the recipient with respect to such payment or indemnity under the laws of any Federal, state or local taxing authority. Any payment or indemnity payable by the Company pursuant to this Section 23 shall be payable five (5) days prior to the time that the Taxes giving rise to such payment nor indemnity become payable. 6 Dated: August 10, 1995 ------------------- POINTCAST INCORPORATED (Corporate Seal) By: /s/ John Jewett ---------------------------------------- Name: John Jewett -------------------------------------- Title: Vice President Finance & Operations ------------------------------------- Attest: - -------------------------- VICE PRESIDENT 7 Subscription To: ____________________________ Date: _________________________________ The undersigned hereby subscribes for _________________ shares of Preferred Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below: _______________________________________ Signature _______________________________________ Name for Registration _______________________________________ Mailing Address Net Issue Election Notice To: ____________________________ Date: _________________________________ The undersigned hereby elects under Section 4 to surrender the right to purchase _______ shares of Preferred Stock pursuant to this Warrant. The certificate(s) for the shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below. _______________________________________ Signature _______________________________________ Name for Registration _______________________________________ Mailing Address 8 Assignment For value received _______________________________ hereby sells, assigns and transfers unto ___________________________________________________________ (Please print or typewrite name and address of Assignee) ______________________________________________________________________________ the within Warrant, and does hereby irrevocably constitute and appoint _____________________________ its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises. Dated: ____________________ ________________________________________ In the Presence of: ___________________________________ 9 EX-10.22 16 COMMON STOCK PURCHASE WARRANT (BENCHMARK CAP) EXHIBIT 10.22 THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (III) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF NO. ____ POINTCAST INCORPORATED DECEMBER 11, 1997 A CALIFORNIA CORPORATION This certifies that, for value received, Benchmark Capital Partners, L.P. (together with any registered assignee(s), the "Holder") is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and at or prior to 11:59 p.m. on the Expiration Date (as defined below), but not thereafter, to acquire from PointCast Incorporated, a California corporation (the "Company"), in whole or from time to time in part, up to 38,321 fully paid and nonassessable shares of Common Stock of the Company ("Warrant Stock") at a purchase price equal to $5.00 per share (the "Exercise Price"). Such number of shares, type of security and Exercise Price are subject to adjustment as provided herein, and all references to "Warrant Stock" and "Exercise Price" herein shall be deemed to include any such adjustment or series of adjustments. 1. TERM (a) Termination and Expiration. If not earlier exercised, the Warrant -------------------------- shall expire on the date (the "Expiration Date") that is the earlier of (i) eighteen (18) months after the consummation of a firmly underwritten public offering pursuant to the Securities Act of 1933, as amended (the "Securities Act"), by the Company of its capital stock with aggregate gross proceeds to the Company of not less than $20,000,000 and with a price per share of not less than $9.50, subject to appropriate adjustment for stock splits, stock dividends, combinations, recapitalizations and the like (a "Qualified IPO") and (ii) 60 months after the date first set forth above. (b) Exceptions. Notwithstanding the foregoing, in the event the ---------- Company is proposed to be acquired in a bona fide transaction (i.e., not a mere recapitalization, reincorporation for the purpose of changing corporate domicile, or similar transaction) (the "Acquisition"), regardless of the form of the transaction (e.g., merger, consolidation, exclusive license, sale or lease of assets or sale of stock), the Company shall give the Holder not less than fifteen (15) business days notice of the record date for determining the shareholders of the Company entitled to vote on (or otherwise approve) the Acquisition; the Company shall provide the Holder with all information with respect to the Acquisition that is otherwise provided to shareholders of the Company at such time and from time to time during the pendency of the Acquisition, including (but not limited to) the proposed price to be paid in the proposed Acquisition; the Holder shall have the right to exercise same on or prior to the record date of shareholders eligible to vote (or otherwise approve) with respect to the proposed Acquisition; if the Warrant is not exercised on or prior to such record date, the Warrant shall expire upon the occurrence of the consummation of the Acquisition, provided that if the Acquisition is not consummated, then the Holder shall be entitled to revoke the exercise of this Warrant pursuant to the operation of this Section 1(a). 2. EXERCISE OF WARRANT The purchase rights represented by this Warrant are exercisable by the registered holder hereof, in whole or in part, at any time and from time to time at or prior to the Expiration Time by the surrender of this Warrant and the Notice of Exercise form attached hereto duly executed to the principal executive office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the Exercise Price for the shares thereby purchased by cash, check or wire transfer or, at the election of the Warrantholder, may be made on a "net exercise" basis, in which event the Company shall issue the Warrantholder a number of shares of Common Stock computed using the following formula: Y = X(A-B)/A Where: X = the number of equal shares of Common Stock for which this Warrant is exercisable; Y = the number of shares of Common Stock to be issued to the Holder; A = the Fair Market Value (as defined below) of one share of the Company's Common Stock on the date of conversion of this Warrant; and B = the Exercise Price for one share of the Company's Common Stock under this Warrant. -2- If the above calculation results in a negative number, then no shares of Warrant Stock shall be issued or issuable upon conversion of this Warrant. "Fair Market Value" of a share of Common Stock shall mean: (a) if this Warrant is exercised (i) immediately prior to a Qualified IPO, and (ii) if the Company's Registration Statement on Form S-1 or SB-2 (or successor or equivalent forms) relating to such public offering has been declared effective by the Securities and Exchange Commission, then the Fair Market Value per share shall be the price per share to the public as specified in the final prospectus with respect to the offering; (b) if this Warrant is exercised after the consummation of a Qualified IPO, then: (i) if traded on a securities exchange, the Fair Market Value per share of Common Stock shall be deemed to be the average of the closing sales prices of the Company's Common Stock over a ten (10) day trading period (or for such shorter period as the Company's Common Stock may have been trading) ending three (3) days before the Exercise Date, or (ii) if traded over-the-counter, the Fair Market Value per share of Common Stock shall be deemed to be the average of the prices of the Company's Common Stock quoted on The Nasdaq Stock Market, Inc. (or NASD bulletin board or any similar system) over the ten (10) day trading period (or for such shorter period as the Company's Common Stock has been trading) ending three (3) days before the Exercise Date; or (c) if this Warrant is exercised prior to a Qualified IPO (except as provided in clause (a) above), the Fair Market Value per share of Common Stock shall be equal to an amount determined in good faith by the Company's Board of Directors, but shall in no event be less than the actual sale price per share in the Company's latest financing. Upon exercise of this Warrant in accordance with this Section 2, the holder of this Warrant shall be entitled to receive from the Company a stock certificate in proper form representing the number of shares of Warrant Stock so purchased, and a new Warrant in substantially identical form and dated as of such exercise for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so exercised. 3. CONVERSION OF WARRANT The Holder shall have the right to convert this Warrant, in whole or in part, at any time (including, but not limited to, the occurrence of an Acquisition of the Company) and from time to time at or prior to the Expiration Time by the payment of the Exercise Price (as hereinafter defined), and surrender of this Warrant and the Notice of Conversion form attached hereto duly executed to the principal executive office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Company), into shares of Warrant Stock as -3- provided in this Section 3. Payment of the Exercise Price may be made by cash, check or wire transfer or, at the election of the Warrantholder, may be made on a "net exercise" basis, in which event the Company shall issue the Warrantholder a number of shares of Common Stock computed using the formula set forth in Section 2. Upon conversion of this Warrant in accordance with this Section 3, the Holder hereof shall be entitled to receive a certificate for the number of shares of Warrant Stock determined in accordance with the foregoing, and a new Warrant in substantially identical form and dated as of such conversion for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so converted. 4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP Certificates for shares purchased hereunder or issuable upon conversion hereof shall be delivered to the Holder promptly after the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. The Company hereby represents and warrants that all shares of Warrant Stock which may be issued upon the exercise or conversion of this Warrant will, upon such exercise or conversion, be duly and validly authorized and issued, fully paid and nonassessable and free from all liens and encumbrances in respect of the issuance thereof (other than liens or encumbrances created by or imposed upon the Holder of the Warrant Stock). The Company agrees that the shares so issued shall be and shall for all purposes be deemed to have been issued to such Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. No fractional shares or scrip representing fractional shares shall be issued upon the exercise or conversion of this Warrant. With respect to any fraction of a share called for upon the exercise or conversion of this Warrant, an amount equal to such fraction multiplied by the Fair Market Value of a share of Warrant Stock on the date of exercise or conversion shall be paid in cash or check to the Holder. 5. CHARGES, TAXES AND EXPENSES Issuance of certificates for shares of Warrant Stock upon the exercise or conversion of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder provided, however, that in the event certificates for shares of Warrant Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise or conversion shall be accompanied by the Assignment Form attached hereto duly executed by the Holder. 6. RIGHTS AS SHAREHOLDERS No Holder of this Warrant, as such, shall be entitled to vote upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, or be deemed the holder of -4- Common Stock until this Warrant shall have been exercised or converted in whole or in part and the Warrant Stock purchasable upon such exercise shall have become deliverable, as provided herein. 7. COMPANY'S RIGHT OF FIRST REFUSAL PRIOR TO WARRANT EXERCISE Before the Warrant may be sold or otherwise transferred by the Holder or any transferee (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Warrant on the terms and conditions set forth in this Section 7 (the "Right of First Refusal"). (a) Notice of Proposed Transfer. The Holder shall deliver to the --------------------------- Company a written notice (the "Notice") stating: (i) the Holder's bona fide intention to sell or otherwise transfer the Warrant; (ii) the name of the proposed purchaser or other transferee ("Proposed Transferee"); and (iii) the bona fide cash price or other consideration for which the Holder proposes to transfer the Warrant (the "Offered Price"), and the Holder shall offer the Warrant at the Offered Price to the Company or its assignee(s), provided that any such assignee is a securityholder of the Company. (b) Exercise of Right of First Refusal. At any time within 20 days ---------------------------------- after receipt of the Notice, the Company or its assignee(s) may, by giving written notice to the Holder, elect to purchase the Warrant proposed to be transferred to the Proposed Transferee, at the purchase price determined in accordance with subsection (c) below. (c) Purchase Price. The purchase price ("Purchase Price") for the -------------- Warrant purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined in good faith by the Board of Directors of the Company. (d) Payment. Payment of the Purchase Price shall be made in cash (by ------- check) within 15 days of the Company's written notice to the Holder pursuant to Section 7(b). (e) Holder's Right to Transfer. If the Warrant proposed in the Notice -------------------------- to be transferred to a given Proposed Transferee is not purchased by the Company or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Warrant to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 90 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section 7 shall continue to apply to the Warrant in the hands of such Proposed Transferee. If the Warrant described in the Notice is not transferred to the Proposed Transferee -5- within such period, a new Notice shall be given to the Company, and the Company or its assignees shall again be offered the Right of First Refusal before the Warrant held by the Holder may be sold or otherwise transferred. (f) Exception for Certain Transfers. The Warrant may be transferred ------------------------------- without the Company being offered the Right of First Refusal in the following transactions; provided that any Transferee shall agree to the terms of this Section 7 as to the Warrant: (1) A Holder's transfer of the Warrant in whole or in part to the Company or to any shareholder of the Company. (2) A Holder's transfer of the Warrant in whole or in part to a person who, at the time of such transfer, is an officer or director of the Company. (3) A Holder's transfer of the Warrant in whole or in part pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate shareholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate shareholder. (4) A transfer by a Holder which is a limited or general partnership to any or all of its partners or former partners or any professional employee (or entity of which such employees are the beneficiaries) of such partnership. (5) A transfer by a Holder which is a corporation to any parent company of the Holder, or any majority-owned subsidiary of such parent company, provided that any such transferee does not derive a majority of its revenues from products or services that compete directly with products or services from which the Company derives a majority of its revenues. (6) Any transfer by a Holder which is a limited liability company to any or all of its members or former members or any professional employee (or entity of which such employees are the beneficiaries) of such limited liability company. Any such transfer shall be made upon surrender of this Warrant together with the Assignment Form attached hereto properly endorsed. (g) Termination of Right of First Refusal. The Right of First Refusal ------------------------------------- shall terminate (i) as to any Warrant Stock acquired upon the exercise or conversion of the Warrant in whole or in part, on the effective date of such exercise or conversion and (ii) as to any portion of the Warrant not previously exercised or converted, on the date 180 days after the date of the final prospectus (the "Final Prospectus") -6- contained in a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act relating to the initial public offering by the Company of its capital stock. 8. MARKET STAND-OFF AGREEMENT The Holder hereby agrees in connection with any registration of the Company's securities (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, not to sell, make any short sale of, loan, pledge (or otherwise encumber or hypothecate), grant any option for the purchase of, or otherwise directly or indirectly dispose of any shares or other securities of the Company (other than those included in the registration) without the prior written consent of the Company and such managing underwriters for such period of time, not to exceed 180 days following the date of the Final Prospectus, as the Board of Directors establishes pursuant to its good faith negotiations with such managing underwriters; provided, however, that the Holder shall not be subject to such market stand-off unless the officers and directors of the Company who own stock of the Company shall also be bound by such restrictions. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. 9. EXCHANGE AND REGISTRY OF WARRANT This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant in substantially identical form and dated as of such exchange. The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered Holder of this Warrant. This Warrant may be surrendered for exchange, transfer, exercise or conversion, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry. 10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT On receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and in case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a new warrant in substantially identical form, dated as of such cancellation and reissuance. 11. SATURDAYS, SUNDAYS AND HOLIDAYS If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding business day. -7- 12. ADJUSTMENTS The type and number of securities of the Company issuable upon exercise of this Warrant and the Exercise Price are subject to adjustment as set forth below: (a) If the Company shall at any time declare a dividend payable in shares of Common Stock, then the Warrantholder, upon exercise of this Warrant after the record date for the determination of holders of Common Stock entitled to receive such dividend, shall be entitled to receive upon exercise of this Warrant, in addition to the number of shares of Common Stock as to which this Warrant is exercised, such additional shares of Common Stock as such holder would have received had this Warrant been exercised immediately prior to such record date. (b) If the Company shall at any time effect a recapitalization or reclassification of such character that the shares of Common Stock shall be changed into or become exchangeable for a larger or smaller number of shares, then upon the effective date thereof the number of shares of Common Stock which the Warrantholder shall be entitled to purchase upon exercise of this Warrant shall be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of Common Stock by reason of such recapitalization or reclassification, and the Exercise Price shall be, in the case of an increase in the number of shares, proportionately decreased and, in the case of a decrease in the number of shares, proportionately increased. (c) If the Company shall at any time distribute to holders of Common Stock cash, evidences of indebtedness or other securities or assets (other than cash dividends or distributions payable out of earned surplus) then, in any such case, the Warrantholder shall be entitled to receive, upon exercise of this Warrant, with respect to each share of Common Stock issuable upon such exercise, the amount of cash or evidences of indebtedness or other securities or assets which such holder would have been entitled to receive with respect to each such share of Common Stock as a result of the happening of such event had this Warrant been exercised immediately prior to the record date or other date fixing stockholders to be affected by such event. (d) If at any time on or after the date hereof the Company shall subdivide its outstanding shares of Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to such subdivision shall thereby be proportionately reduced and the number of shares receivable upon exercise of the Warrant shall thereby be proportionately increased; and, conversely, if at any time on or after the date hereof the outstanding number of shares of Common Stock shall be combined into a smaller number of shares, the Warrant Price in effect immediately prior to such combination shall thereby be proportionately increased -8- and the number of shares receivable upon exercise of the Warrant shall thereby be proportionately decreased. (e) As used in this Warrant the term "Exercise Price" shall mean the purchase price per share specified in this Warrant until the occurrence of an event stated in subsections (b) or (d) of this Section 12 and thereafter shall mean said price as adjusted from time to time in accordance with the provisions of said subsections. No adjustment made pursuant to any provision of this Section 12 shall have the effect of increasing the total consideration payable upon exercise of this Warrant in respect of all the Common Stock as to which this Warrant may be exercised. (f) In the event that at any time, as a result of an adjustment made pursuant to this Section 12, the Warrantholder shall, upon exercise of this Warrant, become entitled to receive shares and/or other securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 12. (g) In case of any adjustment in the Exercise Price or number and type of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the Holder in the form of a certificate, confirmed by an officer of the Company, setting forth such adjustment and showing in reasonable detail the facts upon which adjustment is based. 13. NOTICES OF RECORD DATE, ETC. In the event of: (a) any taking by the Company of a record of the holders of Warrant Stock or securities into which the Warrant Stock is convertible for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, or any transfer of all or substantially all the assets of the Company to, or consolidation or merger of, the Company with or into any person, (c) any voluntary or involuntary dissolution, liquidation or winding- up of the Company, -9- (d) a sale of substantially all of the outstanding capital stock of the Company or the issuance of new shares representing the majority of the Company's right to vote, or (e) the consummation of any Qualified IPO of the Company's Common Stock, then and in each such event the Company will mail to the Holder a notice specifying the record date for voting or the date of closing , as applicable, of any event (a)-(e) above. Such notice shall be delivered to the Holder at least fifteen (15) days prior to the actual or proposed date of consummation of the relevant event. 14. REPRESENTATIONS AND WARRANTIES The Company hereby represents, warrants and agrees that: (a) during the period this Warrant is outstanding, the Company will reserve from its authorized and unissued Warrant Stock a sufficient number of shares to provide for the issuance of Warrant Stock upon the exercise or conversion of this Warrant; (b) during the period this Warrant or the Warrant Stock issuable hereunder is outstanding, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon conversion of the Warrant Stock issuable upon exercise or conversion of this Warrant; (c) the issuance of this Warrant shall constitute full authority to the Company's officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the shares of Warrant Stock issuable upon exercise or conversion of this Warrant; (d) the Company has all requisite legal and corporate power to execute and deliver this Warrant, to sell and issue the Warrant Stock hereunder, to issue the Common Stock issuable upon conversion of the Warrant Stock and to carry out and perform its obligations under the terms of this Warrant; and (e) all corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance of this Warrant by the Company, the authorization, sale, issuance and delivery of the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock, the grant of registration rights as provided herein and the performance of the Company's obligations hereunder has been taken; -10- (f) upon conversion, the Warrant Stock, when issued in compliance with the provisions of this Warrant and the Company's Amended and Restated Articles of Incorporation, will be validly issued, fully paid and nonassessable, and free of any liens or encumbrances, and will be issued in compliance with all applicable federal and state securities laws; and (g) upon conversion, the Warrant Stock will not be subject to any preemptive rights, rights of first refusal or similar rights. 15. APPLICABLE LAW. This Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the State of California. [Remainder of Page Intentionally Left Blank.] -11- IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a duly authorized officer. Dated: __________, 1997. POINTCAST INCORPORATED Signature: ____________________________________ Name: _________________________________________ Title: ________________________________________ Address: ______________________________________ ______________________________________ -12- NOTICE OF EXERCISE To: PointCast Incorporated (1) The undersigned hereby elects to purchase __________ shares of Common Stock of PointCast Incorporated pursuant to the terms of the attached Warrant, and tenders herewith payment of the Exercise Price in accordance therewith. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: ______________________________________ (Name) ______________________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. ________________ Signature: ______________________________________ (Date) Name: ___________________________________________ Title: __________________________________________ Address: ________________________________________ ________________________________________ -13- NOTICE OF CONVERSION To: PointCast Incorporated (1) The undersigned hereby elects to convert that portion of the attached Warrant representing the right to purchase ________ shares of Common Stock into such number of shares of Common Stock of PointCast Incorporated as is determined pursuant to Section 3 of such Warrant, which conversion shall be effected pursuant to the terms of the attached Warrant. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: ______________________________________ (Name) ______________________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. ________________ Signature: ______________________________________ (Date) Name: ___________________________________________ Title: __________________________________________ Address: ________________________________________ ________________________________________ -14- ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, _______________________________ ("Transferor") hereby sells, assigns and transfers unto _________________________________ ("Transferee") the right to purchase Shares represented by the foregoing Warrant to the extent of ___________ shares of Common Stock and does hereby irrevocably constitute and appoint _____________________________, attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Transferee agrees to be bound by all of the terms and conditions of this Warrant (in proportion to its rights under the Warrant vis-a-vis Transferor or any other transferee of rights under this Warrant) as though it were a party to the Warrant in the place of Transferor. Dated: _______________ TRANSFEROR By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Address: ___________________________________ ___________________________________ TRANSFEREE By: ________________________________________ Name: ______________________________________ Title: _____________________________________ Address: ___________________________________ ___________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be medallion guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. -15- EX-10.23 17 COMMON STOCK PURCHASE WARRANT (BENCHMARK FDR) EXHIBIT 10.23 THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (III) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF NO. ____ POINTCAST INCORPORATED DECEMBER 11, 1997 A CALIFORNIA CORPORATION This certifies that, for value received, Benchmark Founders' Fund, L.P. (together with any registered assignee(s), the "Holder") is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and at or prior to 11:59 p.m. on the Expiration Date (as defined below), but not thereafter, to acquire from PointCast Incorporated, a California corporation (the "Company"), in whole or from time to time in part, up to 38,321 fully paid and nonassessable shares of Common Stock of the Company ("Warrant Stock") at a purchase price equal to $5.00 per share (the "Exercise Price"). Such number of shares, type of security and Exercise Price are subject to adjustment as provided herein, and all references to "Warrant Stock" and "Exercise Price" herein shall be deemed to include any such adjustment or series of adjustments. 1. TERM (a) Termination and Expiration. If not earlier exercised, the Warrant -------------------------- shall expire on the date (the "Expiration Date") that is the earlier of (i) eighteen (18) months after the consummation of a firmly underwritten public offering pursuant to the Securities Act of 1933, as amended (the "Securities Act"), by the Company of its capital stock with aggregate gross proceeds to the Company of not less than $20,000,000 and with a price per share of not less than $9.50, subject to appropriate adjustment for stock splits, stock dividends, combinations, recapitalizations and the like (a "Qualified IPO") and (ii) 60 months after the date first set forth above. (b) Exceptions. Notwithstanding the foregoing, in the event the ---------- Company is proposed to be acquired in a bona fide transaction (i.e., not a mere recapitalization, reincorporation for the purpose of changing corporate domicile, or similar transaction) (the "Acquisition"), regardless of the form of the transaction (e.g., merger, consolidation, exclusive license, sale or lease of assets or sale of stock), the Company shall give the Holder not less than fifteen (15) business days notice of the record date for determining the shareholders of the Company entitled to vote on (or otherwise approve) the Acquisition; the Company shall provide the Holder with all information with respect to the Acquisition that is otherwise provided to shareholders of the Company at such time and from time to time during the pendency of the Acquisition, including (but not limited to) the proposed price to be paid in the proposed Acquisition; the Holder shall have the right to exercise same on or prior to the record date of shareholders eligible to vote (or otherwise approve) with respect to the proposed Acquisition; if the Warrant is not exercised on or prior to such record date, the Warrant shall expire upon the occurrence of the consummation of the Acquisition, provided that if the Acquisition is not consummated, then the Holder shall be entitled to revoke the exercise of this Warrant pursuant to the operation of this Section 1(a). 2. EXERCISE OF WARRANT The purchase rights represented by this Warrant are exercisable by the registered holder hereof, in whole or in part, at any time and from time to time at or prior to the Expiration Time by the surrender of this Warrant and the Notice of Exercise form attached hereto duly executed to the principal executive office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the Exercise Price for the shares thereby purchased by cash, check or wire transfer or, at the election of the Warrantholder, may be made on a "net exercise" basis, in which event the Company shall issue the Warrantholder a number of shares of Common Stock computed using the following formula: Y = X(A-B)/A Where: X = the number of equal shares of Common Stock for which this Warrant is exercisable; Y = the number of shares of Common Stock to be issued to the Holder; A = the Fair Market Value (as defined below) of one share of the Company's Common Stock on the date of conversion of this Warrant; and B = the Exercise Price for one share of the Company's Common Stock under this Warrant. -2- If the above calculation results in a negative number, then no shares of Warrant Stock shall be issued or issuable upon conversion of this Warrant. "Fair Market Value" of a share of Common Stock shall mean: (a) if this Warrant is exercised (i) immediately prior to a Qualified IPO, and (ii) if the Company's Registration Statement on Form S-1 or SB-2 (or successor or equivalent forms) relating to such public offering has been declared effective by the Securities and Exchange Commission, then the Fair Market Value per share shall be the price per share to the public as specified in the final prospectus with respect to the offering; (b) if this Warrant is exercised after the consummation of a Qualified IPO, then: (i) if traded on a securities exchange, the Fair Market Value per share of Common Stock shall be deemed to be the average of the closing sales prices of the Company's Common Stock over a ten (10) day trading period (or for such shorter period as the Company's Common Stock may have been trading) ending three (3) days before the Exercise Date, or (ii) if traded over-the-counter, the Fair Market Value per share of Common Stock shall be deemed to be the average of the prices of the Company's Common Stock quoted on The Nasdaq Stock Market, Inc. (or NASD bulletin board or any similar system) over the ten (10) day trading period (or for such shorter period as the Company's Common Stock has been trading) ending three (3) days before the Exercise Date; or (c) if this Warrant is exercised prior to a Qualified IPO (except as provided in clause (a) above), the Fair Market Value per share of Common Stock shall be equal to an amount determined in good faith by the Company's Board of Directors, but shall in no event be less than the actual sale price per share in the Company's latest financing. Upon exercise of this Warrant in accordance with this Section 2, the holder of this Warrant shall be entitled to receive from the Company a stock certificate in proper form representing the number of shares of Warrant Stock so purchased, and a new Warrant in substantially identical form and dated as of such exercise for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so exercised. 3. CONVERSION OF WARRANT The Holder shall have the right to convert this Warrant, in whole or in part, at any time (including, but not limited to, the occurrence of an Acquisition of the Company) and from time to time at or prior to the Expiration Time by the payment of the Exercise Price (as hereinafter defined), and surrender of this Warrant and the Notice of Conversion form attached hereto duly executed to the principal executive office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Company), into shares of Warrant Stock as -3- provided in this Section 3. Payment of the Exercise Price may be made by cash, check or wire transfer or, at the election of the Warrantholder, may be made on a "net exercise" basis, in which event the Company shall issue the Warrantholder a number of shares of Common Stock computed using the formula set forth in Section 2. Upon conversion of this Warrant in accordance with this Section 3, the Holder hereof shall be entitled to receive a certificate for the number of shares of Warrant Stock determined in accordance with the foregoing, and a new Warrant in substantially identical form and dated as of such conversion for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so converted. 4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP Certificates for shares purchased hereunder or issuable upon conversion hereof shall be delivered to the Holder promptly after the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. The Company hereby represents and warrants that all shares of Warrant Stock which may be issued upon the exercise or conversion of this Warrant will, upon such exercise or conversion, be duly and validly authorized and issued, fully paid and nonassessable and free from all liens and encumbrances in respect of the issuance thereof (other than liens or encumbrances created by or imposed upon the Holder of the Warrant Stock). The Company agrees that the shares so issued shall be and shall for all purposes be deemed to have been issued to such Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. No fractional shares or scrip representing fractional shares shall be issued upon the exercise or conversion of this Warrant. With respect to any fraction of a share called for upon the exercise or conversion of this Warrant, an amount equal to such fraction multiplied by the Fair Market Value of a share of Warrant Stock on the date of exercise or conversion shall be paid in cash or check to the Holder. 5. CHARGES, TAXES AND EXPENSES Issuance of certificates for shares of Warrant Stock upon the exercise or conversion of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder provided, however, that in the event certificates for shares of Warrant Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise or conversion shall be accompanied by the Assignment Form attached hereto duly executed by the Holder. 6. RIGHTS AS SHAREHOLDERS No Holder of this Warrant, as such, shall be entitled to vote upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, or be deemed the holder of -4- Common Stock until this Warrant shall have been exercised or converted in whole or in part and the Warrant Stock purchasable upon such exercise shall have become deliverable, as provided herein. 7. COMPANY'S RIGHT OF FIRST REFUSAL PRIOR TO WARRANT EXERCISE Before the Warrant may be sold or otherwise transferred by the Holder or any transferee (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Warrant on the terms and conditions set forth in this Section 7 (the "Right of First Refusal"). (a) Notice of Proposed Transfer. The Holder shall deliver to the --------------------------- Company a written notice (the "Notice") stating: (i) the Holder's bona fide intention to sell or otherwise transfer the Warrant; (ii) the name of the proposed purchaser or other transferee ("Proposed Transferee"); and (iii) the bona fide cash price or other consideration for which the Holder proposes to transfer the Warrant (the "Offered Price"), and the Holder shall offer the Warrant at the Offered Price to the Company or its assignee(s), provided that any such assignee is a securityholder of the Company. (b) Exercise of Right of First Refusal. At any time within 20 days ---------------------------------- after receipt of the Notice, the Company or its assignee(s) may, by giving written notice to the Holder, elect to purchase the Warrant proposed to be transferred to the Proposed Transferee, at the purchase price determined in accordance with subsection (c) below. (c) Purchase Price. The purchase price ("Purchase Price") for the -------------- Warrant purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined in good faith by the Board of Directors of the Company. (d) Payment. Payment of the Purchase Price shall be made in cash (by ------- check) within 15 days of the Company's written notice to the Holder pursuant to Section 7(b). (e) Holder's Right to Transfer. If the Warrant proposed in the Notice -------------------------- to be transferred to a given Proposed Transferee is not purchased by the Company or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Warrant to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 90 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section 7 shall continue to apply to the Warrant in the hands of such Proposed Transferee. If the Warrant described in the Notice is not transferred to the Proposed Transferee -5- within such period, a new Notice shall be given to the Company, and the Company or its assignees shall again be offered the Right of First Refusal before the Warrant held by the Holder may be sold or otherwise transferred. (f) Exception for Certain Transfers. The Warrant may be transferred ------------------------------- without the Company being offered the Right of First Refusal in the following transactions; provided that any Transferee shall agree to the terms of this Section 7 as to the Warrant: (1) A Holder's transfer of the Warrant in whole or in part to the Company or to any shareholder of the Company. (2) A Holder's transfer of the Warrant in whole or in part to a person who, at the time of such transfer, is an officer or director of the Company. (3) A Holder's transfer of the Warrant in whole or in part pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate shareholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate shareholder. (4) A transfer by a Holder which is a limited or general partnership to any or all of its partners or former partners or any professional employee (or entity of which such employees are the beneficiaries) of such partnership. (5) A transfer by a Holder which is a corporation to any parent company of the Holder, or any majority-owned subsidiary of such parent company, provided that any such transferee does not derive a majority of its revenues from products or services that compete directly with products or services from which the Company derives a majority of its revenues. (6) Any transfer by a Holder which is a limited liability company to any or all of its members or former members or any professional employee (or entity of which such employees are the beneficiaries) of such limited liability company. Any such transfer shall be made upon surrender of this Warrant together with the Assignment Form attached hereto properly endorsed. (g) Termination of Right of First Refusal. The Right of First Refusal ------------------------------------- shall terminate (i) as to any Warrant Stock acquired upon the exercise or conversion of the Warrant in whole or in part, on the effective date of such exercise or conversion and (ii) as to any portion of the Warrant not previously exercised or converted, on the date 180 days after the date of the final prospectus (the "Final Prospectus") -6- contained in a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act relating to the initial public offering by the Company of its capital stock. 8. MARKET STAND-OFF AGREEMENT The Holder hereby agrees in connection with any registration of the Company's securities (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, not to sell, make any short sale of, loan, pledge (or otherwise encumber or hypothecate), grant any option for the purchase of, or otherwise directly or indirectly dispose of any shares or other securities of the Company (other than those included in the registration) without the prior written consent of the Company and such managing underwriters for such period of time, not to exceed 180 days following the date of the Final Prospectus, as the Board of Directors establishes pursuant to its good faith negotiations with such managing underwriters; provided, however, that the Holder shall not be subject to such market stand-off unless the officers and directors of the Company who own stock of the Company shall also be bound by such restrictions. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. 9. EXCHANGE AND REGISTRY OF WARRANT This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant in substantially identical form and dated as of such exchange. The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered Holder of this Warrant. This Warrant may be surrendered for exchange, transfer, exercise or conversion, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry. 10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT On receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and in case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a new warrant in substantially identical form, dated as of such cancellation and reissuance. 11. SATURDAYS, SUNDAYS AND HOLIDAYS If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding business day. -7- 12. ADJUSTMENTS The type and number of securities of the Company issuable upon exercise of this Warrant and the Exercise Price are subject to adjustment as set forth below: (a) If the Company shall at any time declare a dividend payable in shares of Common Stock, then the Warrantholder, upon exercise of this Warrant after the record date for the determination of holders of Common Stock entitled to receive such dividend, shall be entitled to receive upon exercise of this Warrant, in addition to the number of shares of Common Stock as to which this Warrant is exercised, such additional shares of Common Stock as such holder would have received had this Warrant been exercised immediately prior to such record date. (b) If the Company shall at any time effect a recapitalization or reclassification of such character that the shares of Common Stock shall be changed into or become exchangeable for a larger or smaller number of shares, then upon the effective date thereof the number of shares of Common Stock which the Warrantholder shall be entitled to purchase upon exercise of this Warrant shall be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of Common Stock by reason of such recapitalization or reclassification, and the Exercise Price shall be, in the case of an increase in the number of shares, proportionately decreased and, in the case of a decrease in the number of shares, proportionately increased. (c) If the Company shall at any time distribute to holders of Common Stock cash, evidences of indebtedness or other securities or assets (other than cash dividends or distributions payable out of earned surplus) then, in any such case, the Warrantholder shall be entitled to receive, upon exercise of this Warrant, with respect to each share of Common Stock issuable upon such exercise, the amount of cash or evidences of indebtedness or other securities or assets which such holder would have been entitled to receive with respect to each such share of Common Stock as a result of the happening of such event had this Warrant been exercised immediately prior to the record date or other date fixing stockholders to be affected by such event. (d) If at any time on or after the date hereof the Company shall subdivide its outstanding shares of Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to such subdivision shall thereby be proportionately reduced and the number of shares receivable upon exercise of the Warrant shall thereby be proportionately increased; and, conversely, if at any time on or after the date hereof the outstanding number of shares of Common Stock shall be combined into a smaller number of shares, the Warrant Price in effect immediately prior to such combination shall thereby be proportionately increased -8- and the number of shares receivable upon exercise of the Warrant shall thereby be proportionately decreased. (e) As used in this Warrant the term "Exercise Price" shall mean the purchase price per share specified in this Warrant until the occurrence of an event stated in subsections (b) or (d) of this Section 12 and thereafter shall mean said price as adjusted from time to time in accordance with the provisions of said subsections. No adjustment made pursuant to any provision of this Section 12 shall have the effect of increasing the total consideration payable upon exercise of this Warrant in respect of all the Common Stock as to which this Warrant may be exercised. (f) In the event that at any time, as a result of an adjustment made pursuant to this Section 12, the Warrantholder shall, upon exercise of this Warrant, become entitled to receive shares and/or other securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 12. (g) In case of any adjustment in the Exercise Price or number and type of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the Holder in the form of a certificate, confirmed by an officer of the Company, setting forth such adjustment and showing in reasonable detail the facts upon which adjustment is based. 13. NOTICES OF RECORD DATE, ETC. In the event of: (a) any taking by the Company of a record of the holders of Warrant Stock or securities into which the Warrant Stock is convertible for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, or any transfer of all or substantially all the assets of the Company to, or consolidation or merger of, the Company with or into any person, (c) any voluntary or involuntary dissolution, liquidation or winding- up of the Company, -9- (d) a sale of substantially all of the outstanding capital stock of the Company or the issuance of new shares representing the majority of the Company's right to vote, or (e) the consummation of any Qualified IPO of the Company's Common Stock, then and in each such event the Company will mail to the Holder a notice specifying the record date for voting or the date of closing , as applicable, of any event (a)-(e) above. Such notice shall be delivered to the Holder at least fifteen (15) days prior to the actual or proposed date of consummation of the relevant event. 14. REPRESENTATIONS AND WARRANTIES The Company hereby represents, warrants and agrees that: (a) during the period this Warrant is outstanding, the Company will reserve from its authorized and unissued Warrant Stock a sufficient number of shares to provide for the issuance of Warrant Stock upon the exercise or conversion of this Warrant; (b) during the period this Warrant or the Warrant Stock issuable hereunder is outstanding, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon conversion of the Warrant Stock issuable upon exercise or conversion of this Warrant; (c) the issuance of this Warrant shall constitute full authority to the Company's officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the shares of Warrant Stock issuable upon exercise or conversion of this Warrant; (d) the Company has all requisite legal and corporate power to execute and deliver this Warrant, to sell and issue the Warrant Stock hereunder, to issue the Common Stock issuable upon conversion of the Warrant Stock and to carry out and perform its obligations under the terms of this Warrant; and (e) all corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance of this Warrant by the Company, the authorization, sale, issuance and delivery of the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock, the grant of registration rights as provided herein and the performance of the Company's obligations hereunder has been taken; -10- (f) upon conversion, the Warrant Stock, when issued in compliance with the provisions of this Warrant and the Company's Amended and Restated Articles of Incorporation, will be validly issued, fully paid and nonassessable, and free of any liens or encumbrances, and will be issued in compliance with all applicable federal and state securities laws; and (g) upon conversion, the Warrant Stock will not be subject to any preemptive rights, rights of first refusal or similar rights. 15. APPLICABLE LAW. This Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the State of California. [Remainder of Page Intentionally Left Blank.] -11- IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a duly authorized officer. Dated: __________, 1997. POINTCAST INCORPORATED Signature: ___________________________________________ Name: ___________________________________________ Title: ___________________________________________ Address: ___________________________________________ ___________________________________________ -12- NOTICE OF EXERCISE To: PointCast Incorporated (1) The undersigned hereby elects to purchase __________ shares of Common Stock of PointCast Incorporated pursuant to the terms of the attached Warrant, and tenders herewith payment of the Exercise Price in accordance therewith. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: _____________________________________ (Name) _____________________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. ________________ Signature: ____________________________________________ (Date) Name: ____________________________________________ Title: ____________________________________________ Address: ____________________________________________ ____________________________________________ -13- NOTICE OF CONVERSION To: PointCast Incorporated (1) The undersigned hereby elects to convert that portion of the attached Warrant representing the right to purchase ________ shares of Common Stock into such number of shares of Common Stock of PointCast Incorporated as is determined pursuant to Section 3 of such Warrant, which conversion shall be effected pursuant to the terms of the attached Warrant. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: _____________________________________ (Name) _____________________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. ________________ Signature: ____________________________________________ (Date) Name: ____________________________________________ Title: ____________________________________________ Address: ____________________________________________ ____________________________________________ -14- ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, _______________________________ ("Transferor") hereby sells, assigns and transfers unto _________________________________ ("Transferee") the right to purchase Shares represented by the foregoing Warrant to the extent of ___________ shares of Common Stock and does hereby irrevocably constitute and appoint _____________________________, attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Transferee agrees to be bound by all of the terms and conditions of this Warrant (in proportion to its rights under the Warrant vis-a-vis Transferor or any other transferee of rights under this Warrant) as though it were a party to the Warrant in the place of Transferor. Dated: _______________ TRANSFEROR By: _____________________________________ Name: ___________________________________ Title: __________________________________ Address: ________________________________ ________________________________ TRANSFEREE By: _____________________________________ Name: ___________________________________ Title: __________________________________ Address: ________________________________ ________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be medallion guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. -15- EX-10.24 18 SERIES D PREF. STOCK PUR. WARRANT (CABLE NEWS) EXHIBIT 10.24 THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED. NO. 1 POINTCAST INCORPORATED DECEMBER 10, 1996 --- ----------- SERIES D PREFERRED STOCK PURCHASE WARRANT This certifies that, for value received, Cable News Network, Inc. (together with any registered assignee(s), the "Holder") is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and at or prior to 11:59 p.m. on the Expiration Date (as defined below), but not thereafter, to acquire from PointCast Incorporated, a California corporation (the "Company"), in whole or from time to time in part, and in accordance with the provisions of Section 1 below, up to 526,316 fully paid and nonassessable shares of Series D Preferred Stock of the Company ("Warrant Stock") at a purchase price equal to $9.50 per share (the "Exercise Price"). Such number of shares, type of security and Exercise Price are subject to adjustment as provided herein, and all references to "Warrant Stock" and "Exercise Price" herein shall be deemed to include any such adjustment or series of adjustments. 1. TERM (a) Termination and Expiration. If not earlier exercised, the Warrant -------------------------- shall expire on the date (the "Expiration Date") that is the earlier of (i) 18 months after the effective date of an initial public offering by the Company of its capital stock with aggregate gross proceeds to the Company of not less than $20,000,000 and with a price per share of not less than $9.50 (a "Qualified IPO") and (ii) 36 months after the date first set forth above. (b) Exceptions. Notwithstanding the foregoing, the Warrant shall ---------- terminate, if not earlier exercised, in the event of an acquisition of the Company. In the event the Company is proposed to be acquired in a bona fide transaction (the "Acquisition") (i.e., not a mere recapitalization, reincorporation for the purpose of changing corporate domicile, or similar transaction), regardless of the form of the transaction (e.g., merger, consolidation, sale or lease of assets or sale of stock), the Company shall give the Holder not less than (i) fifteen (15) business days' notice of the record date for determining the shareholders of the Company entitled to vote on (or otherwise approve) the Acquisition or (ii) 60 calendar days' notice of the effective date of the Acquisition, whichever is longer; the Company shall provide the Holder with all information with respect to the Acquisition that is otherwise provided to shareholders of the Company at such time and from time to time during the pendency of the Acquisition, including (but not limited to) the proposed price to be paid in the proposed Acquisition; the Holder shall have the right to exercise same on or prior to the record date of shareholders eligible to vote (or otherwise approve) with respect to the proposed Acquisition; if the Warrant is not exercised on or prior to such record date, the Warrant shall expire upon the occurrence of the closing of the Acquisition. 2. EXERCISE OF WARRANT The purchase rights represented by this Warrant are exercisable by the registered holder hereof, in whole or in part, at any time and from time to time at or prior to the Expiration Time by the surrender of this Warrant and the Notice of Exercise form attached hereto duly executed to the headquarters office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the Exercise Price for the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company or by cancellation of indebtedness of the Company to the holder hereof, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the holder of this Warrant shall be entitled to receive from the Company a stock certificate in proper form representing the number of shares of Warrant Stock so purchased, and a new Warrant in substantially identical form and dated as of such exercise for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so exercised. 3. CONVERSION OF WARRANT The Holder shall have the right to convert this Warrant, in whole or in part, at any time (including, but not limited to, the occurrence of an Acquisition of the Company) and from time to time at or prior to the Expiration Time by the surrender of this Warrant and the Notice of Conversion form attached hereto duly executed to the headquarters office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Company), into shares of Warrant Stock as provided in this Section 3. Upon exercise of this conversion right, the Holder shall be entitled to receive that number of shares of the Company's Preferred Stock computed by using the following formula: X(A-B) y = -------- A -2- Y = the number of shares of Series D Preferred Stock to be issued to the Holder. A = the Fair Market Value (as defined below) of one share of the Company's Series D Preferred Stock on the date of conversion of this Warrant. B = the Exercise Price for one share of the Company's Series D Preferred Stock under this Warrant. X = the number of shares of Series D Preferred Stock purchasable under this Warrant. If the above calculation results in a negative number, then no shares of Warrant Stock shall be issued or issuable upon conversion of this Warrant. "Fair Market Value" of a share of Series D Preferred Stock shall mean: (a) if the conversion right is being exercised in connection with the initial public offering (the "IPO") of the Company's Common Stock (the "Common Stock"), the IPO price per share (before deducting commissions, discounts or expenses) at which the Common Stock is sold to the public in the IPO, multiplied by the number of shares of Common Stock into which a share of Series D Preferred Stock is convertible at the time of the exercise of the conversion right (the "Conversion Rate"). (b) if the conversion right is being exercised in connection with an Acquisition, the price per share to be paid to holders of the Company's Series D Preferred Stock by the acquiring entity; or, if no such price per share has been established, the price per share to be paid to the holders of the Company's Common Stock multiplied by the Conversion Rate. (c) if the conversion right is being exercised after the IPO (other than in connection with an Acquisition) the average of the closing prices for the Company's Common Stock for the ten (10) trading days prior to the date the Company receives the Warrant and duly executed Notice of Conversion, multiplied by the Conversion Rate. (d) in all other cases, the fair value as determined in good faith by the Company's Board of Directors. Upon conversion of this Warrant in accordance with this Section 3, the Holder hereof shall be entitled to receive a certificate for the number of shares of Warrant Stock determined in accordance -3- with the foregoing, and a new Warrant in substantially identical form and dated as of such conversion for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so converted. 4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP Certificates for shares purchased hereunder or issuable upon conversion hereof shall be delivered to the Holder within a reasonable time after the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. The Company hereby represents and warrants that all shares of Warrant Stock which may be issued upon the exercise or conversion of this Warrant will, upon such exercise or conversion, be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issuance thereof (other than liens or charges created by or imposed upon the holder of the Warrant Stock). The Company agrees that the shares so issued shall be and shall for all purposes be deemed to have been issued to such holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. No fractional shares or scrip representing fractional shares shall be issued upon the exercise or conversion of this Warrant. With respect to any fraction of a share called for upon the exercise or conversion of this Warrant, an amount equal to such fraction multiplied by the Fair Market Value of a share of Warrant Stock on the date of exercise or conversion shall be paid in cash or check to the Holder. 5. CHARGES, TAXES AND EXPENSES Issuance of certificates for shares of Warrant Stock upon the exercise or conversion of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder provided, however, that in the event certificates for shares of Warrant Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise or conversion shall be accompanied by the Assignment Form attached hereto duly executed by the Holder. 6. RIGHTS AS SHAREHOLDERS The Holder shall not, solely as such, be entitled to vote upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, or to be deemed the holder of Series D Preferred Stock until this Warrant shall have been exercised or converted in whole or in part and the Warrant Stock purchasable upon such exercise shall have become deliverable, as provided herein. Thereafter, upon the Holder's signing of the Investor Rights Agreement (as hereinafter defined), the Holder shall have the rights and responsibilities of an Investor under the Amended and Restated Investor Rights Agreement (the "Investor Rights Agreement"), dated as of July 19, 1996, by -4- and among the Company, the persons set forth on the Schedule of Investors attached thereto as Exhibit A, Lighthouse Capital Partners, L.P. and certain officers of the Company, with each share of Warrant Stock being deemed equivalent to one share of Registrable Securities or Shares, as the case may be, under such Investor Rights Agreement. 7. COMPANY'S RIGHT OF FIRST REFUSAL Before any Warrants, or if exercised, any shares of Series D Preferred Stock or Common Stock (the "Converted Shares") held by the Holder or any transferee may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the "Right of First Refusal"). (a) Notice of Proposed Transfer. The Holder shall deliver to the --------------------------- Company a written notice (the "Notice") stating: (i) the Holder's bona fide intention to sell or otherwise transfer such Warrants or Converted Shares, as the case may be; (ii) the name of each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the number of Warrants or Converted Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Warrants or the Converted Shares (the "Offered Price"), and the Holder shall offer the Warrants or the Converted Shares at the Offered Price to the Company or its assignee(s). (b) Exercise of Right of First Refusal. At any time within 30 days ---------------------------------- after receipt of the Notice, the Company or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Warrants or Converted Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below. (c) Purchase Price. The purchase price ("Purchase Price") for the -------------- Warrants or Converted Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith. (d) Payment. Payment of the Purchase Price shall be made in cash (by ------- check) within 45 days of receipt of the Notice. (e) Holder's Right to Transfer. If all of the Warrants or Converted -------------------------- Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Warrants or Converted Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with -5- any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Warrants or Converted Shares in the hands of such Proposed Transferee. If the Warrants or Converted Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company or its assignees shall again be offered the Right of First Refusal before any Warrants or Converted Shares held by the Holder may be sold or otherwise transferred. (f) Exception for Certain Transfers. The Warrant or Converted Shares ------------------------------- may be transferred without the Company being offered the Right of First Refusal in the following transactions; provided that any Transferee shall agree to the terms of this Section 7 as to the Warrant or any Converted Shares: (1) A Holder's transfer of the Warrant or Converted Shares in whole or in part to the Company or to any shareholder of the Company. (2) A Holder's transfer of the Warrant or Converted Shares in whole or in part to a person who, at the time of such transfer, is an officer or director of the Company. (3) A Holder's transfer of the Warrant or Converted Shares in whole or in part pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate shareholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate shareholder. (4) A transfer by a Holder which is a limited or general partnership to any or all of its partners or former partners or any professional employee (or entity of which such employees are the beneficiaries) of such partnership. (5) A transfer by a Holder to any entity who (i) at the date hereof or at the date of the proposed transfer is, or has the power to become through the exercise or conversion of securities, an affiliate, as such term is defined in Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"), of a Holder, and (ii) does not derive a substantial portion of its revenues from products or services that compete with products or services from which the Company derives a substantial portion of its revenues. Any such transfer shall be made upon surrender of this Warrant or Converted Shares together with the Assignment Form attached hereto properly endorsed. (g) Termination of Right of First Refusal. The Right of First Refusal ------------------------------------- shall terminate as to any Shares 90 days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act. -6- 8. MARKET STAND-OFF AGREEMENT The Holder hereby agrees that if so requested by the Company or any representative of the underwriters in connection with any registration of the offering of any shares of the Company under the Securities Act, the Holder shall not sell or otherwise transfer any shares or other securities of the Company during the 180-day period following the date of the final Prospectus contained in a registration statement of the Company filed under the Securities Act; provided, however, that such restriction shall only apply to the first registration statement of the Company to become effective under the Securities Act which includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. 9. EXCHANGE AND REGISTRY OF WARRANT This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant in substantially identical form and dated as of such exchange. The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered holder of this Warrant. This Warrant may be surrendered for exchange, transfer, exercise or conversion, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry. 10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT On receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and in case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a new warrant in substantially identical form, dated as of such cancellation and reissuance. 11. SATURDAYS, SUNDAYS AND HOLIDAYS If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding business day. 12. ADJUSTMENT TO NUMBER AND TYPE OF SECURITIES, EXERCISE PRICE The type and number of securities of the Company issuable upon exercise of this Warrant and the Exercise Price are subject to adjustment as set forth below: -7- (a) Adjustment for Stock Splits, Stock Dividends, Recapitalizations, ---------------------------------------------------------------- Automatic Conversion, etc. The Exercise Price and the number and type of - -------------------------- securities or other property issuable upon exercise of this Warrant shall be appropriately and proportionately adjusted to reflect any stock dividend, stock split, combination of shares, reclassification, recapitalization, automatic conversion, redemption or other similar event affecting the number or character of outstanding shares of Warrant Stock, other than an adjustment to the conversion price of the Warrant Stock pursuant to the antidilution provisions set forth in the Company's Articles, so that the number and type of securities or other property issuable upon exercise of this Warrant shall be equal to that which would have been issuable with respect to the number of shares of Warrant Stock subject hereto at the time of such event, had such shares of Warrant Stock then been outstanding. (b) Certificate as to Adjustments. In case of any adjustment in the ----------------------------- Exercise Price or number and type of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the Holder in the form of a certificate, certified and confirmed by an officer of the Company, setting forth such adjustment and showing in reasonable detail the facts upon which adjustment is based. 13. NOTICES OF RECORD DATE, ETC. In the event of: (1) any taking by the Company of a record of the holders of Warrant Stock or securities into which the Warrant Stock is convertible for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, (2) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, or any transfer of all or substantially all the assets of the Company to, or consolidation or merger of, the Company with or into any person, (3) any voluntary or involuntary dissolution, liquidation or winding- up of the Company, (4) a sale of substantially all of the outstanding capital stock of the Company or the issuance of new shares representing the majority of the Company's right to vote, or (5) the initial public offering of the Company's Common Stock, then and in each such event the Company will mail to the Holder a notice specifying the record date for voting or the date of closing, as applicable, of any event (a)-(e) above. Such notice shall be delivered to the Holder at least fifteen (15) days prior to the date of the relevant event. 14. REPRESENTATIONS AND WARRANTIES -8- The Company hereby represents and warrants to the Holder that: (a) during the period this Warrant is outstanding, the Company will reserve from its authorized and unissued Warrant Stock a sufficient number of shares to provide for the issuance of Warrant Stock upon the exercise or conversion of this Warrant; (b) during the period this Warrant or the Warrant Stock issuable hereunder is outstanding, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon conversion of the Warrant Stock issuable upon exercise or conversion of this Warrant; (c) the issuance of this Warrant shall constitute full authority to the Company's officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the shares of Warrant Stock issuable upon exercise or conversion of this Warrant; (d) the Company has all requisite legal and corporate power to execute and deliver this Warrant, to sell and issue the Warrant Stock hereunder, to issue the Common Stock issuable upon conversion of the Warrant Stock and to carry out and perform its obligations under the terms of this Warrant; and (e) all corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance of this Warrant by the Company, the authorization, sale, issuance and delivery of the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock, the grant of registration rights as provided herein and the performance of the Company's obligations hereunder has been taken; (f) the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock, when issued in compliance with the provisions of this Warrant and the Articles, will be validly issued, fully paid and nonassessable, and free of any liens or encumbrances, and will be issued in compliance with all applicable federal and state securities laws; and (g) the issuance of the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock will not be subject to any preemptive rights, rights of first refusal or similar rights. [This space left blank intentionally] -9- 15. GOVERNING LAW This Warrant shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a duly authorized officer. Dated: December 10, 1996. POINTCAST INCORPORATED /s/ Christopher Hassett ----------------------------------------- By: Christopher Hassett ----------------------------------------- Title: CEO ---------------------------------------- Address: 10101 N. DeAnza Blvd. --------------------------------------- Cupertino, CA 95014 --------------------------------------- -10- NOTICE OF EXERCISE To: PointCast Incorporated (1) The undersigned hereby elects to purchase __________ shares of Series D Preferred Stock of PointCast Incorporated pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: ________________________________________ (Name) ________________________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. ____________________ ________________________________________ (Date) NOTICE OF CONVERSION To: PointCast Incorporated (1) The undersigned hereby elects to convert that portion of the attached Warrant representing the right to purchase ________ shares of Series D Preferred Stock into such number of shares of Series D Preferred Stock of PointCast Incorporated as is determined pursuant to Section 3 of such Warrant, which conversion shall be effected pursuant to the terms of the attached Warrant. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: ____________________________________________ (Name) ____________________________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. _________________ ____________________________________________ (Date) ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to ____________________________________________________________________________ (Please Print) whose address is ___________________________________________________________ (Please Print) Dated: ________________________________________________________________ Holder's Signature: ___________________________________________________ Holder's Address: _____________________________________________________ Guaranteed Signature: ______________________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EX-10.25 19 SERIES D PREF. STOCK PUR. WARRANT (TIME INC.) Exhibit 10.25 THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED. NO. 2 POINTCAST INCORPORATED DECEMBER 10, 1996 -------- ----------- SERIES D PREFERRED STOCK PURCHASE WARRANT This certifies that, for value received, Time Inc. New Media (together with any registered assignee(s), the "Holder") is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and at or prior to 11:59 p.m. on the Expiration Date (as defined below), but not thereafter, to acquire from PointCast Incorporated, a California corporation (the "Company"), in whole or from time to time in part, up to 526,316 fully paid and nonassessable shares of Series D Preferred Stock of the Company ("Warrant Stock") at a purchase price equal to $9.50 per share (the "Exercise Price"). Such number of shares, type of security and Exercise Price are subject to adjustment as provided herein, and all references to "Warrant Stock" and "Exercise Price" herein shall be deemed to include any such adjustment or series of adjustments. 1. TERM 1.1 Termination and Expiration. If not earlier exercised, the -------------------------- Warrant shall expire on the date (the "Expiration Date") that is the earlier of (i) eighteen (18) months after the effective date of the registration statement for an initial public offering by the Company of its capital stock with aggregate gross proceeds to the Company of not less than $20,000,000 and with a price per share of not less than $9.50 (a "Qualified IPO") and (ii) 60 months after the date first set forth above. 1.2 Exceptions. Notwithstanding the foregoing, in the event the ---------- Company is proposed to be acquired in a bona fide transaction (i.e., not a mere recapitalization, reincorporation for the purpose of changing corporate domicile, or similar transaction) (the "Acquisition"), regardless of the form of the transaction (e.g., merger, consolidation, sale or lease of assets or sale of stock), the Company shall give the Holder not less than fifteen (15) business days notice of the record date for determining the shareholders of the Company entitled to vote on (or otherwise approve) the Acquisition; the Company shall provide the Holder with all information with respect to the Acquisition that is otherwise provided to shareholders of the Company at such time and from time to time during the pendency of the Acquisition, including (but not limited to) the proposed price to be paid in the proposed Acquisition; the Holder shall have the right to exercise same on or prior to the record date of shareholders eligible to vote (or otherwise approve) with respect to the proposed Acquisition; if the Warrant is not exercised on or prior to such record date, the Warrant shall expire upon the occurrence of the closing of the Acquisition. 2. EXERCISE OF WARRANT The purchase rights represented by this Warrant are exercisable by the registered holder hereof, in whole or in part, at any time and from time to time at or prior to the Expiration Time by the surrender of this Warrant and the Notice of Exercise form attached hereto duly executed to the headquarters office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the Exercise Price for the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company or by cancellation of indebtedness of the Company to the holder hereof, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the holder of this Warrant shall be entitled to receive from the Company a stock certificate in proper form representing the number of shares of Warrant Stock so purchased, and a new Warrant in substantially identical form and dated as of such exercise for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so exercised. 3. CONVERSION OF WARRANT The Holder shall have the right to convert this Warrant, in whole or in part, at any time (including, but not limited to, the occurrence of an Acquisition of the Company) and from time to time at or prior to the Expiration Time by the surrender of this Warrant and the Notice of Conversion form attached hereto duly executed to the headquarters office of the Company at the address set forth on the signature page hereof (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Company), into shares of Warrant Stock as provided in this Section 3. Upon exercise of this conversion right, the Holder shall be entitled to receive that number of shares of the Company's Preferred Stock computed by using the following formula: X(A-B) Y = ------ A Y = the number of shares of Series D Preferred Stock to be issued to the Holder. A = the Fair Market Value (as defined below) of one share of the Company's Series D Preferred Stock on the date of conversion of this Warrant. B = the Exercise Price for one share of the Company's Series D Preferred Stock under this Warrant. X = the number of shares of Series D Preferred Stock that the Holder desires to purchase pursuant to complete or partial conversion of the Warrant. If the above calculation results in a negative number, then no shares of Warrant Stock shall be issued or issuable upon conversion of this Warrant. "Fair Market Value" of a share of Series D Preferred Stock shall mean: (a) if the conversion right is being exercised in connection with the initial public offering (the "IPO") of the Company's Common Stock (the "Common Stock"), -2- the IPO price per share (before deducting commissions, discounts or expenses) at which the Common Stock is sold to the public in the IPO, multiplied by the number of shares of Common Stock into which a share of Series D Preferred Stock is convertible at the time of the exercise of the conversion right (the "Conversion Rate"). (b) if the conversion right is being exercised in connection with an Acquisition, the price per share to be paid to the holders of the Company's Series D Preferred Stock by the acquiring entity, or, if no such price per share has been established, the price per share to be paid to the holders of the Company's Common Stock multiplied by the Conversion Rate. (c) if the conversion right is being exercised after the IPO (other than in connection with an Acquisition), then (i) if the Company's Common Stock is listed on a national securities exchange, the average of last sale prices for the Company's Common Stock for the fifteen (15) trading days prior to the date the Company receives the Warrant and duly executed Notice of Conversion (the "Notice Receipt Date"), multiplied by the Conversion Rate, or (ii) if the Company's Common Stock is listed on The Nasdaq Stock Market, the average of the average bid and ask price for each of the fifteen (15) trading days prior to the Notice Receipt Date, multiplied by the Conversion Rate. (d) in all other cases, the fair value as determined in good faith by the Company's Board of Directors. Upon conversion of this Warrant in accordance with this Section 3, the Holder hereof shall be entitled to receive a certificate for the number of shares of Warrant Stock determined in accordance with the foregoing, and a new Warrant in substantially identical form and dated as of such conversion for the purchase of that number of shares of Warrant Stock equal to the difference, if any, between the number of shares of Warrant Stock subject hereto and the number of shares of Warrant Stock as to which this Warrant is so converted. 4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP Certificates for shares purchased hereunder or issuable upon conversion hereof shall be delivered to the Holder promptly after the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. The Company hereby represents and warrants that all shares of Warrant Stock which may be issued upon the exercise or conversion of this Warrant will, upon such exercise or conversion, be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issuance thereof (other than liens or charges created by or imposed upon the holder of the Warrant Stock). The Company agrees that the shares so issued shall be and shall for all purposes be deemed to have been issued to such holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. No fractional shares or scrip representing fractional shares shall be issued upon the exercise or conversion of this Warrant. With respect to any fraction of a share called for upon the exercise or conversion of this Warrant, an amount equal to such fraction multiplied by the Fair Market Value of a share of Warrant Stock on the date of exercise or conversion shall be paid in cash or check to the Holder. -3- 5. CHARGES, TAXES AND EXPENSES Issuance of certificates for shares of Warrant Stock upon the exercise or conversion of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder provided, however, that in the event certificates for shares of Warrant Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise or conversion shall be accompanied by the Assignment Form attached hereto duly executed by the Holder. 6. RIGHTS AS SHAREHOLDERS No holder of this Warrant, as such, shall be entitled to vote upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, or be deemed the holder of Series D Preferred Stock until this Warrant shall have been exercised or converted in whole or in part and the Warrant Stock purchasable upon such exercise shall have become deliverable, as provided herein. Thereafter, the Holder thereof shall have the rights and responsibilities of: (i) an Investor under the Amended and Restated Investor Rights Agreement (the "Investor Rights Agreement"), dated as of July 19, 1996, by and among the Company, the persons set forth on the Schedule of Investors attached thereto as Exhibit A, Lighthouse Capital Partners, L.P. and certain officers of the Company, with each share of Warrant Stock being deemed equivalent to one share of Registrable Securities or Shares, as the case may be, under such Investor Rights Agreement; and (ii) a Series D Purchaser under each of (A) the Amended and Restated Investors' Co-Sale Agreement, dated as of July 19, 1996, by and among the Company, the purchasers of the Company's Series D Preferred Stock, the holders of the Company's other series of Preferred Stock, and certain officers of the Company and (B) the Amended and Restated Co-Sale Agreement of even date therewith by and among the same parties (such agreements being referred to collectively as the "Co-Sale Agreements"), with each share of Warrant Stock being deemed equivalent to one share of Co-Sale Securities under such Co-Sale Agreements; in each case of (i) and (ii), as if such Holder were a signatory to each such agreement. 7. COMPANY'S RIGHT OF FIRST REFUSAL PRIOR TO WARRANT EXERCISE Before the Warrant may be sold or otherwise transferred by the Holder or any transferee (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Warrant on the terms and conditions set forth in this Section (the "Right of First Refusal"). (a) Notice of Proposed Transfer. The Holder shall deliver to the --------------------------- Company a written notice (the "Notice") stating: (i) the Holder's bona fide intention to sell or otherwise transfer the Warrant; (ii) the name of the proposed purchaser or other transferee ("Proposed Transferee"); and (iii) the bona fide cash price or other consideration for which the Holder proposes to transfer the Warrant (the "Offered Price"), and the Holder shall offer the Warrant at the Offered Price to the Company or its assignee(s), provided that any such assignee is a securityholder of the Company. (b) Exercise of Right of First Refusal. At any time within 20 days ---------------------------------- after receipt of the Notice, the Company or its assignee(s) may, by giving written notice to the Holder, elect to purchase the Warrant proposed to be transferred to the Proposed Transferee, at the purchase price determined in accordance with subsection (c) below. -4- (c) Purchase Price. The purchase price ("Purchase Price") for the -------------- Warrant purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith. (d) Payment. Payment of the Purchase Price shall be made in cash (by ------- check) within 30 days of receipt of the Notice. (e) Holder's Right to Transfer. If the Warrant proposed in the Notice -------------------------- to be transferred to a given Proposed Transferee is not purchased by the Company or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Warrant to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Warrant in the hands of such Proposed Transferee. If the Warrant described in the Notice is not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company or its assignees shall again be offered the Right of First Refusal before the Warrant held by the Holder may be sold or otherwise transferred. (f) Exception for Certain Transfers. The Warrant may be transferred ------------------------------- without the Company being offered the Right of First Refusal in the following transactions; provided that any Transferee shall agree to the terms of this Section 9 as to the Warrant: (1) A Holder's transfer of the Warrant in whole or in part to the Company or to any shareholder of the Company. (2) A Holder's transfer of the Warrant in whole or in part to a person who, at the time of such transfer, is an officer or director of the Company. (3) A Holder's transfer of the Warrant in whole or in part pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate shareholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate shareholder. (4) A transfer by a Holder which is a limited or general partnership to any or all of its partners or former partners or any professional employee (or entity of which such employees are the beneficiaries) of such partnership. (5) A transfer by a Holder which is a corporation to any parent company of the Holder, or any majority-owned subsidiary of such parent company, provided that any such transferee does not derive a majority of its revenues from products or services that compete directly with products or services from which the Company derives a majority of its revenues. Any such transfer shall be made upon surrender of this Warrant together with the Assignment Form attached hereto properly endorsed. (g) Termination of Right of First Refusal. The Right of First Refusal ------------------------------------- shall terminate (i) as to any Warrant Stock acquired upon the exercise or conversion of the Warrant in whole or in part, on the effective -5- date of such exercise or conversion and (ii) as to any portion of the Warrant not previously exercised or converted, on the date 90 days after the date of the final prospectus (the "Final Prospectus") contained in a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act") for the initial public offering by the Company of its capital stock. 8. MARKET STAND-OFF AGREEMENT The Holder hereby agrees that if so requested by the Company or any representative of the underwriters in connection with any registration of the offering of any shares of the Company under the Securities Act, the Holder shall not sell or otherwise transfer any shares or other securities of the Company during the 180-day period following the date of the Final Prospectus; provided, however, that such restriction shall only apply to the first registration statement of the Company to become effective under the Securities Act which includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. 9. EXCHANGE AND REGISTRY OF WARRANT This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant in substantially identical form and dated as of such exchange. The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered holder of this Warrant. This Warrant may be surrendered for exchange, transfer, exercise or conversion, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry. 10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT On receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and in case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company will execute and deliver to the Holder, in lieu thereof, a new warrant in substantially identical form, dated as of such cancellation and reissuance. 11. SATURDAYS, SUNDAYS AND HOLIDAYS If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding business day. 12. ADJUSTMENT TO NUMBER AND TYPE OF SECURITIES, EXERCISE PRICE The type and number of securities of the Company issuable upon exercise of this Warrant and the Exercise Price are subject to adjustment as set forth below: (a) Adjustment for Stock Splits, Stock Dividends, Recapitalizations, ---------------------------------------------------------------- Automatic Conversion, etc. The Exercise Price and the number and type of - -------------------------- securities or other property issuable upon exercise of this Warrant shall be appropriately and proportionately adjusted to reflect any stock dividend, stock split, combination -6- of shares, reclassification, recapitalization, automatic conversion, redemption or other similar event affecting the number or character of outstanding shares of Warrant Stock, other than an adjustment to the conversion price of the Warrant Stock pursuant to the antidilution provisions set forth in the Company's Articles, so that the number and type of securities or other property issuable upon exercise of this Warrant shall be equal to that which would have been issuable with respect to the number of shares of Warrant Stock subject hereto at the time of such event, had such shares of Warrant Stock then been outstanding. (b) Certificate as to Adjustments. In case of any adjustment in the ----------------------------- Exercise Price or number and type of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the Holder in the form of a certificate, certified and confirmed by an officer of the Company, setting forth such adjustment and showing in reasonable detail the facts upon which adjustment is based. 13. NOTICES OF RECORD DATE, ETC. In the event of: (a) any taking by the Company of a record of the holders of Warrant Stock or securities into which the Warrant Stock is convertible for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, or any transfer of all or substantially all the assets of the Company to, or consolidation or merger of, the Company with or into any person, (c) any voluntary or involuntary dissolution, liquidation or winding- up of the Company, (d) a sale of substantially all of the outstanding capital stock of the Company or the issuance of new shares representing the majority of the Company's right to vote, or (e) the initial public offering of the Company's Common Stock, then and in each such event the Company will mail to the Holder a notice specifying the record date for voting or the date of closing , as applicable, of any event (a)-(e) above. Such notice shall be delivered to the Holder at least fifteen (15) days prior to the date of the relevant event. 14. REPRESENTATIONS AND WARRANTIES The Company hereby represents, warrants and agrees that: (a) during the period this Warrant is outstanding, the Company will reserve from its authorized and unissued Warrant Stock a sufficient number of shares to provide for the issuance of Warrant Stock upon the exercise or conversion of this Warrant; (b) during the period this Warrant or the Warrant Stock issuable hereunder is outstanding, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon conversion of the Warrant Stock issuable upon exercise or conversion of this Warrant; -7- (c) the issuance of this Warrant shall constitute full authority to the Company's officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the shares of Warrant Stock issuable upon exercise or conversion of this Warrant; (d) the Company has all requisite legal and corporate power to execute and deliver this Warrant, to sell and issue the Warrant Stock hereunder, to issue the Common Stock issuable upon conversion of the Warrant Stock and to carry out and perform its obligations under the terms of this Warrant; and (e) all corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance of this Warrant by the Company, the authorization, sale, issuance and delivery of the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock, the grant of registration rights as provided herein and the performance of the Company's obligations hereunder has been taken; (f) the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock, when issued in compliance with the provisions of this Warrant and the Articles, will be validly issued, fully paid and nonassessable, and free of any liens or encumbrances, and will be issued in compliance with all applicable federal and state securities laws; and (g) the issuance of the Warrant Stock and the Common Stock issuable upon conversion of the Warrant Stock will not be subject to any preemptive rights, rights of first refusal or similar rights. [This space left blank intentionally] -8- 15. GOVERNING LAW This Warrant shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a duly authorized officer. Dated: December 10, 1996. POINTCAST INCORPORATED Signature: /s/ Christopher Hassett ----------------------------- Name: Christopher Hassett ----------------------------- Title: CEO ----------------------------- Address: 10101 N. DeAnza Blvd. ----------------------------- Cupertino, CA 95014 ----------------------------- -9- NOTICE OF EXERCISE To: PointCast Incorporated (1) The undersigned hereby elects to purchase __________ shares of Series D Preferred Stock of PointCast Incorporated pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: ______________________________ (Name) ______________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. _______________________ ____________________________ (Date) NOTICE OF CONVERSION To: PointCast Incorporated (1) The undersigned hereby elects to convert that portion of the attached Warrant representing the right to purchase ________ shares of Series D Preferred Stock into such number of shares of Series D Preferred Stock of PointCast Incorporated as is determined pursuant to Section 3 of such Warrant, which conversion shall be effected pursuant to the terms of the attached Warrant. (2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: ______________________________ (Name) ______________________________ (Address) (3) The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, except in compliance with applicable federal and state securities laws. _________________________ ______________________________ (Date) ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to _______________________________________________________________________ (Please Print) whose address is_______________________________________________________ (Please Print) Dated: ___________________________________________ Holder's Signature: ______________________________ Holder's Address: ______________________________ ______________________________ Guaranteed Signature: _________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EX-10.26 20 LOAN & SECURITY AGREEMENT Exhibit 10.26 LOAN & SECURITY AGREEMENT THIS LOAN AND SECURITY AGREEMENT entered into as of the 18th day of November, 1997 by and between MetLife Capital Corporation, a Delaware corporation, whose address is 10900 NE 4th Street, Suite 500, Bellevue, WA 98004 ("Lender") and PointCast Incorporated, a California corporation, whose address is 501 Marcara Avenue, Sunnyvale, CA 94086 ("Borrower"). WHEREAS, Lender has agreed to make a commercial loan or loans to Borrower: and WHEREAS, as a condition to making the loans, and in order to secure the repayment thereof, Lender has required Borrower to execute and deliver to Lender this Loan and Security Agreement. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower and Lender agree as follows: 1. CREATION OF SECURITY INTEREST. As security for the due and punctual ----------------------------- payment of any and all of the present and future obligations of the borrower to Lender under this Loan and Security Agreement and the other Loan Documents (as defined below), whether direct or contingent or joint or several, Borrower hereby conveys, assigns and grants to Lender a continuing security interest in all of Borrower's rights, title and interests in and to the equipment described in the Supplemental Security Agreement(s) entered into pursuant to this Loan and Security Agreement from time to time ("Equipment") including all present and future additions, attachments and accessories thereto, all substitutions therefor and replacements thereof and all proceeds thereof, including all proceeds of insurance (such Equipment and property hereinafter called "Collateral"). 2. THE LOANS. --------- (a) Subject to the terms and conditions of this Loan and Security Agreement, lender agrees to make a loan or loans to Borrower. The maximum principal amount of any loan or loans to be made by Lender to Borrower shall be within Lender's discretion, subject to the exercise of Lender's reasonable business judgment, and shall be as stated in the loan commitment letter issued by lender to Borrower, or in the event a commitment letter is not issued by Lender, in Lender's internal credit approval (each such loan or loans shall be referred to as "the Loan Amount"). (b) The Loan Amounts shall be repaid by Borrower as a term loan or term loans ("Term Loan"). The Term Loan shall be evidenced by a promissory note or notes in the form attached hereto as Exhibit "A" ("Term Note"). The payment provisions of each Term Note shall be stated therein. (c) If requested by Borrower, and in accordance with the terms and conditions of Section 3 hereof, Lender shall make interim fundings to Borrower of a Term Loan as partial advances of the Loan Amount ("Interim Loans"). The interim Loans shall either be for the payment of the acquisition cost of any items of Equipment delivered and accepted by Borrower prior to the expiration date of Lender's loan commitment to Borrower ("Commitment Expiration date") or to fund progress payments to the vendor or manufacturer of the Equipment, if the making of progress payments was agreed to by Lender in its commitment or approval to make the loan or loans to Borrower. The Interim Loans shall be evidenced by promissory notes in the form attached hereto as Exhibit "B" ("interim Note"). Interest on all Interim Loans shall be payable as provided therein. The principal amount due under the Interim Loans shall be due as provided in the Interim Notes, at which time, provided no Event of Default hereunder has occurred and is continuing or event which with the passing of time or giving of notice or both would become an Event of Default hereunder has occurred and is continuing. Lender shall consolidate all Interim Loans and convert them to a Term Loan evidenced by a Term Note or Notes. Whether or not a Term Loan is evidenced by one or more Term Notes shall be agreed between Lender and Borrower, or in the absence of such an agreement, as decided by Lender, in the exercise of its reasonable business judgment. (d) In the event that the amount loan pursuant to the Interim Loans is less than the Loan Amount, subject to Borrowers compliance with the terms and conditions of this Loan and Security Agreement (including the satisfaction of the conditions of borrowing set forth in Section 7 of this Loan and Security Agreement including but not limited to providing Lender with a description of the items of Equipment), Lender shall disburse to Borrower the balance of the Loan Amount on the same date that the Interim Loans are converted into a term loan. 3. METHOD FOR BORROWING ON INTERIM LOAN. Borrower shall give Lender at least ------------------------------------ five (5) business days written notice of a request for the disbursement of an Interim Loan ("Request"), specifying the date on which the Interim Loan is to be disbursed. Such Request shall be in the form attached hereto as Exhibit "C". Such Request shall be accompanied by an original copy of the invoice or invoices to be paid from the Interim Loan. Such Request shall constitute a representation and warranty by the Borrower that (i) as of the date of the Request no Event of Default or event which with the passing of time or the giving of notice or both would constitute an Event of Default hereunder has occurred and is continuing and (ii) in the event items of Equipment have been delivered to Borrower, Borrower has unconditionally accepted the Equipment from the vendor thereof. Subject to the conditions of this Loan and Security Agreement, Lender shall disburse the Interim Loan to the invoicing party, or if Borrower shall have paid the amount of such invoice, Lender shall reimburse Borrower, upon receipt of proof of payment from Borrower. 4. CROSS COLLATERAL/CROSS DEFAULT. All Collateral shall secure the payment ------------------------------ and performance of all of Borrower's liabilities and obligations to Lender hereunder and under any of the loan documents relating hereto including, but not limited to all Interim Notes and all Term Notes (the Loan and Security Agreement, the Interim Notes, the Term Notes, the Supplemental Security Agreement(s) and all other loan documents relating hereto may be referred to herein collectively as the Loan Documents"). Lender's security interest in the Collateral shall not be terminated until and unless all of Borrower's obligations to Lender under any of the Loan Documents are fully paid and performed. The occurrence of an event of default under any other of the Loan Documents shall be deemed to be an Event of Default hereunder and an Event of Default hereunder shall be deemed to be an event of default under any other of the Loan Documents. Page 1 of 6 5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants as ------------------------------ follows: (a) Power and Authorization. Borrower has the full power and (corporate) authority to execute deliver and perform Borrower's obligations under the Loan Documents. The execution and delivery of the Loan Documents have been authorized by all requisite corporate (or partnership) action on the part of Borrower. The execution, delivery and performance of the Loan Documents have not constituted and will not constitute a breach, default or violation of or under Borrower's articles of incorporation, by-laws (partnership agreement), or any other agreement, indenture, contract, lease, law, order, decree judgment or injunction to which Borrower is a party or may be bound and have not resulted and will not result in the creation of any lien upon the Equipment pursuant to any agreement, indenture, lease, contract or other instrument to which Borrower is a party, except the lien created by this Loan and Security Agreement. (b) Existence. If Borrower is a corporation, Borrower (i) is duly incorporated, validly existing and in good standing under the laws of its state of incorporation, (ii) has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry out its business as now conducted, and (iii) is duly qualified to transact business as now conducted, and (iii) is duly qualified to transact business as a foreign corporation in each jurisdiction where the Equipment will be located and in the jurisdiction where its principal place of business is located. If Borrower is a partnership, Borrower (i) has been duly formed as a (limited or general) partnership under the laws of the state of its organization, (ii) is comprised of the general partner(s) listed an the Schedule of Partners attached to this Loan and Security Agreement, and (iii) is in good standing under the laws of the state of its formation. (c) Binding Effect. This Loan and Security Agreement constitutes the valid and binding agreement of the Borrower; the Interim Notes and the Term Note, when executed and delivered, will constitute the valid and binding obligations of the Borrower, and the Loan Documents are enforceable in accordance with their terms except as (i) the enforceability thereof may be limited by the bankruptcy laws, and (ii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability, (d) Litigation. There is no action, suit or proceeding pending against, or to the knowledge of the Borrower, threatened against or affecting the Borrower, before any court of arbitrator or any governmental body, agency or official which has not been previously disclosed to the Lender in writing and in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, financial condition or results of operations of the Borrower or which would in any manner draw into question the validity of any of the Loan Documents. (e) Filing of Tax Returns. The Borrower has filed all tax returns required to have been filed and has paid all taxes shown to be due and payable on such returns, including interest and penalties, and all other taxes which are payable by it, to the extent the same have become due and payable. The Borrower knows of no proposed tax assessment against it and all tax liabilities of the Borrower are adequately provided for. (f) Title. The Borrower has or shall have at the time it executes the Term Note good and indefeasible title to the Collateral free and clear of all liens other than the Lender's lien. (g) Compliance with Law. The business and operations of the Borrower have been and are being conducted in accordance with all applicable laws, rules and regulations, other than violations which could not (either individually or collectively) have a material adverse effect on the financial condition or operations of the Borrower. (h) Full Disclosure. All documents, records, instruments, certificates, statements (including, but not by way of limitations financial statements of Borrower) and information provided to Lender by Borrower in connection with this Loan and Security Agreement are true and accurate in all material respects and do not contain any untrue statement, or fail to contain any statement of a material fact necessary to make the statements contained herein or therein not misleading. There is no fact known to the Borrower that Borrower has not disclosed which could materially and adversely affect the financial condition or operations of Borrower. (i) Security Interest. The security interest granted to Lender hereunder is a valid, first priority security interest in the Collateral and has been, or Promptly after the execution of the Supplemental Security Agreement describing the Collateral will be, perfected in accordance with the requirements of all states in which any item of the Collateral is located. (j) Personal Property. Under the laws of the state(s) in which the Collateral is to be located, the Collateral is deemed to consist solely of personal property. (k) Pollution and Environmental Control. Borrower has obtained all permits, licenses and other authorizations which are required under, and is in material compliance with all federal, state, and local laws and regulations relating to pollution, reclamation, or protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, or hazardous or Toxic materials or wastes into air, water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Pollutants, contaminants or hazardous or toxic materials or wastes Borrower shall maintain all such permits, licenses, and authorizations current. 6. COVENANTS. Borrower hereby agrees and covenants as follows: --------- (a) Payment. Borrower shall pay the indebtedness secured hereby as provided herein and in the Interim Notes and Term Notes. (b) Location of Collateral. Borrower will keep the Collateral located at the location or locations stated on the Supplemental Security Agreements provided, however, that Borrower may change the location of the Collateral with Lender's prior written consent. (c) No Liens. Except for the security interest granted hereby or under any other agreement under which Lender is the secured party whether as mortgagee, beneficiary or otherwise, Borrower shall keep the Collateral free and clear of any security interest, lien or encumbrance of any kind and Borrower shall no sell, assign (by operation of law or otherwise) exchange or otherwise dispose of any of the Collateral. Page 2 of 6 (d) Insurance. Borrower shall procure and continuously maintain and pay for (a) all risk physical damage and property insurance covering loss or damage to the equipment for not less than the full replacement value thereof naming Lender as loss payee and (b) bodily injury and property damage combined single limit liability insurance, all in such amounts and against such risks and hazards as are reasonably required by Lender, with insurance companies and pursuant to contracts or policies and with deductibles satisfactory to Lender. All contracts and policies shall include provisions for the protection of Lender notwithstanding any act or neglect of or breach or default by Borrower, shall provide for payment of property insurance proceeds to Lender, shall provide that they may not be modified, terminated or canceled unless Lender is given at least thirty (30) days' advance written notice thereof, and shall provide that the coverage is "primary coverage" for the protection of Borrower or Lender notwithstanding any other coverage carried by Lender protecting against similar risks. Borrower shall promptly notify any appropriate insurer and Lender of each and every occurrence, which may become the basis of a claim or cause of action against the insured and provide Lender with all data pertinent to such occurrence. Borrower shall furnish Lender with certificates of such insurance or copies of policies upon request and shall furnish Lender with renewal certificates not less than thirty (30) days prior to the renewal date. Proceeds of all property insurance are payable first to Lender to the extent of its interest. (e) Financing Statements. At the request of Lender, Borrower will join Lender in executing one or more financing statements pursuant to the Uniform Commercial Code and other documents deemed necessary by Lender under applicable law to record or perfect its security interest in the Collateral, including continuation statements, in form satisfactory to Lender and will pay the cost of filing the same in all public offices wherever filing is deemed by Lender to be necessary or desirable. Borrower hereby authorizes Lender, in such jurisdictions where such action is authorized by law, to effect any such recordation or filing of financing statements or other documents without Borrower's signature thereto. (f) Change of Name or Address. Borrower will immediately notify Lender in writing of any change in its place of business or the adoption or change of any tradename or fictitious business name, and will upon request of Lender, execute any additional financing statements or other similar documents necessary to perfect or maintain its security interest. (g) Use of Equipment, Maintenance. Borrower will cause the Equipment to be used in a careful and proper manner, will comply with and conform to all governmental laws, rules and regulations relating thereto, and will cause the Equipment to be operated in accordance with the manufacturer's or supplier's instructions or manuals and only by competent and duly qualified personnel. Borrower will cause the Equipment to be kept and maintained in good repair, condition and working order and will furnish all parts, replacements, mechanisms, devices and servicing required therefor so that the value, condition and operating efficiency thereof will at all times be maintained and preserved, normal wear and tear excepted. All such repairs, parts, mechanisms, devices and replacements shall immediately, without further act, become part of the Equipment and subject to the security interest created by this Loan and Security Agreement. Borrower will not make any improvement, change, addition or alteration to the Equipment if such improvement, change, addition or alteration will impair the originally intended function or use of the Equipment or impair the value of the Equipment as it existed immediately prior to such improvement, change, addition or alteration. Any part added to the Equipment in connection with any improvement, change, addition or alteration shall immediately, without further act, become part of the Equipment and subject to the security interest created by this Loan and Security Agreement. (h) Inspection. Lender may at any reasonable time or times inspect the Equipment and may at any reasonable time or times inspect the books and records of Borrower. (i) Taxes. Borrower shall promptly pay, when due, all charges, fees, assessments and taxes (excluding all taxes measured by Lender's income) which may now or hereafter be imposed upon the ownership, leasing, possession,, sale or use of the Collateral. Borrower may, in good-faith and by proper proceedings, contest taxes and assessment for which Borrower has created an appropriate reserve in accordance with generally accepted accounting principles consistently applied, so long as any such contest does not result in a lien being imposed on any of the Collateral. (j) Performance by Lender. If Borrower fails to perform any agreement or obligation contained herein, Lender may itself perform, or cause the performance of such agreement or obligation. Borrower will pay, or reimburse Lender, on demand, for any and all fees, including attorneys' fees, costs and expenses of whatever kind or nature incurred by Lender in connection with (i) the creation, preservation and protection of Lender's security interest in the Collateral, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in public offices, (ii) payments or discharge of any taxes or liens upon or in respect of the Collateral, (iii) premiums for insurance with respect to the Equipment and (iv) this Loan and Security Agreement and with protecting, maintaining or preserving the Collateral and Lender's interests therein, whether through judicial proceedings or otherwise, or in connection with defending or prosecuting any actions, suits or proceedings arising out of or related to the Loan and Security Agreement and the Loan Documents or in connection with any debt restructuring, loan workout negotiations or bankruptcy or insolvency case or proceedings. All such amounts shall constitute obligations of Borrower secured by the Collateral. In the event that Borrower fails to perform any of its agreements contained herein, Borrower will, on demand, reimburse Lender for all such expenditures, together with interest thereon from the date of such expenditure until fully reimbursed at the rate of one percent (1%) per month on the outstanding balance of such expenditures or the highest rate permitted by law, whichever is less. (k) Power of Attorney. Borrower hereby irrevocably appoints Lender Borrower's attorney-in-fact with full authority in the place and stead of Borrower and in the name of Borrower or otherwise, from time to time in the Lenders discretion, to take any action and to execute any instrument which Lender may deem necessary or advisable to accomplish the purposes of this Loan and Security Agreement, including, without limitation: (i) to obtain, compromise and adjust insurance required to be paid to Lender; (ii) to ask, demand, collect, sue for, recover, receive, and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (iii) to receive, endorse, and collect any drafts or other instruments, documents, and chattel paper in connection with clause (i) or (ii) above; and (iv) to file any claims or take any action or institute any proceedings which Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Lender with respect to any of the Collateral. (l) No Duties. The powers conferred on Lender hereunder am solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys Page 3 of 6 actually received by it hereunder, Lender shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve right against prior parties or any other rights pertaining to any Collateral. (m) Financial Data. Borrower will furnish to Lender and will cause any guarantor of Borrower's obligations to furnish to Lender on request (i) annual balance sheet and profit and loss statements prepared in accordance with generally accepted accounting principles and practice consistently applied and, if Lender so requires, accompanied by the annual audit report of an Independent certified public accountant reasonably acceptable to Lender, and (ii) all either financial information and reports that Lender may from time to time reasonably request including, if Lender so requires, income tax returns of Borrower and any guarantor of Borrower's obligations hereunder. 7. CONDITIONS OF BORROWING. Lender shall not be obligated to make any loan hereunder unless: (a) The Interim Notes or Term Notes evidencing such loan shall have been duly executed and delivered to Lender. (b) Borrower shall have executed and delivered to Lender the Supplemental Security Agreement describing the Collateral and stating except with respect to progress payment fundings, the location thereof; (c) Except with respect to progress payment fundings, Lender shall have received evidence (as described in Section 6d hereof) that insurance has been obtained in accordance with the provisions of this Loan and Security Agreement; (d) Lender shall have received any and all third party consents, waivers or releases deemed necessary or desirable by it in connection with the loan and the Collateral being financed, including, without limitation, Uniform Commercial Code lien releases and the consent and waiver, in form and substance satisfactory to Lender, of each and every realty owner, landlord and mortgagee holding an interest in or encumbrance on the real property where any of the Collateral is to be located; (e) All filings, recordings and other actions deemed necessary or desirable by Lender in order to establish, protect, pro-serve and perfect its security interest in the Collateral being financed by such loan as a valid perfected first priority security interest shall have been duly effected, Including. without limitation, the filing of financing statements and the recordation of landlord (owners) and/or mortgages waivers or disclaimers, all in form and substance satisfactory to Leader, and all fees, taxes and other charger relating to such filings and recordings shall have been paid by Borrower; (f) The representations and warranties contained in this Loan and Security Agreement shall be true and correct in all respects on and as of the date of the making of any loan hereunder with the same effect as if made on and as of such date; (g) In the sole judgment of Lender, there shall have been no material adverse change in the financial condition, business or operations of Borrower from the most recent date of any financial statement, credit report, business report or similar document submitted to Lender for its review; (h) All Loan Documents shall be satisfactory to Lender's attorneys; and (i) Lender shall have received, in form and substance satisfactory to Lender, such other documents as Lender shall require including, but not limited to, a Request, proof of payment, vendor invoices and certificates of authority and incumbency. 8. DEFAULT. The occurrence of any of the following events, following the giving of any required notice and/or the expiration of any applicable period of grace, shall constitute an event of default ("Event of Default") hereunder: (a) Borrower's default in payment of any Installment of the principal of or interest on any Interim Note or Term Note when and after the same shall become due and payable, whether at the due date thereof or by acceleration or otherwise, which default shall continue unremedied for ton (10) days after receipt by Borrower of written notice thereof; or (b) The failure by Borrower to make payment of any other amount payable hereunder or under any Interim Note or Term Note, and the continuance of such failure for more than ten (10) days after written notice thereof by Lender to Borrower; or (c) The failure by Borrower to perform or observe any covenant, condition, obligation or agreement to be performed or observed by it hereunder, which failure shall continue unremedied for thirty (30) days after written notice thereof by Lender to Borrower; or (d) The occurrence of a default described in Section 4 hereof; or (e) Any warranty, representation or statement made or furnished with respect to the Borrower or the Collateral to Lender by or on behalf of Borrower, in connection with this Loan and Security Agreement, or the indebtedness secured hereby, shall prove to have been false in any adverse, material respect when made or furnished; or (f) Borrower shall become insolvent or bankrupt or make an assignment for the benefit of creditors or consent to the appointment of a trustee or receiver; or a trustee or a receiver shall be appointed for Borrower or for a substantial part of its property without its consent and shall not be dismissed for a period of sixty (60) days; or bankruptcy, reorganization, liquidation, insolvency or dissolution proceedings shall be instituted by or against Borrower and, if instituted against Borrower, shall be consented to or be pending and not dismissed for a period of sixty (60) days; or any execution or writ of process shall be issued under any action or proceeding against Borrower in such capacity whereby any of the Collateral may be taken or restrained; Borrower shall cease doing business as a going concern; or, without the prior written Consent of Lender, Borrower shall sell, transfer or dispose of all or substantially all of its assets or property (excluding, however, any transfer of cash or stock to acquire a business, if such acquisition does not constitute an Event of Default under Section 8(h) and any sole of all or substantially all of Borrower's assets or property that does not constitute an Event of Default under section 8(i)); or Page 4 of 6 (g) The liquidation, consolidation, reorganization (excluding, however, any acquisition by Borrower of a business for cash or stock, if such acquisition does not constitute an Event of Default under Section 8(h) and any merger that does not constitute an Event of Default under Section 8(i)), conversion to an "S" status or dissolution, if Borrower is a corporation or partnership, of Borrower, if in Lender's reasonable opinion, such act shall materially and adversely affect Borrower's ability to perform under any of the Loan Documents: or (h) Without Lender's consent, Borrower (i) acquires another business for cash in excess of (A) $5,000,000 prior to Borrower's initial pubic offering or (B) $15,000,000 thereafter, or (ii) acquires another business for stock if such acquisition would result in a material reduction of Borrower's tangible net worth; or (i) Without Lender's consent, which shall be given or withheld based on Lender's good faith analysis of the credit quality of Borrower's successor and shall not be unreasonably withheld, Borrower (1) sells all or substantially all of its assets and, in conjunction therewith, assigns its obligations under this Loan and Security Agreement without complying with Section 13 hereof, or (2) merges with another entity; provided that, in the event Lender withholds such consent, the Term Loans may be prepaid without penalty or premium; or (j) Any item of Collateral is seized or levied on under legal or governmental process or for any reason Lender deems itself insecure. Lender shall be entitled to deem itself insecure when some event occurs, fails to occur or is threatened or some objective condition exists or is threatened which significantly impairs the prospects that any of Borrower's obligations to Lender will be paid when due or which significantly impairs the value of the Collateral to Lender. The occurrence of an Event of Default shall terminate any commitment or obligation by Lender to make any of the loans contemplated by this Loan and Security Agreement. 9. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default --------------------- hereunder, Lender may, at its option, do any one or more of the following: (a) Declare all obligations of Borrower to Lender to be immediately due and payable, whereupon all unpaid principal of and interest on said indebtedness and other amounts declared due and payable shall be and become immediately due and payable; (b) Take possession of all or any of the Collateral and exclude therefrom Borrower and all others claiming under Borrower, and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to and exercise all rights and powers of Borrower in respect to the Collateral or any part thereof. In the event Lender demands, or attempts to take possession of the Collateral in the exercise of any rights under this Loan and Security Agreement, Borrower promises and agrees to promptly turn over and deliver complete possession thereof to Lender; (c) Require Borrower to assemble the Collateral, or any portion thereof, at a place designated by Lender and reasonably convenient to both parties, and promptly to deliver such Collateral to Lender, or an agent or representative designated by it; (d) Sell, lease or otherwise dispose of the Collateral at public or private sale, without having the Collateral at the place of sale, and upon terms and in such manner as Lender may determine (and Lender may be a purchaser at any sale); and (e) Exercise any remedies of a secured party under the Uniform Commercial Code as adopted in the state where the Collateral is located or any other applicable law. Except as to portions of the Collateral which are perishable or threaten to decline speedily in value or are of a type customarily sold on a recognized market, Lender shall give Borrower at least ten (10) days' prior written notice of the time and place of any public or private sale of the Collateral or other intended disposition thereof to be made. Such notice may be mailed to Borrower at the address set forth in the first paragraph of this Loan and Security Agreement. Borrower hereby specifically agrees (to the extent that applicable law and public policy allows it to effectively do so) that any public or private sale held in accordance with the terms of this Loan and Security Agreement shall, for the purpose of the Uniform Commercial Code as adopted in the state where the Collateral is located and for all other purposes, be deemed to have been conducted in a commercially reasonable manner and in good faith. The proceeds of any sale under Section 9(d) shall be applied as follows: (i) To the repayment of the costs and expenses of retaking, holding and preparing for the sale and the selling of the Collateral (including legal expenses and attorneys' fees) and the discharge of all assessments, encumbrances, charges or liens, if any, on the Collateral prior to the lien hereof (except any taxes. assessments, encumbrances, charges or liens subject to which such sale shall have been made); (ii) To the payment of the whole amount then due and unpaid of the indebtedness of Borrower to Lender; (iii) To the payment of other amounts then secured hereunder; and (iv) The surplus, if any, shall be paid to the Borrower or to whomsoever may be lawfully entitled to receive the same. Lender shall have the right to enforce one or more remedies hereunder, successively or concurrently, and such action shall not operate to stop or prevent Lender from pursuing any further remedy which it may have, and any repossession or retaking or sale of the Collateral pursuant to the terms hereof shall not operate to release Borrower until full payment of any deficiency has been made in cast 10. LIMITATION ON INTEREST. It is the intent of the parties to this Loan and ---------------------- Security Agreement to contract in strict compliance with applicable usury laws from time to time in effect. In furtherance thereof, the parties stipulate and agree that none of the terms and provisions contained in the Loan Documents shall ever be construed to create a contract to pay for the use, forbearance or detention of money at a rate in excess of the maximum interest rate permitted to be charged by applicable law from time to time in effect. Page 5 of 6 11. PERSONAL PROPERTY/TAGS. No item of Equipment will be attached or affixed ---------------------- to realty or any building without Lender's prior knowledge and written consent and waiver of the landlord and the mortgagee, if any, of the real property. If so requested by Lender, Borrower will affix tags supplied by Lender, reflecting Lenders security interest in the Equipment. 12. LOSS AND DAMAGE. Borrower shall bear the risk of damage, loss, theft, or --------------- destruction, partial or complete of the Equipment, whether or not such loss or damage is covered by insurance, Lender agrees to apply toward payment of obligations of Borrower insurance proceeds payable to Lender by reason of such damage, loss, theft, or destruction. In the event of any damage, loss, theft, or destruction, partial or complete, of any item of Equipment, Borrower shall promptly notify Lender in writing and at the option of Lender (a) repair or restore the Equipment to good condition and working order, or (b) replace the Equipment with similar equipment in good repair, condition and working order, or (c) pay Lender, in cash, an amount equal to the unamortized equipment cost for the item or if the Equipment was not purchased with the loan proceeds, the pro rata portion of the outstanding principal balance due under the Interim Note or Term Note, as the case may be, and all other amounts relating to that item of Equipment then due and owing hereunder, and upon payment of that amount, Lender's lien shall be terminated with respect to that item of Equipment only, and Lender will release its interest in that item of Equipment. 13. ASSIGNMENT. Without Lender's consent, which shall be given or withheld ---------- based on Lender's good faith analysis of the credit quality of Borrower's assignee and shall not be unreasonably withheld, Borrower may not assign or transfer any rights under this Loan and Security Agreement or to the Collateral. 14. INDEMNIFICATION. Borrower shall indemnify and hold harmless Lender from --------------- and against any and all claims, losses, liabilities, causes of action, costs and expenses (including the fees of Lender's attorneys) ("Claims") in any way relating to or arising out of this Loan and Security Agreement, the other Loan Documents or the Collateral, except for any Claims resulting solely and directly from Lender's gross negligence or willful misconduct. 15. NOTICES. Whenever Borrower or Lender shall desire to give or serve any ------- notice, demand, request or other communication with respect to this Loan and Security Agreement, each such notice, demand, request or communication shall be in writing and shall be effective only if the same is physically delivered or is by certified mail, postage prepaid, return receipt requested, or by overnight courier, postage prepaid. mailed to the parties at the addresses set forth in the first paragraph of this Loan and Security Agreement, with a copy to Lender's Vice President of Credit. Any party hereto may change its address for such notices by delivering or mailing to the other parties hereto, as aforesaid, a notice of such change. 16. NO WAIVER BY LENDER. By exercising or failing to exercise any of its ------------------- rights, options or elections hereunder, lender shall not be deemed to have waived any breach or default on the part of Borrower or to have released Borrower from any of the obligations secured hereby, unless such waiver or release is in writing and is signed by Lender. In addition, the waiver by Lender of any breach hereof for default in payment of an indebtedness secured hereby shall not be deemed to constitute a waiver of any succeeding breach or default. 17. FURTHER AGREEMENTS. From time to time, Borrower will execute such further ------------------ instruments as Lender may reasonably require, in order to protect, preserve, and maintain the security interest granted hereby. 18. BINDING UPON SUCCESSORS. All agreements, covenants, conditions and ----------------------- provisions of this Loan and Security Agreement shall apply to and bind the successors and assigns of all parties hereto. 19. GOVERNING LAWS. This Loan and Security Agreement shall be governed by the -------------- laws of the State of Washington. 20. AMENDMENT. This Loan and Security Agreement can be modified or rescinded --------- only by a writing expressly referring to this Loan and Security Agreement, signed by both of the parties hereto. 21. INVALIDITY OF PROVISIONS. Every provision of this Loan and Security ------------------------ Agreement is intended to be severable. In the event that any term or provision hereof is declared by a court to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable, then to the extent possible all of the other provisions shall nonetheless remain in full force and effect. IN WITNESS WHEREOF: Borrower and Lender have duly executed this Loan and Security Agreement the day and year first above written. Lender: MetLife Capital Corporation Borrower: PointCast Incorporated By: /s/ Mitch Stevens By: /s/ Philip J. Koen (Print Name): Mitch Stevens (Print Name): Philip J. Koen Title: Vice President Title: Snr VP & CFO Social Security Number (If Borrower is an individual) FEIN: CERTIFICATE OF CORPORATE RESOLUTION The undersigned, being the Secretary _________ of PointCast Incorporated ("Company"), a corporation duly organized and validly existing under the laws of the State of California, hereby certifies that the following resolution was duly adopted in accordance with the articles of incorporation and bylaws of the Company at a meeting of the Board of Directors of the Company held on November 18, 1997 and that the same has not been modified or rescinded and is in full force and effect: "RESOLVED that it is in the best interests of the Company to borrow in the name of the Company from METLIFE CAPITAL CORPORATION ("MetLife"), and further resolved that any one [1] of the following named officers of the, Company is(are) authorized to pledge or mortgage for and on behalf of the Company such personal or real property as this Company may now own or hereafter purchase or in which it may now have or hereafter acquire any interest, to secure the payment of any loans or other indebtedness or liability to MetLife and to execute, on behalf of the Company, a loan and security agreement and any addenda or amendments thereto, any promissory notes, and any other related instruments and documents that MetLife may require in the course of its dealings with the Company, in such form and substance as are deemed to be appropriate by such officer(s), such determination to be conclusively evidenced by such officer(s) execution thereof.
Names Titles Signatures (Print or Type) (Print or Type) Philip Koen Chief Financial Officer /s/ Philip J. Koen Jacklyn A. Karceski Controller /s/ Jacklyn A. Karceski
"Resolved further that this resolution is intended to and does confer upon the above named officers a general authority to deal with MetLife on behalf and in the name of the Company, and this resolution shall apply to all transactions of the Company with MetLife without specifically enumerating them herein. Any and all actions taken by any officer of the Company in connection herewith prior to the date of this resolution are hereby ratified, approved and confirmed in all respects. This resolution shall continue in full force and effect until notice in writing of its revocation shall be given to and received by MetLife." The undersigned further certifies that the signatures appearing opposite the names of the officers in the foregoing resolution the signatures of such individuals and that such individuals hold the offices indicated above. IN WITNESS WHEREOF the undersigned has executed this certificate and affixed the corporate set of the Company thereto this 18th day of November, 1997 (Corporate Seal) /s/ Philip J. Koen Secretary No. 89.001 TERM PROMISSORY NOTE 3,346,590.16 November 18, 1997 FOR VALUED RECEIVED, the undersigned PointCast Incorporated, ("Maker"), promises to pay to the order of MetLife Capital Corporation, ("Payee"), at its office at P.O. Box C-97550, Bellevue, Washington 98009, the principal sum of Three Million Three Hundred Forty-Six Thousand Five Hundred Ninety and 16/100 ($3,346,590.16) Dollars together with interest on unpaid principal from the date of disbursement of such principal amount until payment in full at a rate of Nine and 70/100 percent (9.70%) per annum ("Rate") computed on the basis of a 360 day year of twelve consecutive thirty day months. Interest hereunder shall be paid on the unpaid principal, together with principal, in Thirty-Six (36) installments of One Hundred Six Thousand Six Hundred Fifty-Two and 20/100 ($106,652.20) commencing on November 21, 1997 and monthly thereafter until October 21, 2000, on which date the entire balance of principal and interest unpaid shall be due and payable. It is agreed that each installment, when paid, shall be applied by the holder hereof, first so much as shall be required to the payment of interest accrued as specified hereto, and the balance thereof to the repayment of the principal sum. The Rate expressed above will be adjusted at Loan Closing in accordance with the following formula: The interest rate shall be fixed at 399 basis points (3.99%) over the then weekly average yield of Two (2) year U.S. Treasury Constant Maturities as published in the Federal Reserve Statistical Release H. 15[519]. Except as may be otherwise expressly provided herein, this Note may not be prepaid in whole or in part, except with the prior written consent of Payee. Maker shall have the privilege of prepaying all (but not part) of the then outstanding balance under this Note on September 21, 1999 or on any installment due date thereafter, subject to giving thirty (30) days prior written notice to Payee specifying the date of prepayment and further subject to payment of a prepayment premium equal to the amount, if any, required to offset the adverse impact to Payee of any decline in interest rates. The prepayment premium is determined by (i) calculating the decrease, expressed in basis points (but not less than zero) in the current weekly average yield for Two (2)-year U.S. Treasury Constant Maturities as published in Federal Reserve Statistical Release ----------------------------------- 15(519) (the "Index") from the weekly average yield of 5.71% as of November 21, 1997 to the Friday (or, if Friday is not a business day, the last business day) of the week immediately preceding the prepayment date (ii) dividing the difference by 100, (iii) multiplying the result by the applicable "Premium Factor" set forth below, and (iv) multiplying the product by the principal to be prepaid. Any prepayment shall be applied first to the prepayment premium, if any, next to accrued interest and late charges (if any), and thereafter to the principal when outstanding. The Premium Factor shall be the amount shown on the following chart for the month in which prepayment occurs.
NUMBER OF MONTHS REMAINING (YEARS) PREMIUM FACTOR 18 - 13 (2) .010 12 - 1 (1) .005
In the event the Federal Reserve Board ceases to publish Statistical Release H 15(519), then the decrease in Two (2)-Year U.S. Treasury Constant Maturities will be determined from another source designated by Payee. If Maker shall have given to Payee notice of Makers intention to so prepay, Maker Shall not then be entitled to withdraw such notice, and the indebtedness proposed to be prepaid in such notice together with the aforesaid prepayment fee, if applicable, shall be due and payable upon the date specified for such prepayment in such notice. Upon the occurrence of an Event of Default and acceleration of payment of indebtedness evidenced hereby during a period open to prepayment, Maker shall pay to Payee, in addition to any and all other sums due and payable hereunder, as liquidated damages for the loss of Payee's investment and not as a penalty, an amount equal to the prepayment fee which would have been payable hereunder in such date of acceleration in the event of a voluntary prepayment. Maker and Payee agree that the foregoing amounts do not constitute penalties but rather constitute reasonable calculations of the investment loss that would be sustained by Payee in the event of such prepayment. It is specifically understood and agreed by Maker that, in the event of a default under this Note or under any instrument securing the Note, a tender of payment of the unpaid principal and accrued interest then outstanding shall be deemed a prepayment, and, accordingly, said tender must include the premium herein above required, or if said tender is made prior to the time this privilege is operative, then said tender must include a premium equal to six (6) months' interest at the Rate computed on the principal amount so tendered. It is further understood and agreed by Maker that Payee shall not be obligated to accept said tender, and said tender shall for all purposes be deemed ineffectual and deficient, unless said tender shall include the premium herein above required. In the event that Payee does not receive any payment on the date due, Maker will pay Payee a late charge of five percent (5%) of the payment outstanding together with the payment and, provided said sum is received within ten (10) days of the date due, Payee agrees not to demand immediate payment of the whole sum of principal and interest as otherwise permitted herein. If, from any circumstances whatsoever, payment of any obligation due under this Note at the time such performance shall be due shall involve exceeding the maximum amount currently prescribed by any applicable usury statute or any other applicable law, then such obligation shall be reduced to such maximum amount, so that in no event shall any payment be possible under this Note, or under any other instrument evidencing or securing the indebtedness evidenced hereby, that is in excess of such maximum amount. In the event that an Event of Default shall occur under the Loan and Security Agreement (as hereinafter defined) or any other instrument now or hereafter securing repayment hereof, following any required notice and/or the expiration of any applicable period of grace, then, and in such event, the principal indebtedness evidenced hereby, and any other sums advanced hereunder, together with all unpaid interest accrued thereon, shall, at the option of Payee, at once become due and payable and may be collected forthwith, regardless of the stipulated date of maturity. TIME IS OF THE ESSENCE WITH RESPECT TO THIS NOTE. Interest shall accrue on the outstanding principal for so long as such default continues, regardless of whether or not there has been an acceleration of the indebtedness evidenced hereby as set forth herein, at the rate equal to the lesser of fifteen percent (15%) per annum or the maximum rate allowable under law. All such interest shall be paid at the time of and as a condition precedent to the curing of any such default should Payee, at its sole option, allow such default to be cured. In the event this Note, or any part thereof, is collected by or through an attorney-at-law, Maker agrees to pay all costs of collection including, but not limited to, reasonable attorneys' fees, whether or not suit is filed. This Note is one of the notes referred to in and is Secured by the Loan and Security Agreement dated November 18, 1997 between Maker and Payee. The terms of the Loan and Security Agreement are incorporated herein by reference. Maker waives any right of exemption and waives presentment, protest and demand and notice of protest, demand and of dishonor and nonpayment of this Note, and consents that any holder hereof shall have the right, without notice, to grant any extension or extensions of time for payment of this Note or any part thereof or any other indulgences or forbearances whatsoever, or may release any of the security for this Note without in any way affecting the liability of any other party for the payment of this Note. The due payment and performance of Maker's obligations hereunder shall be without regard to any counterclaim, right of offset or any other counterclaim whatsoever which Maker may have against Payee and without regard to any other obligations of any nature whatsoever which Payee may have to Maker, and no such counterclaim or offset shall be asserted by Maker in any action, suit or proceeding instituted by Payee for payment of Maker's obligations hereunder. This Note and the Loan and Security Agreement shall be governed by and construed in accordance with the laws of the State of Washington. Maker acknowledges that there is no presumption that the value of the property securing this Note is equal to the face amount of the Note, and that a deficiency judgment may be necessary In proceedings taken for enforcement hereof. No amendment to this Note shall be binding upon Payee unless it is in writing and duly signed by Payee. IN WITNESS WHEREOF, the Maker has caused these presents to be duly signed the date first above written. Borrower: PointCast Incorporated By: /s/Philip J. Koen Witness: (Print Name) Philip J. Koen Title: Snr VP & CFO EX-10.27 21 REVOLVING CREDIT LOAN & SECURITY AGREEMENT Exhibit 10.27 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (ACCOUNTS AND INVENTORY) OBLIGOR # NOTE# AGREEMENT DATE August 4,1997 CREDIT LIMIT INTEREST RATE OFFICER NO./INITIALS $5,000,000 B + 0.00% 487O3 Mary Beth Suhr 8.50% THIS AGREEMENT is entered into on August 4, 1997, between Comerica Bank- California ("Bank") as secured party, whose Headquarter Office is 333 West Santa Clara Street, San Jose, California and Pointcast Incorporated ("Borrower"), a California corporation whose sole place of business (if it has only one), chief executive office (if it has more than one place of business) or residence (if an individual) is located at 501 Macara Avenue, Sunnyvale, California. The parties agree as follows: 1. DEFINITIONS. ----------- 1.1 "Agreement" as used in this Agreement means and includes this Revolving Credit Loan & Security Agreement (Accounts and Inventory), any concurrent or subsequent rider to this Revolving Credit Loan & Security Agreement (Accounts and Inventory) and any extensions, supplements, amendments or modifications to this Revolving Credit Loan & Security Agreement (Accounts and Inventory) and to any such rider. 1.2 "Bank Expenses" as used in this Agreement means and includes: all reasonable costs or expenses required to be paid by Borrower under this Agreement which are paid or advanced by Bank; taxes and insurance premiums of every nature and kind of Borrower paid by Bank; filing, recording, publication and search fees, appraiser fees, auditor fees and costs, and title insurance premiums paid or incurred by Bank in connection with Bank's transactions with Borrower; costs and expenses incurred by Bank in collecting the Receivables (with or without suit) to correct any default or enforce any provision of this Agreement, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, disposing of, preparing for sale and/or advertising to sell the Collateral, whether or not a sale is consummated; costs and expenses of suit incurred by Bank in enforcing or defending this Agreement or any portion hereof, including, but not limited to, expenses incurred by Bank in attempting to obtain relief from any stay, restraining order, injunction or similar process which prohibits Bank from exercising any of its rights or remedies; and reasonable attorneys' fees and expenses incurred by Bank in advising, structuring, drafting, reviewing, amending, terminating, enforcing, defending or concerning this Agreement, or any portion hereof or any agreement related hereto, whether or not suit is brought. Bank Expenses shall include Bank's in- house legal charges at reasonable rates. 1.3 "Base Rate" as used in this Agreement means that variable rate of interest so announced by Bank at its headquarters office in San Jose, California as its "Base Rate" from time to time and which serves as a basis upon which effective rates of interest are calculated for those loans making reference thereto. 1 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) 1.4 "Borrower's Books" as used in this Agreement means and includes all of the Borrower's books and records including but not limited to: minute books; ledgers; records indicating, summarizing or evidencing Borrower's assets, liabilities, Receivables, business operations or financial conditions, and all information relating thereto, computer programs; computer disk or tape files; computer printouts; computer runs; and other computer prepared information and equipment of any kind. 1.5 "Borrowing Base" as used in this Agreement means the greater of (i) $2,000,000, or (ii) the sum of (1) eighty percent (80%) of the net amount of Eligible Accounts after deducting therefrom all payments, adjustments and credits applicable thereto ("Accounts Receivable Borrowing Base"); and (2) the amount, if any, of the advances against Inventory agreed to be made pursuant to any Inventory Rider ("Inventory Borrowing Base"), or other, rider, amendment or modification to this Agreement, that may now or hereafter be entered into by Bank and Borrower. 1.6 "Cash Flow" as used in this Agreement means, for any applicable period of determination, the Net Income (after deduction for income taxes and other taxes of such person determined by reference to income or profits of such person) for such period, plus, to the extent deducted in computation of such Net Income, the amount of depreciation and amortization expenses and the amount of deferred tax liability during such period, all as determined in accordance with GAAP. 1.7 "Collateral" as used in this Agreement means and includes each and all of the following: the Receivables; the Intangibles; the negotiable collateral, the Inventory; all money, deposit accounts and all other assets of Borrower in which Bank receives a security interest or which hereafter come into the possession, custody or control of Bank; and the proceeds of any of the foregoing, including, but not limited to, proceeds of insurance covering the collateral and any and all Receivables, Intangibles, negotiable collateral, Inventory, equipment, money, deposit accounts or other tangible and intangible property of borrower resulting from the sale or other disposition of the collateral, and the proceeds thereof. Notwithstanding anything to the contrary contained herein, collateral shall not include (i) any waste or other materials which have been or may be designated as toxic or hazardous by Bank (ii) any equipment or other fixed assets of the Borrower leased from or financed by third parties to the extent the contracts evidencing such lease or financing prohibit the granting by Borrower of any security interest therein, provided such equipment shall automatically be included in the Collateral upon the termination of such contracts or the consent to such security interest by such third party. Notwithstanding the foregoing, the term "Collateral" shall not include any general intangibles or rights under licenses or other contracts of Borrower (whether owned or held as licensee or lessee, or otherwise) to the extent that (i) such general intangibles or rights under licenses or other contracts are not assignable or capable of being encumbered as a matter of law or under the terms of the license, lease or other agreement applicable thereto (but solely to the extent that such restriction shall be enforceable under applicable law) without the consent of the licensor or lessor thereof or other applicable party thereto and (ii) such consent has not been obtained: provided, however, that the foregoing grant of security interest shall extend to, and the term "Collateral" shall include, (A) any general intangible which is an account or a proceed of, or otherwise related to the 2 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) enforcement or collection of, any account or goods which are the subject of any account, and (B) any and all proceeds of any general intangibles which are otherwise excluded to the extent that the assignment or encumbrance of such proceeds is not so restricted, and (C) upon obtaining the consent of any such licensor, lessor or other applicable party with respect to any such otherwise excluded general intangibles, such general intangibles as well as any and all proceeds thereof that might theretofore have been excluded from such grant of a security interest and the term "Collateral". 1.8 "Credit" as used in this Agreement means all Obligations, except those obligations arising pursuant to any other separate contract, instrument, note, or other separate agreement which, by its terms, provides for a specified interest rate and term. 1.9 "Current Assets" as used in this Agreement means, as of any applicable date of determination, all cash, non-affiliated customer receivables, United States government securities, claims against the United States government, and inventories. 1.10 "Current Liabilities" as used in this Agreement means, as of any applicable date of determination (i) all liabilities of a person that should be classified as current in accordance with GAAP, including without limitation any portion of the principal of the Indebtedness classified as current, plus (ii) to the extent not otherwise included, all liabilities of the Borrower to any of its affiliates whether or not classified as current in accordance with GAAP. 1.11 "Daily Balance" as used in this Agreement means the amount determined by taking the amount of the Credit owed at the beginning of a given day, adding any new Credit advanced or incurred on such date, and subtracting any payments or collections which are deemed to be paid and are applied by Bank in reduction of the Credit on that date under the provisions of this Agreement. 1.12 "Eligible Accounts" as used in this Agreement means and includes those accounts of Borrower which are due an payable within thirty (30) days, or less, from the date of invoice, have been validly assigned to Bank and strictly comply with all of Borrower's warranties and representations to Bank; but Eligible Accounts shall not include the following: (a) accounts with respect to which the account debtor is an officer, employee, partner, or joint venturer of Borrower; (b) accounts with respect to which goods are placed on consignment, guaranteed sale or other terms by reason of which the payment by the account debtor may be conditional; (c) accounts with respect to which the account debtor is not a resident of the United States; (d) accounts with respect to which the account debtor is the United States or any department, agency or instrumentality of the United States; (e) accounts with respect to which the account debtor is any State of the United States or any city, county, town municipality or division thereof, (f) accounts with respect to which the account debtor is a subsidiary of, related to, affiliated or has common shareholders, officers or directors with Borrower; (g) accounts with respect to which Borrower is or may become liable to the account debtor for goods sold or services rendered by the account debtor to Borrower; (h) accounts not paid by an account debtor within one hundred twenty (120) days from the date of the invoice; (i) accounts with respect to which account debtors dispute liability or make any 3 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) claim, or have any defense, crossclaim, counterclaim, or offset; (j) accounts with respect to which any Insolvency Proceeding is filed by or against the account debtor, or if an account debtor becomes insolvent, fails or goes out of business; and (k) accounts owed by any single account debtor which exceed twenty percent (20%) of all of the Eligible Accounts; and (l) accounts with a particular account debtor on which over twenty-five percent (25%) of the aggregate amount owing is greater than one hundred twenty (120) days from the date of the invoice. 1.13 "Event of Default" as used in this Agreement means those events described in Section 7 contained herein below. 1.14 "Fixed Charges" as used in this Agreement means and includes, for any applicable period of determination, the sum, without duplication, of (a) all interest paid or payable during such period by a person on debt of such person, plus (b) all payments of principal or other sums paid or payable during such period by such person with respect to debt of such person having a final maturity more than one year from the date of creation of such debt, plus (c) all debt discount and expense amortized or required to be amortized during such period by such person, plus (d) the maximum amount of all rents and other payments paid or required to be paid by such person during such period under any lease or other contract or arrangement providing for use of real or person property in respect of which such person is obligated as a lessee, use or obligor, plus (e) all dividends and other distributions paid or payable by such person or otherwise accumulating during such period on any capital stock of such person, plus (f) all loans or other advances made by such person during such period to any Affiliate of such person. 1.15 "GAAP" as used in this Agreement means as of any applicable period, generally accepted accounting principles in effect during such period. 1.16 "Insolvency Proceeding" as used in this Agreement means and includes any proceeding or case commenced by or against the Borrower, or any guarantor of Borrower's Obligations, or any borrower's account debtors, under any provisions of the Bankruptcy Code, as amended, or any other bankruptcy or insolvency law, including but not limited to assignments for the benefit of creditors, formal or informal moratoriums, composition or extensions with some or all creditors, any proceeding seeking reorganization, arrangement or any other relief under the Bankruptcy code, as amended, or any other bankruptcy or insolvency law. 1.17 "Intangibles" as used in this Agreement means and includes all borrower's present and future general Intangibles and other personal property (including, without limitation, any and all rights in any legal proceeding, goodwill, patents, trade names, copyrights, trademarks, blueprints, drawings, purchase orders, computer programs, computer disks, computer tapes, literature, reports, catalogs and deposit accounts) other than goods and Receivables, as well as Borrower's Books relating to any of the foregoing. 1.18 "Inventory" as used in this Agreement means and includes all present and future inventory in which Borrower has any interest, including, but not limited to, goods held 4 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) by Borrower for sale or lease or to be furnished under a contract of service and all of Borrower's present and future raw materials, work in process, finished goods, advertising, materials and packing and shipping materials, wherever located and any documents of title representing any of the above, and any equipment, fixtures or other property used in the storing moving preserving, identifying, accounting for and shipping or preparing for the shipping of inventory, and any and all other items hereafter acquired by Borrower by way of substitution, replacement, return, repossession or otherwise, and all additions and accessions thereto, and the resulting product or mass, and any documents of title respecting any of the above. 1.19 "Net Income" as used in this Agreement means the net income (or loss) of a person for any period determined in accordance with GAAP but excluding in any event: a. any gains or losses on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, and any taxes on the excluded gains and any tax deductions or credits on account on any excluded losses; and b. in the case of the Borrower, net earnings of any Person in which Borrower has an ownership interest, unless such net earnings shall have actually been received by Borrower in the form of cash distributions. 1.20 "Judicial Officer or Assignee" as used in this Agreement means and includes any trustee, receiver, controller, custodian, assignee for the benefit of creditors or any other person or entity having powers or duties like or similar to the powers and duties of trustee, receiver, controller, custodian or assignee for the benefit of creditors. 1.21 "Obligations" as used in this Agreement means and includes any and all loans, advances, overdrafts, debts, liabilities (including, without limitation, any and all amounts Charged to Borrower's account pursuant to any agreement authorizing Bank to charge Borrower's account), obligations, lease payments, guaranties, covenants and duties owing by Borrower to Bank of any kind and description whether advanced pursuant to or evidenced by this Agreement; by any note or other instrument; or by any other agreement between Bank and Borrower and whether or not for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including, without limitation, any debt, liability or obligation owing from Borrower to others which Bank may have obtained by assignment, participation, purchase or otherwise, and further including, without limitation, all interest not paid when due and all Bank Expenses which Borrower is required to pay or reimburse by this Agreement, by law, or otherwise. 1.22 "Person" or "person" as used in this Agreement means and includes any individual, corporation, partnership, joint venture, association, trust unincorporated association, joint stock company, government, municipality, political subdivision or agency, or other entity. 1.23 "Receivables" as used in this Agreement means and includes all presently existing and hereafter arising accounts, instruments, documents, chattel paper, general 5 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) intangibles, all other forms of obligations owing to Borrower, all of Borrower's rights in, to and under all purchase orders heretofore or hereafter received, all moneys due to Borrower under all contracts or agreements (whether or not yet earned or due), all merchandise returned to or reclaimed by Borrower and the Borrower's books (except minutes books) relating to any of the foregoing. 1.24 "Subordinated Debt" as used in this Agreement means indebtedness of the Borrower to third parties which has been subordinated to the Obligations pursuant to a subordination agreement in form and content reasonably satisfactory to the Bank. 1.25 "Tangible Effective Net Worth" as used in the Agreement means net worth as determined in accordance with GAAP consistently applied, increased by Subordinated Debt, if any, and decreased by the following: patents, licenses, goodwill, subscription lists, organization expenses, trade receivables converted to notes, money due from affiliates (including officers, directors, subsidiaries and commonly held companies). 1.26 "Tangible Net Worth" as used in the Agreement means, as of any applicable date of determination, the excess of a. the net book value of all assets of a person (other than patents, patent rights, trademarks, trade names, franchises, copyrights, licenses, goodwill, and similar tangible assets) after all appropriate deductions in accordance with GAAP (including, without limitation, reserves for doubtful receivables, obsolescence, depreciation and amortization), over b. all Total Liabilities of such person. 1.27 "Total Liabilities" as used in this Agreement means the total of all items of indebtedness, obligation or liability which, in accordance with GAAP consistently applied, would be included in determining the total liabilities of the Borrower as of the date Total Liabilities is to be determined, including without limitation (a) all obligations secured by any mortgage, pledge, security interest or other lien on property owned or acquired, whether or not the obligations secured thereby shall have been assumed; (b) all obligations which are capitalized lease obligations; and (c) all guaranties, endorsements or other contingent or surety obligations with respect to the indebtedness of others, whether or not reflected on the balance sheets of the Borrower, including any obligation to furnish funds, directly or indirectly through the purchase of goods, supplies, services, or by way of stock purchase, capital contribution, advance or loan or any obligation to enter into a contract for any of the following. 1.28 "Working Capital" as used in this Agreement means, as of any applicable date of determination, Current Assets less Current Liabilities. 1.29 Any and all terms used in this Agreement shall be construed and defined in accordance with the meaning and definition of such terms under and pursuant to the California Uniform Commercial Code (hereinafter referred to as the "Code") as amended. 6 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) 2. LOAN AND TERMS OF PAYMENTS. -------------------------- For value received, Borrower promises to pay to the order of Bank such amount, as provided for below, together with interest, as provided for below. 2.1 Upon the request of Borrower, made at any time and from time to time during the term hereof, and so long as no Event of Default has occurred, Bank shall lend to Borrower an amount equal to the Borrowing Base; provided, however, that in no event shall Bank be obligated to make advances to Borrower under this Section 2.1 whenever the Daily Balance exceeds, at any time, either the Borrowing Base or the sum of Five Million and no/100 Dollars ($5,000,000), such amount being referred to herein as an "Overadvance". 2.2 Except as hereinbelow provided, the Credit shall bear interest, on the Daily Balance owing, at a rate of no (0.00) percentage points per annum above the Base Rate (the "Rate"). The Credit shall bear interest, from and after the occurrence of an Event of Default and without constituting a waiver of any such Event of Default, on the Daily Balance owing, at a rate of three (3) percentage points per annum above the Rate. All interest chargeable under this Agreement that is based upon a per annum calculation shall be computed on the basis of a three hundred sixty (360) day year for actual days elapsed. The Base Rate as of the date of this Agreement is eight and 500/1000 percent (8.50%) per annum. In the event that the Base Rate announced is, from time to time hereafter changed, adjustment in the Rate shall be made and based on the Base Rate in effect on the date of such change. The Rate, as adjusted, shall apply to the Credit until the Base Rate is adjusted again. All interest payable by Borrower under the Credit shall be due and payable on the first day of each calendar month during the term of the Agreement and Bank may, at its option, elect to treat such interest and any and all Bank Expenses as advances under the Credit, which amounts shall thereupon constitute Obligations and shall thereafter accrue interest at the rate applicable to the Credit under the terms of the Agreement. 3. TERM. ---- 3.1 This Agreement shall remain in full force and effect until March 31, 1999, or until terminated by notice by Borrower. Notice of such termination by Borrower shall be effectuated by providing Bank written notice not less than three (3) days prior to the effective date of such termination, addressed to the Bank at the address set forth herein and the termination shall be effective as of the date so fixed in such notice. Notwithstanding the foregoing, while an Event of Default is continuing, Bank may terminate this Agreement at any time without notice. Notwithstanding the foregoing, should either Bank or Borrower become insolvent or unable to meet its debts as they mature, or fail, suspend, or go out of business, the other party shall have the right to terminate this Agreement at any time without notice. On the date of termination all Obligations shall become immediately due and payable without notice or demand; no notice of termination by Borrower shall be effective until Borrower shall have paid all Obligations (other than inchoate indemnity obligations) to Bank in full. Notwithstanding termination, until all Obligations (other than inchoate indemnity obligations) have been fully satisfied, Bank shall retain its security interest in all existing 7 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) Collateral and Collateral arising thereafter, and Borrower shall continue to perform all of its Obligations. 3.2 After termination and when Bank has received payment in full of Borrower's Obligations to Bank, Bank shall reassign to Borrower all Collateral held by Bank, and shall execute a termination of all security agreements and security interests given by Borrower to Bank, upon the execution and delivery of mutual general releases. 4. CREATION OF SECURITY INTEREST. ----------------------------- 4.1 Borrower hereby grants to Bank a continuing security interest in all presently existing and hereafter arising Collateral in order to secure prompt repayment of any and all Obligations owed by Borrower to Bank and in order to secure prompt performance by Borrower of each and all of its covenants and Obligations under the Agreement and otherwise created. Bank's security interest in the Collateral shall attach to all Collateral without further act on the part of Bank or Borrower. In the event that any Collateral, including proceeds, is evidenced by or consists of a letter of credit, advice of credit, instrument, money, negotiable documents, chattel paper or similar property (collectively "Negotiable Collateral"), Borrower shall, immediately upon receipt thereof, endorse and assign such Negotiable Collateral over to Bank and deliver actual physical possession of the Negotiable Collateral to Bank. 4.2 Bank's security interest in Receivables shall attach to all Receivables without further act on the part of Bank or Borrower. Upon request from Bank, Borrower shall provide Bank with schedules describing all Receivables created or acquired by Borrower (including without limitation agings listing the names and addresses of, and amounts owing by date by account debtors), provided, however, Borrower's failure to execute and deliver such schedules shall not affect or limit Bank's security interest and other rights in and to the Receivables. Together with each schedule, Borrower shall furnish Bank with copies of Borrower's customers' invoices or the equivalent, and original shipping or delivery receipts for all merchandise sold, and Borrower warrants the genuineness thereof. Upon the occurrence and during the continuance of an Event of Default, Bank or Bank's designee may notify customers or account debtors of collection costs and expenses to Borrower's account but, unless and until Bank does so or gives Borrower other written instructions, Borrower shall collect all Receivables for Bank, receive in trust all payments thereon as Bank's trustee, and, if so requested to do so from Bank, Borrower shall immediately deliver said payments to Bank in their original form as received from the account debtor and all letters of credit, advices of credit, instruments, documents, chattel paper or any similar property evidencing or constituting Collateral. The receipt of any check or other item of payment by Bank shall not be considered a payment on account until such check is honored when presented for payment. 4.3 Bank's security interest in Inventory shall attach to all Inventory without further act on the part of Bank or Borrower. Upon Bank's request following the occurrence and during the continuance of an Event of Default Borrower will from time to time at Borrower's expense pledge, assemble and deliver such Inventory to Bank or to a third party 8 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) as Bank's bailee; or hold the same in trust for Bank's account or store the same in a warehouse in Bank's name; or deliver to Bank documents of title representing said Inventory; or evidence of Bank's security interest in some other manner acceptable to Bank. 4.4 Borrower shall execute and deliver to Bank concurrently with Borrower's execution of this Agreement, and at any time or times hereafter at the request of Bank, all financing statements, continuation financing statements, security agreements, mortgages, assignments, certificates of title, affidavits, reports, notices, schedules of accounts, letters of authority and all other documents that Bank may request, in form satisfactory to Bank, to perfect and maintain perfected Bank's security interest in the Collateral and in order to fully consummate all of the transactions contemplated under this Agreement. Effective upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably makes, constitutes and appoints Bank (and any of Bank's officers, employees or agents designated by Bank) as Borrower's true and lawful attorney-in-fact with owner to sign the name of Borrower on any financing statements, continuation financing statements, security agreement, mortgage, assignment, certificate of title, affidavit, letter of authority, notice of other similar documents which must be executed and/or filed in order to perfect or continue perfected Bank's security interest in the Collateral. Borrower shall make appropriate entries in Borrower's Books disclosing Bank's security interest in the Receivables. Bank (through any of its officers, employees or agents) all have the right at any time or times hereafter during Borrower's usual business hours, or during the usual business hours of any third party having control over the records of Borrower, to inspect and verify Borrower's Books in order to verify the amount or condition of, or any other matter, relating to, said Collateral and Borrower's financial condition. 4.5 Effective only while an Event of Default is continuing, Borrower appoints Bank or any other person whom Bank may designate as Borrower's attorney-in-fact, with power to endorse Borrower's name on any checks, notes, acceptances, money order, drafts or other forms of payment or security that may come into Bank's possession; to sign Borrower's name on any invoice or bill of lading relating to any Receivables, on drafts against account debtors, on schedules and assignments of Receivables, on verifications of Receivables and on notices to account debtors; to establish a lock box arrangement and/or to notify the post office authorities to change the address for delivery of Borrower's mail addressed to Borrower to an address designated by Bank, to receive and open all mail addressed to Borrower, and to retain all mail related to the Collateral and forward all other mail to Borrower; to send, whether in writing or by telephone, requests for verification of Receivables; and to do all things necessary to carry out this Agreement. Borrower ratifies and approves all acts of the attorney-in-fact. Neither Bank nor its attorney-in-fact will be liable for any acts or omissions or for any error of judgement or mistake of fact or law. This power being coupled with an interest, is irrevocable so long as any Receivables in which Bank has a security interest remain unpaid and until the Obligations have been fully satisfied. 4.6 Effective only while an Event of Default is continuing, in order to protect or prefect any security interest which Borrower is granted hereunder, Borrower may, in its sole discretion, discharge any lien or encumbrance or bond the same, pay any insurance, maintain 9 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) guards, warehousemen, or any personnel to protect the Collateral, pay any service bureau, or, obtain any records, and all costs for the same shall be added to the Obligations and shall be payable on demand. 4.7 Borrower agrees that Bank may provide information relating to this Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and services providers. Notwithstanding any provision of this Agreement to the contrary, prior to the occurrence of an Event of Default, Borrower shall not be required to disclose, permit inspection, examination, copying or making extracts of, or discuss, any document, information or other matter that (i) constitutes non- financial trade secrets or non-financial proprietary information, or (ii) the disclosure of which to Bank, or their designated representative, is then prohibited by (a) law, or (b) an agreement binding on the Borrower that was not entered into by the Borrower for the primary purpose of concealing information from the Bank. In handling any confidential information Bank and all employees and agents of Bank, including but not limited to accountants, shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) to the subsidiaries or affiliates of Bank in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Obligations, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of Bank when disclosed to Bank, or becomes part of the public domain after disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a third party, provided Bank does not have actual knowledge that such third party is prohibited from disclosing such information. 5. CONDITIONS PRECEDENT. -------------------- 5.1 Conditions precedent to the making of the loans and the extension of the financial accommodations hereunder, Borrower shall execute, or cause to be executed, and deliver to Bank, in form and substance satisfactory to Bank and its counsel, the following: a. This Agreement and other documents required by Bank; b. Financing statements (Form UCC-1) in form satisfactory to Bank for filing and recording with the appropriate governmental authorities; c. If Borrower is a corporation, the certified extracts from the minutes of the meeting of its board of directors, authorizing the borrowings and the granting of the 10 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) security interest provided for herein and authorizing specific officers to execute and deliver the agreements provided for herein; d. If Borrower is a corporation, then a certificate of good standing showing that Borrower is in good standing under the laws of the state of its incorporation and certificates indicating that Borrower is qualified to transact business and is in good standing in any other state in which it conducts business where the failure to be so qualified could reasonably be expected to have a material adverse effect; e. If Borrower is a partnership, then a copy of Borrower's partnership agreement certified by each general partner of Borrower; f. UCC searches, tax lien and litigation searches, fictitious business statement filings, insurance certificates, notices or other similar documents which Bank may require and in such form as Bank may require, in order to reflect, perfect or protect Bank's first priority security interest in the Collateral and in order to fully consummate all of the transactions contemplated under this Agreement; g. Evidence that Borrower has obtained insurance and acceptable endorsements; and h. Warranties and representations of officers. 6. WARRANTIES REPRESENTATIONS AND COVENANTS. ---------------------------------------- 6.1 If so requested by Bank, Borrower shall, at such intervals designated by Bank, during the term hereof execute and deliver a Report of Accounts Receivable or similar report, in form customarily used by Bank. Borrower's Borrowing Base at all times pertinent hereto shall not be less than the advances made hereunder. Bank shall have the right to recompute Borrower's Borrowing Base in conformity with this Agreement. 6.2 If any warranty is breached as to any account, or any account is not paid in full by an account debtor within ninety (90) days from the date of invoice, or an account debtor disputes liability or makes any claim with respect thereto, or a petition in bankruptcy or other application for relief under the Bankruptcy Code or any other insolvency law is filed by or against an account debtor, or an account debtor makes an assignment for the benefit of creditors, becomes insolvent, fails or goes out of business, then Bank may deem ineligible any and all accounts owing by that account debtor, and reduce Borrower's Borrowing Base by the amount thereof. Bank may retain its security interest in all Receivables and accounts, whether eligible or ineligible, until all Obligations (other than inchoate indemnity obligations) have been fully paid and satisfied. Returns and allowances, if any, as between Borrower and its customers, will be on the same basis and in accordance with the usual customary practices of the Borrower, as they exist at this time. After the occurrence of an Event of Default and during the continuance thereof, Borrower hereunder, no discount, credit or allowance shall be granted to any account debtor by Borrower and no return of merchandise shall be accepted by Borrower without Bank's consent. Bank may, after default by Borrower, settle or adjust 11 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) disputes and claims directly with account debtors for amounts and upon terms which Bank considers advisable, and in such cases Bank will credit Borrower's account with only the net amounts received by Bank in payment of the accounts, after deducting all Bank Expenses in connection therewith. 6.3 Borrower warrants, represents, covenants and agrees that: a. Borrower has good and marketable title to the Collateral. Bank has and shall continue to have a first priority perfected security interest in and to the Collateral. The Collateral shall at all times remain free and clear of all liens, encumbrances and security interests (a "Lien") (except those in favor of Bank except for Permitted Liens). "Permitted Liens" shall mean (i) the Lien in favor of Bank, (ii) any Liens existing on the date of this Agreement and disclosed to Bank prior to signing this Loan and Security Agreement, (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and as to which adequate reserves are maintained on Borrower's Books in accordance with GAAP, provided the same have no priority over any of Bank's security interests; (iv) Liens (a) upon or in any equipment acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment, or (b) existing on such equipment at the time of its acquisition, provided that -------- the Lien is confined solely to the property so acquired and improvements thereon, accessions and additions thereto, replacements and proceeds thereof; (v) leases or subleases and licenses or sublicenses granted to others in the ordinary course of Borrower's business not interfering in any material respect with the business of Borrower, and any interest or title of a lessor, licensor or under any lease or license provided that such leases, subleases, licenses and sublicenses do not prohibit the grant of a security interest to Bank; (vi) easements, reservations rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances affecting real property; (vii) workman's courier's or materialmen's Liens or other similar statutory or common law Liens incurred in the ordinary course of Borrower's business; (viii) Liens that are not prior to the Lien of Bank which constitute rights of set-off of a customary nature or bankers' Liens with respect to amounts of deposit, whether arising by operation of law or by contract, in connection with arrangements entered into with banks in the ordinary course of business; (ix) earn-out and royalty obligations existing on the date hereof or entered into in connection with an acquisition permitted by this addendum. b. All accounts are and will, at all times pertinent hereto, be bona fide existing obligations created by the sale and delivery of merchandise or the rendition of services to account debtors in the ordinary course of business, free of liens, claims, encumbrances and security interests (except as held by Bank and except as may be consented to, in writing, by Bank) and are unconditionally owed to Borrower without defenses, disputes, offsets, counterclaims, rights of return or cancellation, except in the ordinary course of business, and Borrower shall have received no notice of actual or imminent bankruptcy or insolvency of any account debtor at the time an account due from such account debtor is included in the Borrowing Base. 12 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) c. At the time an account is included as an Eligible Receivable, all property giving rise to such account shall have been delivered to the account debtor or to the agent for the account debtor for immediate shipment to, and unconditional acceptance by, the account debtor. Borrower shall deliver to Bank, as Bank may from time to time require, delivery receipts, customer's purchase orders, shipping instruction, bills of lading and any other evidence of shipping arrangements. Absent such a request by Bank, copies of all such documentation shall be held by Borrower as custodian of Bank. 6.4 At the time an eligible account is included as an Eligible Receivable, all such eligible accounts will be due and payable on terms set forth in Section 1.12, or on such other terms approved in writing by Bank in advance of the creation of such accounts and which are expressly set forth on the face of all invoices, copies of which shall be held by Borrower as custodian for Bank, and no such eligible account will then be past due. 6.5 a. Borrower, immediately upon demand by Bank therefor, shall now and from time to time hereafter, at such intervals as are requested by Bank, deliver to Bank, designations of Inventory specifying Borrower's cost of Inventory, the wholesale market value thereof and such other matters and information relating to the Inventory as Bank may request; b. All of the Inventory is and shall remain free from all purchase money or other security interests, liens or encumbrances, except as held by Bank, other than Permitted Liens. c. Borrower does now keep and hereafter at all times shall keep correct and accurate records itemizing and describing the kind, type, quality and quantity of the Inventory, its cost therefor and selling price thereof, and the daily withdrawals therefrom and additions thereto, all of which records shall be available upon demand to any of Bank's officers, agents and employees for inspection and copying. d. All Inventory, now and hereafter at all times, shall be new Inventory of good and merchantable quality free from material defects. e. Inventory is not now and shall not at any time or times hereafter be located or stored with a bailee, warehouseman or other third party without Bank's prior written consent, and, in such event, Borrower will concurrently therewith cause any such bailee, warehouseman or other third party to issue and deliver to Bank, in a form acceptable to Bank, warehouse receipts in Bank's name evidencing the storage of Inventory or other evidence of Bank's prior rights in the Inventory. In any event, Bank shall instruct any third party to hold all such Inventory for Bank's account subject to Borrower's security interests and its instructions; and f. Bank shall have the right upon demand now and/or at all times hereafter, during Borrower's usual business hours, to inspect and examine the Inventory and to check and test the same as to quality, quantity, value and condition and Borrower agrees to reimburse Bank for Bank's reasonable costs and expenses in so doing. 13 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) 6.6 Borrower represents, warrants and covenants with Bank that Borrower will not, without Bank's prior written consent: a. Grant a security interest in or permit a lien, claim or encumbrance upon any of the Collateral to any person, association, firm, corporation, entity or governmental agency or instrumentality, other than Permitted Liens; b. Permit any levy, attachment or restraint to be made affecting any of Borrower's assets; c. Permit any Judicial Officer or Assignee to be appointed or to take possession of any or all of Borrower's assets; d. Change its name or corporate identity or add any new fictitious names, without providing Bank at least ten (10) days prior written notice, or liquidate, merge or consolidate with or into any other business organization; e. Move or relocate any Collateral outside the ordinary course of business without providing Bank with prior written notice thereof; f. Prior to Borrower's initial public offering, acquire any other business organization in any transactions involving aggregate cash consideration in excess of Five Million Dollars ($5,000,000) and, after Borrower's initial public offering, any transactions involving aggregate cash consideration in excess of Fifteen Million Dollars ($15,000,000); provided that Borrower may acquire any other business organization in any transactions involving stock consideration where such transaction does not result in a material reduction of Borrower's tangible net worth, provided an Event of Default does not exist before or after giving effect to such transaction. g. Make any change in Borrower's financial structure or in any of its business objectives, purposes or operations which would materially adversely affect the ability of Borrower to repay Borrower's Obligations; h. Incur any debts outside the ordinary course of Borrower's business except (i) renewals or extensions of existing debts and interest thereon (ii) debts consisting of capital leases or entered into for the purpose of financing equipment, real property (including improvements thereon) and other property, (iii) indebtedness subordinated to the obligations of Borrower to Bank on customary terms and conditions, and (iv) other indebtedness not to exceed One Million Dollars ($1,000,000); i. Make any advance or loan except in the ordinary course of Borrower's business as currently conducted; j. Guarantee or otherwise, directly or indirectly, in any way be or become responsible for obligations of any other Person, whether by agreement to purchase the indebtedness of any other Person, agreement for the furnishing of funds to any other Person 14 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) through the furnishing of goods, supplies or services, by way of stock purchase, capital contribution, advance or loan, for the purpose of paying or discharging (or causing the payment or discharge of) the indebtedness of any other Person, or otherwise, except for the endorsement of negotiable instruments by the Borrower in the ordinary course of business for deposit or collection, k. (a) Sell, lease, transfer or otherwise dispose of properties and assets having an aggregate book value of more than Five Hundred Thousand Dollars ($500,000), provided that Borrower may not dispose of its accounts (whether in one transaction or in a series of transactions) except as to the sale of inventory in the ordinary course of business; (b) consolidate with or merge into any other corporation, permit another corporation to merge into it, acquire all or substantially all the properties or assets of any other Person; or (c) enter into any sale-leaseback transaction; l. Purchase or hold beneficially any stock or other securities of, or make any investment or acquire any interest whatsoever in, any other Person, except for the common stock of the Subsidiaries owned by the Borrower on the date of this Agreement and except for certificates of deposit with maturities of one year or less of United States commercial banks with capital, surplus and undivided profits in excess of $100,000,000 and direct obligations of the United States Government maturing within one year from the date of acquisition thereof and other short term investments consistent with the investment policy; provided that nothing in this Section 6.6(o) shall be construed to preclude (i) Borrower's acquiring or holding shares of its consolidated subsidiaries or making investments therein, and (ii) Borrower's acquiring or holding interests in joint ventures or making investments therein; or m. Allow any fact, condition or event to occur or exist with respect to any employee pension or profit sharing plans established or maintained by it which might constitute grounds for termination of any such plan or for the court appointment of a trustee to administer any such plan. 6.7 Borrower's sole place of business or chief executive office or residence is located at the address indicated above and Borrower covenants and agrees that it will not, during the term of this Agreement, without prior written notification to Bank, relocate said sole place of business or chief executive office or residence. 6.8 If Borrower is a corporation, Borrower represents, warrants and covenants as follows: a. Borrower will not make any distribution or declare or pay any dividend (in stock or in cash) to any shareholder or on any of its capital stock, of any class, whether now or hereafter outstanding, or purchase, acquire, repurchase, redeem or retire any such capital stock other than (i) repurchases of equity security owned by any employee, consultant, officer or director upon termination of their relationship with Borrower (as long as an Event of Default is not continuing or would not exist after giving effect to such repurchase), and (ii) 15 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) repurchases of equity securities with the proceeds of the sale of other equity securities or Subordinated Debt; b. Borrower is and shall at all times hereafter be a corporation duly organized and existing in good standing under the laws of the state of its incorporation and qualified and licensed to do business in California or any other state in which it conducts its business unless the failure to do so would not reasonably be expected to have a Material Adverse Effect; c. Borrower has the right and power and is duly authorized to enter into this Agreement; and d. The execution by Borrower of this Agreement shall not constitute a breach of any provision contained in Borrower's articles of incorporation or by-laws. 6.9 The execution of and performance by Borrower of all of the terms and provisions contained in this Agreement shall not result in a breach of or constitute an event of default under any agreement to which Borrower is now or hereafter becomes a party. 6.10 Borrower shall promptly notify Bank in writing of its acquisition by purchase, lease or otherwise of any after acquired property of the type included in the Collateral, with the exception of purchase of Inventory in the ordinary course of business. 6.11 All assessments and taxes, whether real, personal or otherwise, due or payable by, or imposed, levied or assessed against, Borrower or any of its property have been paid, and shall hereafter be paid in full, before delinquency. Borrower shall make due and timely payment or deposit of all federal, state and local taxes, assessments or contributions required of it by law, and will execute and deliver to Bank, on demand, appropriate certificates attesting to the payment or deposit thereof. Borrower will make timely payment or deposit of all F.I.C.A. payments and withholding taxes required of it by applicable laws, and will upon request furnish Bank with proof satisfactory to it that Borrower has made such payments or deposit. If Borrower fails to pay any such assessment, tax, contribution, or make such deposit, or furnish the required proof, Bank may, in its sole and absolute discretion, and without notice to Borrower, (i) make payment of the same or any part thereof; or (ii) set up such reserves in Borrower's account as Bank deems necessary to satisfy the liability therefor, or both. Bank may conclusively rely on the usual statements of the amount owing or other official statements issued by the appropriate governmental agency. Each amount so paid or deposited by Banks shall constitute a Bank Expense and an additional advance to Borrower. 6.12 There are no actions or proceedings pending by or against Borrower or any guarantor of Borrower before any court or administrative agency and Borrower has no knowledge of any pending, threatened or imminent litigation, governmental investigations or claims, complaints, actions or prosecutions involving Borrower or any guarantor of Borrower, except as heretofore specifically disclosed in writing to Bank. If any of the foregoing arise during the term of the Agreement, Borrower shall immediately notify Bank in writing. 16 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) 6.13 a. Borrower, at its expense, shall keep and maintain its assets insured against loss or damage by fire, theft, explosion, sprinklers and all other hazards and risks ordinarily insured against by other owners who use such properties in similar businesses for the full insurable value thereof; provided that the foregoing shall not preclude Borrower from having reasonable deductibles on any such policies. Borrower shall also keep and maintain public liability and property damage insurance relating to Borrower's ownership and use of the Collateral and its other assets. All such policies of insurance shall be in such form, with such companies, in such amounts and upon terms and conditions standard to Borrower's industry. Borrower shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor at Bank's request. All such policies of insurance (except those of public liability and property damage) shall contain an endorsement in a form satisfactory to Bank showing Bank as a loss payee thereof, with a waiver of warranties (Form 438-BFU), and all proceeds payable thereunder shall be payable to Bank (other than on proceeds in respect of property financed by third parties) and, upon receipt by Bank, shall be applied on account of the Obligations owing to Bank. To secure the payment of the Obligations, Borrower grants Bank a security interest in and to all such policies of insurance (except those of public liability and property damage) and the proceeds thereof. b. Upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank's officers, employees or agents designated by Bank) as Borrower's attorney for the purpose of making, selling and adjusting claims under such policies of insurance, endorsing the name of Borrower or any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect to such policies of insurance. Borrower will not cancel any of such policies without Bank's prior written consent. Each such insurer shall agree by endorsement upon the policy or policies of insurance issued by it to Borrower as required above, or by independent instruments furnished to Bank, that it will give Bank at least ten (10) days written notice before any such policy or policies of insurance shall be altered or canceled, and that no act or default of Borrower, or any other person, shall affect the right of Bank to recover under such policy or policies of insurance required above or to pay any premium in whole or in part relating thereto. Bank, without waiving or releasing any Obligations or any Event of Default, may, but shall have no obligation to do so, obtain and maintain such policies of insurance and pay such premiums and take any other action with respect to such policies which Bank deems advisable. All sums so disbursed by Bank, as well as reasonable attorneys' fees, court costs, expenses and other charges relating thereto, shall constitute Bank Expenses and are payable on demand. 6.14 All financial statements and information relating to Borrower which have been or may hereafter be delivered by Borrower to Bank are true and correct in au material respects and have been prepared in accordance with GAAP consistently applied and there has been no material adverse change in the financial condition of Borrower since the submission of such financial information to Bank. 6.15 a. Borrower at all times hereafter shall maintain a standard and Modern system of accounting in accordance with GAAP consistently applied with ledger and account 17 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) cards and/or computer tapes and computer disks, computer printouts and computer records pertaining to the Collateral which contain information as may from time to time be requested by Bank; permit Bank and any of its employees, officers or agents, upon demand, during Borrower's usual business hours, or the usual business hour of third persons having control thereof, to have access to and examine all of the Borrower's Books relating to the Collateral, Borrower's Obligations to Bank, Borrower's financial condition and the results of Borrower's operations and in connection therewith, permit Bank or any of its agents, employees or officers to copy and make extracts therefrom. b. Borrower shall deliver to Bank within thirty (30) days after the end of each month, a company prepared balance sheet and profit and loss statement covering Borrower's operations and deliver to Bank within one hundred twenty (120) days after the end of each of Borrower's fiscal year an audited CPA statement of the financial condition of the Borrower for each such fiscal year, including but not limited to, a balance sheet and profit and loss statement and any other report requested by Bank relating to the Collateral and the financial condition of Borrower, and a certificate signed by an authorized employee of Borrower to the effect that all reports, statements, computer disk or tape files, computer printouts, computer runs, or other computer prepared information of any kind or nature relating to the foregoing or documents delivered or caused to be delivered to Bank under this subparagraph are complete, correct and thoroughly present the financial condition of Borrower and that there exists on the date of delivery to Bank no condition or event which constitutes a breach or Event of Default under this Agreement. c. In addition to the financial statements requested above, the Borrower agrees to provide Bank with the following schedules: X Accounts Receivable and Accounts Payable Agings within 15 days of - the last day of each month. 6.16 Borrower shall maintain the following financial ratios and covenants on a consolidated and non-consolidated basis: a. Tangible Effective Net Worth in an amount not less than Six Million Dollars ($6,000,000) to increase by seventy-five percent (75%) of quarterly net profit after tax plus fifty percent (50%) of new equity raised excluding the sale of the Company's Series E Preferred Stock on or before December 31, 1997. b. A quick ratio of cash plus securities plus Receivables to Current Liabilities not less than 1.15 to 1.00 to increase to 1.25 to 1.00 upon completion of new equity. Quick Ratio to include outstandings. c. Borrower shall not without Bank's prior written consent acquire or expend for or commit itself to acquire or expend for fixed assets by lease, purchase or otherwise in an aggregate amount that exceeds Seven Million and no/100 Dollars ($7,000,000) in any fiscal year; and 18 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) d. Semi-annual A/R audits. All financial covenants shall be computed in accordance with GAAP consistently applied except as otherwise specifically set forth in this Agreement. All monies due from affiliates (including officers, directors and shareholders) shall be excluded from Borrower's assets for all purposes hereunder. 6.17 Borrower shall promptly supply Bank (and cause any guarantor to supply Bank) with such other information (including tax returns) concerning its financial affairs (or that of any guarantor) as Bank may request from time to time hereafter, and shall promptly notify Bank of any material adverse change in Borrower's financial condition and of any condition or event which constitutes an Event of Default under this Agreement. 6.18 Borrower is now and shall be at all times hereafter solvent and able to pay its debts (including trade debts) as they mature. 6.19 Borrower shall immediately and without demand reimburse Bank for all Bank Expenses; Borrower authorizes and approves all advances and payments by Bank for items described in this Agreement as Bank Expenses. 6.20 Each warranty, representation and agreement contained in this Agreement shall be automatically deemed repeated with each advance and shall be conclusively presumed to have been relied on by Bank regardless of any investigation made or information possessed by Bank. The warranties, representations and agreements set forth herein shall be cumulative and in addition to any and all other warranties, representations and agreements which Borrower shall give, or cause to be given, to Bank either now or hereafter. 6.21 Borrower shall keep all of its principal bank accounts with Bank and shall notify the Bank immediately in writing of the existence of any other bank account, deposit account or any other account into which money can be deposited. 6.22 Borrower shall furnish to the Bank: (a) as soon as possible, but in no event later than thirty (30) days after Borrower knows or has reason to know that any reportable event with respect to any deferred compensation plan has occurred, a statement of chief financial officer of Borrower setting forth the details concerning such reportable event and the action which Borrower proposes to take with respect thereto, together with a copy of the notice of such reportable event given to the Pension Benefit Guaranty Corporation, if a copy of such notice is available to Borrower; (b) promptly after the filing thereof with the United States Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of each annual report with respect to each deferred compensation plan; (c) promptly after receipt thereof, a copy of any notice Borrower may receive from the Pension Benefit Guaranty Corporation or the Internal Revenue Service with respect to any deferred compensation plan; provided, however, this subparagraph shall not apply to notice of general application issued by the Pension Benefit Guaranty Corporation or the Internal Revenue Service; and (d) when the same is made available to participants in the deferred compensation plan, all notices and 19 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) other forms of in-formation from time to time disseminated to the participants by the administrator of the deferred compensation plan. 6.23 Borrower is now and shall at all times hereafter remain in compliance with all federal, state and municipal laws, regulations and ordinances relating to the handling, treatment and disposal of toxic substances, wastes and hazardous material and shall maintain all necessary authorizations and permits. 7. EVENTS OF DEFAULT. ----------------- Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement: a. If Borrower fails or neglects to perform, keep or observe any term, provision, condition, covenant, agreement, warranty or representation contained in this Agreement, or any other present or future agreement between Borrower and Bank, provided that, as to any default under this Section 7.a that can be cured, Borrower shall have a right to cure such default within ten (10) days after the occurrence thereof; b. If any representation, report or certificate made or delivered by Borrower to Bank is not true and correct in any material respect; c. If Borrower fails to pay when due and payable, or declared due and payable, any principal or interest; or fails to pay all or any portion of the Borrower's obligations other than principal or interest within twenty (20) days of the due date of such obligations; d. If there is a material impairment of the prospect of repayment of all or any portion of Borrower's Obligations or a material impairment of the value or priority of Bank's security interest in the Collateral; e. If all or any of Borrower's assets are attached, seized, subject to a writ or distress warrant, or are levied upon, or come into the possession of any Judicial Officer or Assignee and the same are not released, discharged or bonded against within thirty (30) days thereafter; f. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within thirty (30) days; g. If any proceeding is filed or commenced by Borrower for its dissolution or liquidation; h. If Borrower is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs; 20 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts &- Inventory) i. If a notice of Lien, levy or assessment is filed of record with respect to any or all of Borrower's assets by the United States Government, or any department, agency or instrumentality thereof, or by any state, county, municipal or other government agency, or if any taxes or debts owing at any time hereafter to any one or more of such entities becomes a lien, whether choate or otherwise, upon any or all of the Borrower's assets and the same is not paid on the payment date thereof; j. If a judgment or other claim becomes a lien or encumbrance upon any or all of Borrower's assets and the same is not satisfied, dismissed or bonded against within ten (10) days thereafter; k. If Borrower permits a default in any material agreement to which Borrower is a party with third parties so as to result in an acceleration of the maturity of Borrower's indebtedness to others, whether under any indenture, agreement or otherwise; l. If Borrower makes any payment on account of indebtedness which has been subordinated to Borrower's Obligations to Bank unless permitted by the terms of the subordination arrangement governing such indebtedness; m. If any misrepresentation exists now or thereafter in any warranty or representation made by Bank by any officer or director of Borrower, or if any such warranty or representation is withdrawn by any officer or director; n. If any guarantor of Borrower's Obligations dies or terminates its subordination or guaranty, becomes insolvent or an Insolvency Proceeding is commenced by or against any such subordinating party or guarantor; o. If Borrower fails to comply with any of the provisions of Section 6.6 or 6.16; or p. If any reportable event, which the Bank determines constitutes grounds for the termination of any deferred compensation plan by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer any such plan, shall have occurred and be continuing thirty (30) days after written notice of such determination shall have been given to Borrower by Bank, or any such Plan shall be terminated within the meaning of Title IV of the Employment Retirement Income Security Act ("ERISA"), or a trustee shall be appointed by the appropriate United States District Court to administer any such plan, or the Pension Benefit Guaranty Corporation shall institute proceedings to terminate any plan and in case of any event described in this Section 7, the aggregate amount of the Borrower's liability to the Pension Benefit Guaranty Corporation under Sections 4062, 4063 or 4064 of ERISA shall exceed five percent (5) of Borrower's Tangible Effective Net Worth. Notwithstanding anything contained in Section 7 to the contrary, Bank shall refrain from exercising its rights and remedies and Event of Default shall thereafter not be deemed to have occurred by reason of the occurrence of any of the events set forth in 21 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) Sections 7.e, 7.f or 7.j of this Agreement if, within ten (10) days from the date thereof, the same is released, discharged, dismissed, bonded against or satisfied; provided, however, if the event is the institution of Insolvency Proceedings against Borrower, Bank shall not be obligated to make advances to Borrower during such cure period. 8. BANK'S RIGHTS AND REMEDIES. -------------------------- 8.1 Upon the occurrence and during the continuance of an Event of Default by Borrower under this Agreement, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower: a. Declare Borrower's Obligations, whether evidenced by this Agreement, installment notes, demand notes or otherwise, immediately due and payable to the Bank; b. Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement, or any other agreement between Borrower and Bank; c. Terminate this Agreement as to any future liability or obligation of Bank, but without affecting Bank's rights and security interests in the Collateral, and the Obligations of Borrower to Bank; d. Without notice to or demand upon Borrower or any guarantor, make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, take and maintain possession of the Collateral and the premises (at no charge to Bank), or any part thereof, and to pay, purchase, contest or compromise any encumbrance, charge or lien which in the opinion of Bank appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith; e. Without limiting Bank's rights under any security interest, Bank is hereby granted a license or other right to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secret, trade names, trademarks and advertising matter, or any property of a similar nature as it pertains to the Collateral, in completing production of, advertising for sale and selling any Collateral and Borrower's rights under all licenses and all franchise agreement shall inure to Bank's benefit, and Bank shall have the right and power to enter into sublicense agreements with respect to all such rights with third parties on terms acceptable to Bank; f. Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sales and sell (in the manner provided for herein) the Inventory; g. Sell or dispose the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at 22 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) such places (including Borrower's premises) as is commercially reasonable in the opinion of Bank. It is not necessary that the Collateral be present at any such sale; h. Bank shall give notice of the disposition of the Collateral as follows: (1) Bank shall give the Borrower and each holder of a security interest in the Collateral who has filed with Bank a written request for notice, a notice in writing of the time and place of public sale, or, if the sale is a private sale or some disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or the disposition is to be made; (2) The notice shall be personally delivered or mailed, postage prepaid, to Borrower's address appearing in this Agreement, at least five (5) calendar days before the date fixed for the sale, or at least five (5) calendar days before the date on or after which the private sale or other disposition is to be made, unless the Collateral is perishable or threatens to decline speedily in value. Notice to persons other than Borrower claiming an interest in the Collateral shall be sent to such addresses as they have furnished to Bank; (3) If the sale is to be a public sale, Bank shall also give notice of the time and place by publishing a notice one time at least five (5) calendar days before the date of this sale in a newspaper of general circulation in the county in which the sale is to be held; and (4) Bank may credit bid and purchase at any public sale. i. Borrower shall pay all Bank Expenses incurred in connection with Bank's enforcement and exercise of any of its rights and remedies as herein provided, whether or not suit is commenced by Bank; j. Any deficiency which exists after disposition of the Collateral as provided above will be paid immediately by Borrower. Any excess will be returned, without interest and subject to the rights of third parties, to Borrower by Bank, or, in Bank's discretion, to any party who Bank believes, in good faith, is entitled to the excess; and k. Without constituting a retention of Collateral in satisfaction of an obligation within the meaning of 9505 of the Uniform Commercial Code or an action under California Code of Civil Procedure 726, apply any and all amounts maintained by Borrower as deposit accounts (as that term is defined under 9105 of the Uniform Commercial Code) or other accounts that Borrower maintains with Bank against the Obligations. 8.2 Bank's rights and remedies under this Agreement and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided by law or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any default on Borrower's part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election or acquiescence by Bank. 23 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) 9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY. ------------------------------------------------ If Borrower fails to pay promptly when due to another person or entity, monies which Borrower is required to pay by reason of any provision in this Agreement, Bank may, but need not, pay the same and charge Borrower's account therefor, and Borrower shall promptly reimburse Bank. All such sums shall become additional indebtedness owing to Bank, shall bear interest at the rate hereinabove provided, and shall be secured by all Collateral. Any payments made by Bank shall not constitute (i) an agreement by it to make similar payments in the future; or (ii) a waiver by Bank of any default under this Agreement. Bank need not inquire as to, or contest the validity of, any such expense, tax security interest, encumbrance or lien and the receipt of the usual official notice of the payment thereof shall be conclusive evidence that the same was validly due and owing. Such payments shall constitute Bank Expenses and additional advances to Borrower. 10. WAIVERS. ------- 10.1 Borrower agrees that checks and other instruments received by Bank in payment or on account of Borrower's Obligations constitute only conditional payment until such items are actually paid to Bank and Borrower waives the right to direct the application of any and all payments at any time or times hereafter received by Bank on account of Borrower's Obligations and Borrower agrees that Bank shall have the continuing exclusive right to apply and reapply such payments in any manner as Bank may deem advisable, notwithstanding any entry by Bank upon its books. 10.2 Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Borrower may in any way be liable. 10.3 Bank shall not in any way or manner be liable or responsible for (a) the safekeeping of the Inventory; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person whomsoever. All risk of loss, damage or destruction of Inventory shall be borne by Borrower. 10.4 Borrower waives the right and the right to assert a confidential relationship, if any, it may have with any accountant, accounting firm and/or service bureau or consultant in connection with any information requested by Bank pursuant to or in accordance with this Agreement, and agrees that a Bank may contact directly any such accountants, accounting firm and/or service bureau or consultant in order to obtain such information. 10.5 BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION HEREUNDER, OR CONTEMPLATED HEREUNDER, OR ANY OTHER 24 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) CLAIM (INCLUDING TORT OR BREACH OF DUTY CLAIMS) OR DISPUTE HOWSOEVER ARISING BETWEEN BANK AND BORROWER. 10.6 In the event that Bank elects to waive any rights or remedies hereunder, or compliance with any of the terms hereof, or delays or fails to pursue or enforce any terms, such waiver, delay or failure to pursue or enforce shall only be effective with respect to that single act and shall not be construed to affect any subsequent transactions or Bank's right to later pursue such rights and remedies. 11. ONE CONTINUING LOAN TRANSACTION. ------------------------------- All loans and advances heretofore, now or at any time or times hereafter made by Bank to Borrower under this Agreement or any other agreement between Bank and Borrower, shall constitute one loan secured by Bank's security interests in the Collateral and by all other security interests, liens, encumbrances heretofore, now or from time to time hereafter granted by Borrower to Bank. Notwithstanding the above, (i) to the extent that any portion of the Obligations are a consumer loan, that portion shall not be secured by any deed or trust or mortgage on or other security interest in the Borrower's principal dwelling which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the Borrower (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering real property, that deed of trust or mortgage shall not secure the loan and any other Obligation of the Borrower (or any of them), unless expressly provided to the contrary in another place. 12. NOTICES. ------- Unless otherwise provided in this Agreement, all notices or demands by either party on the other relating to this Agreement shall be in writing and sent by regular United States mail, postage prepaid, properly addressed to Borrower or to Bank at the addresses stated in this Agreement, or to such other addresses as Borrower or Bank may from time to time specify to the other in writing. Requests to Borrower by Bank hereunder may be made orally. 13. AUTHORIZATION TO DISBURSE. ------------------------- Bank is hereby authorized to make loans and advances hereunder upon telephonic or other instructions received from anyone purporting to be an officer, employee, or representative of Borrower, or at the discretion of Bank if said loans and advances are necessary to meet any Obligations of Borrower to Bank. Bank shall have no duty to make inquiry or verify the authority of any such party, and Borrower shall hold the Bank harmless from any damage, claims or Liability by reason of Bank's honor of, or failure to honor, any such instructions. 25 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) 14. DESTRUCTION OF BORROWER'S DOCUMENTS ----------------------------------- Any documents, schedules, invoices or other papers delivered to Bank, may be destroyed or otherwise disposed of by Bank six (6) months after they are delivered to or received by Bank, unless Borrower requests, in writing, the return of the said documents, schedules, invoices or other papers and makes arrangements, at Borrower's expense, for their return. 15. CHOICE OF LAW. ------------- The validity of this Agreement, its construction, interpretation and enforcement, and the rights of the parties hereunder and concerning the Collateral, shall be determined according to the laws of the State of California. The parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the state and federal courts in the Northern District of California or County of Santa Clara. 16. GENERAL PROVISIONS. ------------------ 16.1 This Agreement shall be binding and deemed effective when executed by the Borrower and accepted and executed by Bank at its Headquarter Office. 16.2 This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties, provided, however, that Borrower may not assign this Agreement or any rights hereunder without Bank's prior written consent and any prohibited assignment shall be absolutely void. No consent to an assignment by Bank shall release Borrower or any guarantor from their Obligations to Bank. Bank may assign this Agreement and its rights and duties hereunder. Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in Bank's rights and benefits hereunder. In connection therewith, Bank may disclose all documents and information which Bank now or hereafter may have relating to Borrower or Borrower's business. 16.3 Paragraph headings and paragraph numbers have been set forth herein for convenience only; unless the contrary is compelled by the context, everything contained in each paragraph applies equally to this entire Agreement. 16.4 Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Bank or Borrower, whether under any rule of construction or otherwise; on the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto. When permitted by the context, the singular includes the plural and vice versa. 16.5 Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 26 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) 16.6 This Agreement cannot be changed or terminated orally. Except as to currently existing Obligations owing by Borrower to Bank, all prior agreements, understandings, representations, warranties, and negotiations, if any, with respect to the subject matter hereof, are merged into this Agreement. 16.7 The parties intend and agree that their respective rights, duties, powers, liabilities, obligations and discretions shall be performed, carried out, discharged and exercised reasonably and in good faith. IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit Loan & Security Agreement (Accounts and Inventory) to be executed as of the date first hereinabove written. ATTEST: BORROWER: ___________________________________ By:_________________________________ Title Signature of Accepted and effective as of ______ Title:______________________________ at Bank's Headquarters Office By:_________________________________ Signature of Title:_______________________________ BANK: By:_________________________________ Signature of Title:_______________________________ By:_________________________________ Signature of Title:_______________________________ 27 REVOLVING CREDIT LOAN & SECURITY AGREEMENT (Accounts & Inventory) IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit Loan & Security Agreement (Accounts and Inventory) to be executed as of the date fast hereinabove written. ATTEST: BORROWER: ___________________________________ By: /s/ Philip J. Koen Title Signature of Accepted and effective as of ______ Title: Senior VP & CEO at Bank's Headquarters Office By:_________________________________ Signature of Title:_______________________________ BANK: By:_________________________________ Signature of Title:_______________________________ By:_________________________________ Signature of Title:_______________________________ 28 -----END PRIVACY-ENHANCED MESSAGE-----